$15.8m loss in Tanglin penthouse sale 'small change' | Singapore Property News

$15.8m loss in Tanglin penthouse sale 'small change'

19 Mar 2015
Property News
 Straits Times:  $15.8m loss in Tanglin penthouse sale 'small change'

The Japanese billionaire who suffered a record $15.8 million loss when he offloaded a penthouse in Tanglin Road is not one to shy away from making aggressive bets in real estate.

Mr Katsumi Tada, 69, president of Daisho Group, is known for paying top dollar to land prized assets that seem to promise future earnings.

The purchase of The Westin Singapore hotel in Marina Bay by his Daisho Group for a record-smashing $1.5 million per room in December 2013 is a case in point.

The landmark deal was the company's maiden purchase in Singapore and came as the local hotel sector faced headwinds from declining room rates and new completions.

However, analysts noted then that "Daisho is buying into the future", as the hotel's Marina Bay location could face an undersupply of rooms as the area develops.

St Regis Residences penthouse sold at loss of $15.8 million 

Mr Tada set another record in 2007 when he paid a whopping $28 million - or $4,654 per sq ft (psf) - for a plush 6,017 sq ft penthouse at St Regis Residences in Tanglin Road.

This broke the previous psf benchmark of $4,200 paid for a four-bedroom unit at Chyau Fwu Group's 35-unit Parkview Eclat in Grange Road.

The purchase represented a remarkable gain of $12.77 million for the seller, also a foreigner, who had paid $15.23 million - or $2,530 psf - to developer City Developments in August 2006.

Now, Mr Tada has set a record of a different kind by selling the penthouse for a bargain-basement $12.2 million, or $2,028 psf, racking up the biggest loss suffered on an apartment sale here.

The sale - to Yum Nam Hair Care owner Andy Chua - at a price well below market value has baffled analysts, who noted that the $12.2 million would be "pocket change" for Mr Tada, who is estimated by Forbes to be worth about US$1.7 billion (S$2.4 billion).

The Straits Times understands that Mr Tada, who also bought a smaller 3,897 sq ft home at the 173-unit St Regis project for about $11.6 million, had been trying to sell both for more than two years. Three units in the development, spanning 2,153 to 4,941 sq ft, have changed hands for between $1,923 psf and $2,276 psf in the past two months.

Ms Christine Li, research director at Cushman & Wakefield, said the billionaire could have just been rebalancing his portfolio of investments as opportunities appear elsewhere.

"To him, a $15.8 million loss is not a big deal. A lot of billionaires buy properties and leave them vacant because rental income is negligible to them and holding costs aren't that high," said Ms Li.

The penthouse is said to have been vacant all this while - another factor which could have led to a "deterioration" of the unit, said a veteran market watcher who did not wish to be named.

"Since he didn't stay in it, he could have realised the unit was not what he wanted. For the obscenely rich, they can do anything they like."

Another analyst added that the absolute loss could have been smaller than what was recorded, thanks to tax considerations and currency conversions, as the Singapore dollar has strengthened against the yen.

Shrewd move by low-profile investor

A little-known businessman has proved an astute investor after netting a St Regis penthouse at a price well below what it sold for back in 2007.

Mr Andy Chua, who is the owner of the Yun Nam Hair Care chain, paid $12.2 million - or $2,028 per sq ft (psf) - for the 6,017 sq ft unit at St Regis in Tanglin Road.

That price has surprised analysts on two fronts: Apart from being well under the average price of $2,500 to $3,000 psf being paid for units in the upscale Tanglin area, it is also a marked discount from the $15.23 million that the first owner paid to developer City Developments in 2006.

The real headline grabber, of course, is that Japanese billionaire Katsumi Tada had paid $28 million for the property in 2007, so he copped a stinging loss of $15.8 million when Mr Chua snapped it up in an all-cash deal that was sealed in only two weeks.

Mr Chua's Yun Nam Hair Care company recorded turnover of $42.6 million last year, down slightly from $43.3 million in 2013. Earnings came in at $11.5 million, down from $11.8 million in 2013.

He is also the owner of a string of beauty firms such as London Weight Management, New York Skin Solutions and Dorra Slimming, among other businesses.

London Weight Management recorded revenue of $48 million last year, almost unchanged from $48.6 million in 2013. Earnings were $11.9 million, up from $11.2 million in the same period.

Last year, Mr Chua, who is believed to be in his late 40s, outbid others when he agreed to pay US$2.2 million (S$3.1 million) to have lunch with renowned American investor Warren Buffett.

He was allowed to invite seven guests to meet Mr Buffett, who is chief executive of conglomerate Berkshire Hathaway, for lunch at New York's Smith & Wollensky restaurant.

combines advanced technology with personalized service to help you achieve your property goals.