Buying a condominium in Singapore is a significant milestone for many, symbolizing an upgrade in lifestyle, a status symbol, or a strategic investment for better capital appreciation compared to public housing. For those considering this step, understanding the types of condos available and their differences is essential to make an informed decision. Let’s explore the key considerations when choosing between New Launch Condos and Resale Condos and the preferences of investors in Singapore.
1. New Launch Condos Definition: Properties sold directly by developers before construction or during the early stages. Advantages:
Customizability:
Buyers can choose units with preferred layouts, facing directions, and floors early in the launch phase.
Modern Features:
New launches come with the latest designs, smart home technologies, and contemporary facilities.
Lower Initial Cost:
The progressive payment scheme allows buyers to stagger payments based on the construction timeline, making upfront costs more manageable. Potential for Higher Capital Gains:
As these properties are purchased at the developer’s price, they may see greater appreciation upon completion.
Extended payment plans like the Progressive Payment Scheme (PPS). Often come with promotional discounts or incentives during the launch phase.
Disadvantages: Prices seem to be higher then the neighboring existing much older condos. But why buy new launch condo?
Because we are aware the newer condos, when subsale to the market will outperform their older peers Furthermore, tenants will prefer the newer, just completed units, and be willing to pay higher rents then for the older peers.
And also, do you know most developers get a whole array of banks to valuate their properties and to standby to lend money to the interested buyers in their showroom? This mean the banks agreed to the valuation of the propertes that these new launch properties are not overpriced. If the properties are over priced, the banks who have loan money to the buyers for the entire project will face a very major concern should many default on payment as overpriced condos will caused many buyers not be able to susbtain the loan.
Wait Time:
Buyers must wait 3–5 years for completion and move-in.
2. Resale Condos Definition: Completed properties purchased from individual owners. Advantages:
Immediate Move-In or Rental Income: Ideal for those who want to occupy or rent out the property quickly. Clear understanding of the property’s environment, view, and amenities. Established communities in older developments.
Wider Choices:
Resale units offer a view of the actual living conditions, amenities, and neighborhood. Immediate possession and rental income potential.
Drawbacks:
Higher initial down payment compared to new launches. Less chance for customization or enjoying brand-new facilities.
Continuing from earlier, for a resale property, various banks may have various valuations of a property. As a Resale Buyer you must realised that some banks are willing to "match" the price for the Buyer
What does "Match the Price" means?
Let me illustrate
Say Buyer is interested to buy this property for a certain price say $2m. Some banks may value the property at only $1.8m. But there may be 1 or 2 banks will be willing to say, "we can match"
That simply means, "Mr Buyer, since you are interested to pay $2m for this property, even though we, the Bank, think this property is only worth $1.8m, we are willing to lend you say 80% of $2m. That is $1.6m. So by right, Mr Buyer we can only lend $1.44m for this property. But Mr Buyer can now get $1.6m to buy this property". He feels good.
He completes the sale.
BUT... and i will like to use the big BUT. Should this Mr Buyer have to sell the property a few weeks or months from then, he may have be in for a shock to realise his property that he paid $2m for was actually worth much lesser as other banks may reveal to the new buyer that this house was only worth $1.6m. So even if offered him $1.6m, this will cause Mr Buyer suffer a huge lost, on top of the Seller Stamp Duty (SSD) that comes along with his mistake.
So, in my opinion, this is the biggest risk of buying a Resale Property. You may not really know what it is worth. You could be overpaying without knowing.
Compared to getting a new launch condo, the Developer has already gotten the valuation to be assessed by the Banks. The more banks you see at the showflat, the more safe the sales is and you do not need to be worried the Developer has overpriced the property.
3. Which Condo Type Do Investors Prefer?
Investors often choose condos based on their goals: Resale Condos: Favored for immediate rental income, especially in mature estates with established demand. Chosen for strategic locations with a proven track record of appreciation.
Conclusion
Both new launch and resale condos have their unique appeal. Your choice depends on your timeline, financial goals, and lifestyle needs. A new launch condo with modern features and potential of capital appreciation.
If you need to stay in right now, then resale is your option"