Back in the period of 2017 to 2018, a lot of aging private condos were acquired by private developers. In fact, this was known as the period of “enbloc fever”.
Eunosville is now known as Parc Esta.
Rio Casa is now known as Riverfront Residences.
Tampines Court is now known as Treasure at Tampines.
Shunfu Ville is now known as Jadescape.
Florence Regency is now known as Florence Residences.
Today, about 5 years on, most of these acquired sites have been torn down and rebuilt as brand new developments.
So you can imagine there will be spanking new facilities, rejuvenated surroundings and new condo units in ready-to-move-in conditions.
For most of these developments that I mentioned, the TOP date will be coming soon – within the next 12 to 18 months. This means buyers can look forward to key collection soon.
The TOP Effect
Being involved in sub-sales transactions for as long as I did, I became familiar with the TOP effect.
This term came about due to psychological effect of waiting for your dream home to be ready.
I am sure you are familiar with the positive anticipation of collecting your first BTO keys or having your home renovations completed.
After waiting patiently, you know everything is going to be brand new and you feel the excitement in the air.
This positive anticipation has a premium to it which I call the “TOP effect”.
And for people who are actively looking for a home – they are willing to pay a premium for that privilege of being able to move in immediately rather than waiting longer.
A brand new unit that is in ready-to-move in condition is very attractive and highly sought after by buyers who are tired of waiting or hunting down for their next home.
Before you make any big decisions what to do with your uncompleted condo unit, you should know what to expect if you decide to move in or sell.
Here are 5 things you should take into consideration.
Factor #1: No viewings can be done as there is no showflat and nothing physical to show
If you are planning to sell your unit before the key collection date, you have to remember that there are essentially no traditional “viewings”.
So the agent you engage have to be particularly skilled in trying to sell intangibles like floor plans or just pictures.
For me, I have sold subsale units by meeting potential buyers in a quiet cafe.
There is a certain level of skillset to sell over a cup of coffee as not all agents possess this ability to sell without a physical home.
If you are so used to walking with a crutch, imagine trying to run without one.
It will very difficult.
Similarly, if a real estate agent is so used to selling with a physical unit for buyers to walk through – it becomes that much harder to sell a “virtual” unit.
It is simply something most agents are not used to.
That’s why for most agents, it takes them 6-12 months to sell a subsale unit.
For me, I am able to do it in less than 3 months.
#2: Your profit will vary wildly
The construction time for a new launch project will usually be between 3 to 4 years.
As a new launch buyer, you are likely to be following the Progressive Payment Scheme.
While you pay the mortgage down, the bank will be releasing payments to the developer as they complete various milestones in the development.
At the same time, you also need to consider other buyers like yourself who might be thinking of selling too.
For some buyers who bought units maximized for livability like dumb-bell layout, they might be able to secure better profits.
Why? They attract buyers who buy for their own stay so they are much more willing to pay more.
But if your unit was bought for the sole reason of investment for example to rent out in the future – your profits are likely to be lesser as only investors would be keen to buy.
However, investors are also another breed of buyers – they are very cautious and calculative about their returns.
So you need to know how to balance between maximizing your profit when you are selling and being priced attractively enough to get buyers.
You also need to note the milestones the development is an indicator to how close you are to the TOP date.
All sellers would want to maximize profits so they tend to sell very close to TOP date.
However based on my experience, that is when you also have the most sellers and competition is the most keen.
Do take all these factors into your consideration.
#3: You need to plan your next property and financing
If you do make the decision to sell your under construction unit before TOP, you will need to sit down and calculate your finances carefully.
You will also need to take into consideration of what will be your next property purchase if you were to let go of this current one.
For couples, you have to think about what it means to postpone your future life together – as you tie your marriage to the TOP date.
Some questions to ask yourself:
- What are the other property options that can allow for an earlier move-in date?
- How much would we have to pay if I were to sell earlier than the 3-year SSD period?
- Is it worth it giving up this unit in this development for this other unit?
If you are tired of waiting for the TOP date, you can consider exploring resale units instead.
Being experienced in the buy/sell process of subsale units, I am very familiar of great alternative developments that you can consider.
You can read more about how I do it here: https://askrandallhow.com/how-i-sold-this-riverfront-residences-subsale-unit-within-3-days/
#4: Consider swapping from a smaller unit to a bigger unit
For early buyers of some new launch developments, you were lucky to secure a low entry price when you signed the Sales & Purchase Agreement during the pre-pandemic period.
I congratulate you because you were smart enough to buy a new launch property when no one was buying back then.
Since then, prices have gone significantly upwards and you should be sitting on tidy paper profits.
For those who bought small 2-bedder units, this is an opportunity to upgrade and swap your small unit to a bigger unit.
I have done this for a few clients of mine and they now have settled into a more comfortable home.
If you are thinking that your purchased unit might be too small, feel free to contact me to explore your options.
#5: The hot rental market is an opportunity to capitalize on
The rental market in 2022 is crazy hot.
While you might think of tenants being typically to be expats or PRs, there are actually a lot of Singaporeans who are also renting.
The soaring rental market might be the tipping point for them to quickly purchase a property unit instead of fighting it out with landlords and other tenants.
In the developments that have recently hit TOP this past few months, I have seen units moving quickly as they are snatched up by eager buyers. These developments include:
- Parc Esta
- Park Colonial
- Parc Botannia
There is a strong demand right now from tenants who are put off by paying significant rental hikes.
With the increasing pool of buyers in the market, you can take advantage by letting go of your property unit soon.
Conclusion
While it seems the property market in Singapore looks buoyant, the recent cooling measures of 30 September 2022 has started to dampen market sentiment.
Developers are not so eager to bid for the recent GLS near Hillview and Beauty World MRT stations.
With recession predicted to come in 2023, there is an air of caution.
More tech jobs are being cut as companies try to shore up their stock prices – in order to make shareholders happy in a business environment of rising interest rates.
There is no confirmation that a recession will definitely hit in 2023. But those speculation is enough for a lot of companies to start cutting down their workforce.
No one wants to be a casualty of the recession but it is good to start preparing for rainy days ahead of us.
Do start exploring your options because it can give you room to breathe if the worst does happen.
If you bought a new launch unit in the pre-pandemic period, you are now in a position of great advantage if you wish to cash out.
Have questions on the choices open to you? Thinking of entering the subsale market? I invite you to drop me a message with your questions.
All our discussions are no-obligation.
