New Launch VS Resale Condominiums! When choosing between a new launch or an existing resale condominium, many Singaporeans face dilemmas trying to make an informed decision. Depending if you are a property investor or a homeowner, here are some things to think about! Halfway into 2020 in June, we are still unsure when will the global COVID-19 end. Understanding your motivations to sell is key.
New Launch VS Resale Condominiums: Price
Wallich Residence | Source: The Straits Times
Price is definitely one of the most important considerations for condominium buyers when choosing between a new condominium or one from the resale market. Generally, older condominiums are larger and offer a lower per square foot prices than new condominiums. However, with well-designed layouts and space-saving fittings, the space in new condominium units are usually more than adequate for comfortable living.
In addition, older condominiums would be cheaper as they get closer to the end of their lease term. If the condominium is on a 99-year leasehold, the lease term will reduce as time goes by. The reduced lease term will decrease the valuation of the unit. However, developers can launch the condominium at a discount to get buyers to buy during the initial phase of the condominium launch.
Let’s take a look at a case-study…
|Condominium||Unit||Size||sold date||sold price|
|The Trilinq||7th floor 3 bedrooms||915 sqft||May 2019||S$1.49 million|
|Parc Clementi||7th floor 3 bedrooms||915 sqft||August 2019||S$1.48 million|
A discrepancy of $10,000 in Clementi Condominiums
We observe a price disparity in 2 Clementi condominium units located only adjacent to one another. A 7th floor 3 bedrooms 915 sqft unit at The Trilinq is sold at S$1.49 million in May 2019; a similar 7th floor unit 3 bedrooms 915 sqft unit at Parc Clementi is sold at S$1.48 million in August 2019 during its launch. That is a discrepancy of $10,000 for a new unit that has 7 years more on the lease than that of the resale unit!
New Launch WINS: Furnishing and Facilities
In a resale condominium unit, there will definitely be wear and tear to the furnishing, and you may need to renovate the property. Issues with wiring or plumbing would require major renovations which would therefore increase your expenditure on the resale unit.
Apart from the initial renovation, an older condominium may require a higher monthly maintenance cost, especially when the communal areas are old and in lower condition. In these situations, higher sinking funds will be charged for older facilities, roofing or a one-time charge for facility maintenance. The maintenance fee is usually short-term and goes to pay the salary of the maintenance staff and condominium management.
In contrast, everything is new in a new condominium. This includes a one year defect liability period, which acts like a one-year warranty, so there is no need for any initial maintenance expenses. If there is anything wrong with the unit in terms of structure, wiring, plumbing or appliances, the developer will be onsite to fix it. Also, since the communal facilities are also new, there would be lower monthly costs to maintain these facilities.
Overall, a new condominium would more likely provide more bang for your buck!
New Launch VS Resale Condominiums: Living conditions
It is easier to know what to expect with a resale condominium such as traffic noise, and the look-and-feel of the facilities. For new condominiums, buyers can deduce the living conditions based on the floor plan, site plan, show units and also show flats. By observing the roads and the neighbouring blocks, buyers would be able to tell if their preferred unit will be sheltered from traffic noise.
A new condominium has facilities that are brand new, such as swimming pools, swanky state-of-the-art gym equipment, and even creative play areas for children. Some new condominiums also have modern features that older condominiums do not have; for example, supermarkets, concierge services, and even smart home features pre-installed. This is a home that is already set-up to make your life easier!
In addition, owners can create their own community culture by being involved in the management committee in the new condominium. In an older condominium, new buyers would need to adapt to the existing culture.
Having newer facilities would enhance the rentability of the condominium unit. Tenants usually prefer newer developments with more newer and varied facilities. Given that smart homes are the new trend in lifestyle experience, new condominiums with smart-home features would be popular with young tech-savvy tenants. Appliances and fittings are also usually newer and not break down so often. As such, they do not need to replace at their own expense. They are also able to enjoy a new unit with similar pricing.
New Launch VS Resale Condominiums: Rentability
A resale condominium unit can be rented out immediately, but a new condominium may take at least two to three years before it could be rented out. However, when the new condominium is built, mortgage expenses will be lower and costs such as maintenance fee and property tax will not be payable, therefore matching the cash flow of the rented resale condominium. It would also be easier to predict the rental income of new units, just by looking at the current rental rate on the market. It usually will not differ too much from the market rental.
Another advantage of a resale condominium in terms of rental is that you will get a sense of the profile of tenants or owners in the compound. If you are planning to live in the unit, you can get a good gauge of your neighbours. If you are looking to rent, you will know what kind of tenant profile will most probably be interested to rent. Tenants of similar profile usually stay together in the same compound as a mini enclave.
For new condominiums, you would have the luxury of choice to pick desirable units. If you have preferences for a specific auspicious unit number or block number, you would still have the choice. In contrast, for resale condominiums, you could only pick from the available units which may not be desirable or fully suit you. If you are looking to rent out your unit, or to sell it after a few years, a new condominium unit may be a more worthy investment due to its higher expected returns.
New Launch WINS: First-mover advantage
Avenue South Residence | Source: ShowFlat.info
For new condominium buyers, they enjoy a first-mover advantage as they are more likely to be buying the condo at a floor price similar to what the other owners buy at launch. On the other hand, resale sellers will usually charge a premium to sell to the resale buyers. They sell with the aim of earning a margin, or at least breaking even. Otherwise, they may not be willing to transact from holding the unit and also for recouping some renovation cost.
Making your next big property decision?
There are many processes, tips and tricks to look out for when you make a property decision. Although we do not know when will the ripple effects of Covid-19 end, many of the considerations are timeless.
Do share your opinions on this article with us by dropping us an email or contacting us through our Facebook and Instagram pages; what age group do you fall under, and do you think you will still want to buy a cheaper condominium after reading this article?
If you’re still unsure of what property best suits your needs, no matter your age group, do feel free to reach out to us! At Home Quarters, we take all your priorities and circumstances into account before we advise you on how to sell your property, or what property we believe you should buy.
We’d be happy to provide you with various analyses, advice, and any sort of assistance you may require, whether you’re a buyer or a seller. Leave your contact details and any queries down below, and we’ll contact you ASAP.
That’s it for this article! Stay safe everybody, and remember, call Home Quarters and start packing!