Wee Cho Yaw, chairman emeritus of UOB, made headlines recently for his purchase of all 45 unsold units at upscale condominium The Nassim. The deal, valued at $412 million – or $2,300 psf – represents a discount of around 18 per cent, according to developer CapitaLand, which had sold the properties to the Wee family’s private real estate arm, Kheng Leong.
How did Mr Wee secure such a crazy bargain? Here’s what we can learn from this deal.
Buy when no one is buying
There’s no getting around the gloom that’s surrounding the residential property market in Singapore now. Worse still, it shows no sign of clearing anytime soon. Cooling measures such as the Additional Buyer’s Stamp Duty (ABSD) and the Total Servicing Debt Ratio (TDSR) have made it technically more expensive and difficult to own properties, slowing demand.
As a result, most investors are taking a wait-and-see approach before making any big-ticket purchase. But Mr Wee saw this as an opportunity to make a deal, taking advantage of property prices that have slumped by over 11 per cent since 2013 due to the lower demand.
Buy at the right time
Mr Wee bought the units at a time when developer CapitaLand needed to get the properties off its hands urgently. Under the Residential Property Act, developers issued with a Qualifying Certificate (QC) upon buying private residential land must finish building the project within five years of acquiring the site and sell all units within two years of obtaining a temporary occupation permit (TOP).
If the developer fails to meet the deadlines, it would have to pay extension charges pro-rated accordingly to the number of unsold units. Since The Nassim received its TOP in August 2015, CapitaLand would have to pay up to millions in fines if it hadn’t sold the properties by August this year. Other developers are following suit, with most offering significant discounts on unsold units nearing their sell-by dates.
Buy properties that are in or near prime locations
The Nassim is a freehold condominium located in the Core Central Region (CCR), which includes the Central Business District (CBD), Orchard Road, Cairnhill, Tanglin, River Valley, Newton and Bukit Timah. Due to their proximity to well … pretty much every important amenity (think office buildings downtown, shopping malls in Orchard and prestigious schools), residential properties in this area are generally sought after and costly.
By managing to grab the properties at a lower-than-usual price now, Mr Wee has set himself up for at least a decent profit in the future when the value of his investment appreciates.
Bonus Tip! Buy properties that are shunned by superstition
If you aren’t superstitious, you can find a ton of great deals in some developments. A #04-04 unit at Mon Jervois, for example, was sold at $1,850 psf last year – a 20 per cent discount compared to other units. Many consider the number 4 to be auspicious in Chinese culture, contributing to a lower price for the unit.
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