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Buying A New Launch Condo (Things To Look Out For)

Compared to a ‘pre-loved’ product, most of us would prefer to buy things brand new. This is especially so in property, since early bird prices have and often still beat out resale prices. 

And that’s why one of the most common questions that we get is: what do I need to look out for when I want to buy a (new launch) condo? 

It’s not all preference—there are plenty of advantages to buying a brand new condo instead of a resale like: a year’s warranty on all your new property’s defects, maintenance and repairs, early bird discounts, or sometimes, deferred payment schemes.

However, new launches also come with their own potential pitfalls: defects, design differences compared to the showflat and needing to wait three years before moving-in/renting out. 

So…what do we need to look out for when we want to buy a new launch condo?

The Three Buyer Profiles (And Their Requirements) 

Before we dive straight into the topic, we’ll need to talk about the three types of buyers. Each buyer purchases property for a different reason and those reasons will change the points they need to note. The three buyer profiles are: 

  1. En Bloc Then Talk 
  2. Maximiser Investor 
  3. Stay-Home Investor

The En Bloc Then Talk 

“I’m buying a property to own a home.” If buying real estate is a long term plan for you—one that is more concerned with sheltering and growing your family instead of profitability, then it’s likely that you’re part of the En Bloc Then Talk (EBTT) team. 

Unlike the other two who do prioritise investment opportunities, you will only consider selling if a developer offers a high price. Why? Because this is it—you bought this place intending to live here for the rest of your life. You’ve probably sunk in considerable renovation and redesign costs to tailor it to your specific tastes too. 

Hence, unless it’s an irresistible (en bloc) offer, there’s no need to waste time talking! 

If this is you, we recommend a long term strategy. Adhering to our Umbrella Approach, we’ll still make sure that you have the option to exit if need be by picking a suitable entry price. However, we’ll prioritise amenities and conveniences suitable for you and your family at every phase of your life. Your checklist may include things like: 

  1. Enough apartment space even after the children grow up 
  2. Nearby nurseries, kindergarten and primary schools 
  3. An MRT station within 5 – 7 minutes walk 
  4. Supermarket for grocery shopping 
  5. Malls for other shopping needs (a few minutes drive or MRT ride away)
  6.  Recreation centre for children, adults and elderly (CCs, etc) 

Depending on your desired family lifestyle, you may also prefer to be near parks or sports complexes for weekly family activities.

The Maximiser Investor (This is HUUUUUGE)

On the other hand of the spectrum, we have Maximisers who prioritise squeezing every last drop of profit available from their property. 

Make no mistake—not everyone can compromise on their comforts and live with relatives or rent cheaply to collect rental income from their property. If this is you, we definitely salute your perseverance. 

The good part is that investing like this is one of the most efficient and profitable ways to grow your wealth. It also gives you more holding power: you can continue collecting rent until the price is right, then sell it for a profit to either cash out or reinvest in another property. 

The goal is to do it enough times and eventually get to the point where you can afford multiple properties and won’t need to trade comfort for cash. By then, you can simply sit back and collect rent. 

To Maximisers, numbers are everything. Unit selections revolve around the entry price, rental yield, capital appreciation and tenant pools.

 

Beware! 

Property investments still come with risks. Many would-be Maximisers often give in to greed and over leverage their finances in order to afford a property. Under our Umbrella Approach, we always ensure sufficient cash reserves and buffers. Properties are illiquid assets and you never know when you’ll need emergency cash. 

Additionally, landlords have their own challenges too. Finding tenants quickly can be a challenge and it is inevitable that there will be months in between where you will need to be able to pay for the mortgage and upkeep without rental income.

Emotional Buying and Overleveraging Your Finances are one of the common pitfalls that homebuyers encounter. Find out more in our upcoming article.

The Stay-Home Investor (Staying in Since Before CB)

Unlike the EBTT or Maximiser crowd, the Stay-Home Investor takes the middle road. Although they’re looking at a profitable exit strategy for their property, they also fully intend to enjoy the lifestyle benefits of a full condo’s facilities. Basically, they’ll stay at home while waiting to reap the benefits of their capital gains a few years later.  If this sounds familiar, then you’re likely to be a Stay-Home Investor.  Depending on your family structure, the new home’s requirements will vary. This is especially so when including children in the equation. For example: 
No Children  Young Children Teenagers

1. Smaller unit for two

2. Facilities that cater to individuals

 3. Nearby public transport

1. Slightly larger unit 

2. Facilities that cater to family activities

3. Within 1 km of primary schools

1. Large unit with a room for each child

2. Facilities for family and individuals

3. Nearby public transport or child’s school

If you’re single or without children, you have the flexibility of shifting from house to house. However, once there’s a baby, it’s more likely that you’ll settle down. (Especially if you want to enter your child into a popular primary school!)  It doesn’t always have to be about children though—you may have gotten to know the neighbours and enjoy living in the community.

Our Checklist

As seen above, there are many different reasons why people buy properties. Although each buyer profile will certainly have their own personal checklist, we’ve compiled all the main points that they consider. 

With no further ado, in no order of priority, here’s our 10 things to look out for when buying a new launch condo

  1. Capital Appreciation & Rental Yield
  2. Tenant Pool
  3. Land Size & Number of Units
  4. URA Master Plan
  5. Nearby Schools
  6. Connectivity
  7. Comparative Market Analysis (CMA)
  8. Entry Price & Land Price
  9. Facilities
  10. Developer

#1 - Capital Appreciation & Rental Yield

The first thing that property investors zoom in on when evaluating a property. Even if you are an EBTT not looking to sell your property, this is still a point to consider to ensure that you have options to cash out when you need to. 

(You never know when you’ll need to move!) 

To Stay-Home Investors, most of their investment plans revolve around capital appreciation as they are not planning to rent out their unit. On the other hand, Maximisers are more likely to prioritise rental yield if they are not planning to sell quickly. This also means more holding power, as there is less urgency to sell.

One of the crucial parts of calculating capital appreciation (and thus your capital gains) is factoring in all the additional costs on top of the price of the property. Remember that selling your house will also come with fees!

Similarly, be sure to calculate your net rental yield instead of just your gross rental yield for a more accurate judgement on the profitability of your property. Being a landlord is no easy task, and comes with a host of other upkeep costs.

#2 - Tenant Pool

Speaking of rental yield, we must talk about the various tenant pools. Different tenants have very different requirements for their rental home. Currently, there are three main types of tenants in Singapore: 

  1. Expatriates 
  2. Local Millennials 
  3. Foreign Students

Expatriates

One of the most highly sought after tenant pools in Singapore, expatriate tenants usually come with corporate tenancies or year-long tenancies, excellent for landlords who want to ensure consistent cash flow. 

Single expatriates usually don’t require large living quarters (1 to 2-bedders are ideal). Instead, they have higher requirements for facilities, centralised locations and nearby amenities. Popular areas include Orchard (including Ardmore), Tanglin, Holland Village, Bukit Timah and the East Coast, but those areas have recently seen a drop. 

In contrast, expats with families are choosing to live near Serangoon Gardens, Hougang and Punggol, where there is better value for money and more International Schools. (expatliving.sg)

Local Millennials

In recent years, an increasing number of millennials are now considering renting instead of buying a property. According to the Straits Times, one in five young couples are living in rental flats upon marriage. With this shift in mentality, the property market is now welcoming an influx of local tenants, most of whom are PMETs (Professionals, Managers, Executives & Technicians).

This shift has also been hastened by the circuit breaker period, during which many young adults were forced to spend extended periods of time with family members, increasing friction and the need for personal space. Furthermore, the extended waiting time for BTOs has added to the demand for renting a property.

Budgets may vary between single professionals and young couples with combined incomes, but their considerations include condo facilities, being located in a matured estate and having access to a nearby MRT station.

Foreign Students

Not many are aware that there is a strong tenant market of foreign students in Singapore. With internationally renowned universities, Singapore attracts flocks of foreign students yearly. This means that university dorms are often oversubscribed with many students struggling to secure on-campus accommodation. 

Properties within 15-20 minutes of the nearest tertiary institution can be a good source of rental income as landlords can easily find foreign student tenants. Additionally, a good landlord will always be referred by students to their friends, ensuring a chain of referrals and little chance of vacancies.

#3 - Land Size & Number of Units

If you’ve shopped around for condos on your own, you may know some of the benefits of a large land size. Depending on the ratio of residential blocks versus facilities, having a large land size may mean more spacious units, a greater variety of facilities, less overcrowding and more privacy. 

Having a large number of units, on the other hand, would mean lower maintenance fees but also more noise pollution, lack of privacy and often overcrowded facilities. 

For EBTTs (or long term Investors) thinking of potential en bloc though, both may work against your agenda. Many developers avoid large land plots and developments with many units due to: 

  1. The difficulty of getting 80% – 90% agreement from owners to sell 2. The cost of buying up so many blocks (plus an additional 5% stamp duty!)

Credit: MoneySmart 

So if you’re looking for a place with en bloc potential, you may want to shop around a bit for developments with smaller land size and fewer units.

#4 - URA Master Plan (AKA ‘Transformation’)

Increase in condo prices in Jurong during and after the Jurong Lake ROH plans

Whether you’re a EBTT or one of the two Investors, the most important thing to note about the URA Master Plan is how soon will you be able to capitalise on it

If the plans will be completed within a year of your condo’s TOP date, then that may be a good point to consider, especially for the potential bump in your unit’s value. However, if it’s 10 or 20 years later, then it may as well be nonexistent. After all, nobody waits for a decade to take an MRT or go to a mall!

#5 - Nearby Schools

EBTT parents or Investors looking for tenant families will definitely want to consider developments near to popular schools. In particular, parents looking to register their children will want to scrutinise distances even more closely, and ensure that their new address is within 1 km of their desired school

Even those with older children attending secondary schools or tertiary institutions might want to consider the travelling distance and time. (Taking the MRT for 45 minutes every morning to school is no joke!)

#6 - Connectivity

Complete MRT plan from LTA

Not just to schools, but to all other parts of Singapore, a development’s connectivity is a significant plus point for any buyer or tenant. With an average of 7.5 million people riding public transport in Singapore daily, it’s no surprise that any property within 5 minutes of an MRT will be quickly snapped up. 

Unfortunately, connectivity also comes with noise pollution. MRTs and vehicles are not quite passersby, meaning that your peace may be disturbed every 5 minutes by the sound of zooming cars or trains. 

If peace and quiet is high on your list of requirements, you may want to consider a unit a little further away from MRT stations or major roads.

#7 - Comparative Market Analysis (CMA)

A comparative market analysis is a tool that we use to estimate the value of a specific real estate property by evaluating similar ones that have recently sold in the same area. It can be extremely challenging to reliably estimate the fair market value of a home 

because there are a significant number of factors that go into determining how much a specific property is worth. 

We consider the prices of similar properties within the area, size or other comparable selling points to get an accurate idea of a unit’s value. To do so, we have specialised

data collection and analytics software that help us identify, compare and estimate property prices.

#8 - Entry Price & Land Price

Entry prices alone are not necessarily the most accurate factor to determining whether a project is a good deal. They are definitely essential for keeping within budget, but they’re not indicative of the property’s value. (That’s where our CMA comes in) 

A simple way of gauging though, is by comparing the land price with the entry price. Although it may not be an absolute indicator (there are several other factors including the costs of designing and constructing the project), it is still a good benchmark for the developer’s breakeven price.

#9 - Facilities (And Maintenance Fees)

It’s no surprise that the facilities each development offers is important or even essential to a buyer. EBTTs and Stay-Home Investors will take personal interest in a condo’s facilities as they will be making use of them themselves, however Maximisers should also take note. Having a wider variety of facilities means being able to appeal to more tenants, the more popular ones being gyms, lap pools and barbecue pits. 

However, more complex facilities equal higher maintenance fees, which are covered by the landlord. Remember to factor in upkeep costs when setting your rental prices! 

Here is a rough guide to average condo maintenance fees per month (condosingapore)

  • Mass market condos with more than 200 units: $200 to $300 
  • Mid-tier condos with fairly large grounds: $500 to $700 
  • Luxury-end condos: Around $1,000 or more 

If facilities are your priority, be sure to get an estimate of your monthly maintenance fees.

#10 - Developer

It’s important to do due diligence on the developer in charge of your project. Track records are a good way to judge, but do note that well-known developers are still likely to engage smaller contractors for parts of the project. Each developer has their own unique style, so knowing what they focus on can also help point you in the direction of your dream home or investment property. Here are some examples: 

Oxley Holdings 

Formerly known as Singapore’s King of Shoebox, Executive Chairman and CEO of Oxley Holdings, Ching Chiat Kwong is known for his bold initiatives. Having pioneered the concept of shoebox apartments (units of 500 sqft or less), Oxley’s developments are perfect for buyers in Singapore’s mass market, with developments like Affinity @ Serangoon and Riverfront Residences. 

Guocoland 

One of Singapore’s top property developers, Guocoland is well-known for its namesake Guoco Tower as well as the super-luxe development, Wallich Residences. The developer has been expanding its ventures into the luxury condominium market, entering the fray with Midtown Bay, Meyer Mansion and The Avenir, all of which exceed $2,700 psf in price! 

Aurum Land 

An award-winning boutique property developer, Aurum Land was incorporated in 1982 and known for its creative designs that combine functionality and aesthetics. A subsidiary of real estate and construction titan Woh Hup, Aurum has been gaining greater market recognition in the last decade. It has developed the heritage inspired freehold projects 1919 and The Orient. 

Occasionally, you may see two developers listed under a project, indicating a collaboration, like these: 

  • Sengkang Grand Residences (CapitaLand & CDL) 
  • Forett at Bukit Timah (QingJian Realty & Perennial Real Estate Holdings) Woodleigh Residences (SPH & Kajima Development)

To avoid surprises (and unexpected expenses), find out more about Singapore’s property developers. You can check them out in this comprehensive list.

Conclusion

There are many things to check on before considering a unit, just as there are points that may apply more to you than to another buyer. With the latest ABSD rules, first time and genuine Singaporean home buyers are in a more comfortable position to choose a home that best suits their needs and objectives.

At RoS, our aim is to provide every client with suitable advice and a secured entry and exit plan to achieve their property goals. We do this through our Umbrella Approach, a method to analyse, plan and execute property decisions tailored to every buyer’s specifications. 

If you’re looking for honest and objective property advice, book an appointment with us.

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