SINGAPORE - The owner of a penthouse at St Regis Residences booked an eye-popping loss of $15.8 million when he sold the apartment last month. It is the biggest loss ever made on an apartment sale here.
The two-storey unit in Tanglin Road, with a swimming pool on the upper floor and views over Nassim Road greenery, first made headlines in 2007 when Japanese billionaire Katsumi Tada shelled out a record-smashing $28 million - or $4,653 per sq ft - for it.
Mr Tada's generous offer back then gave the lucky seller a profit of $12.77 million, but it has turned out to be a bad investment and underscores how fortunes have turned in the high-end property market, where more instances of loss-making transactions are surfacing.
The new owner is Mr Andy Chua, who owns Yun Nam Hair Care. He snapped up the 6,017 sq ft apartment at the 173-unit project in a cash transaction of $12.2 million, or $2,028 psf, according to records lodged with the Singapore Land Authority.
The sale was executed in Tokyo and took just two weeks to complete, instead of the usual eight to 12 weeks, possibly due to it being a cash sale or when either party was "in a haste to wrap it up", said market watchers. Mr Tada is believed to have left the property vacant all this time.
Mr Samuel Eyo, managing director of Singapore Christie's Homes, said Mr Chua probably got a bargain as the price was low for luxury projects in the area, which sell for between $2,500 psf and $3,000 psf. What sealed the deal was probably because Mr Chua paid in cash.
Mr Tada is by no means the only high-end owner to want to cut his losses as luxury home values have dived 20 per cent from their peak in 2013. A 2,626 sq ft unit at luxury condo The Coast at Sentosa Cove went for just $1,190 psf in January, booking a loss of $1.215 million for its seller.
Mr Tada, the 17th richest man in Japan with a fortune of US$1.7 billion (S$2.4 billion) according to Forbes, is the president of Daisho Group. The firm acquired The Westin Singapore hotel from BlackRock for $468 million in December 2013, setting a record at $1.5 million per hotel room key.
Mr Chua made headlines last year when he paid US$2.2 million to score a private lunch with US investment guru Warren Buffett.
Mr Eyo believes more bargains of the St Regis kind will emerge as interest rates rise. Cash-rich investors, too, are shopping around for a good deal.
"The ultra-rich would rather cash out of assets they have no use for, to invest in other assets that could rake in a profit larger than the loss," said Mr Eyo. "To them, it's just part and parcel of investing."