Should I Invest In New Project or Resale condo?

Should you consider buying new project or resale condo when you are financially ready? Let’s say you have lived in your current property for years, and accumulated quite some savings or made good profits from stock market or bitcoin investment, you are thinking if there are good buy property to part your money either earning rental income or capital appreciation in the upcoming new condo or resale condo

This is the typical scenario in Singapore which is one of the highest home ownership rate country in the world. For the case of the first home buyers, we will discuss it in another article. When it comes to choosing a condominium for upgrading or investment, there are obviously two options, new project from developer or completed home in resale market. Either for own stay or rent out, there are always pros and cos for both new project and resale condo. If you plan to buy a private condominium, here are some factors to be considered when you compare which one to choose.

1. Location and amenities

New project is usually less choice of location and amenities because it’s developed from Government land Sales which is often located in some developing area. However, resale homes are all over the islands, especially in the central region where there are so many aging condominiums in the vicinity of abundant amenities.

2. Price and payment scheme

In the same area, a new residential project will well-known sell at a higher per square foot (psf) price than a resale condominium does. New project is fine-priced by the developer which is based on a basket amount of land cost, construction cost, marketing cost and profit margin. Developer will thus control the selling price, and prospective buyers have to accept it, which is also recognized as the market valutation by the bankers whom you are about to apply home loan.

Resale condo is usually priced based on the combination of recent competitive transactions and purchase price of the seller.  There is some space you can offer and negotiate the price with the individual seller as private treaty. 

The higher psf price in new project doesn’t mean you will surely pay a higher quantum price too. With more efficient design and thoughtful layout, the overall sellable area of new home may be lower than a resale home which is often with much bigger area including household shelters or even bay window and plant boxes.

3. Choice of units

For new project when you are VIP clients at its initial launch, you have wide available units to choose which is easily over 100 homes.  You can book your unit with preferred facing, stack and storey during the ballot process. As we know, those variable attributions will determine the premium price you can ask in the resale market in the future. After all, this is especially important if you have decided to spend a large amount of your savings to buy a dream home.

In resale condominium market, there are only few owners are genuine enough to sell their units. Your preference often cannot be satisfied in a particular development or another. It’s not surprise that you need wait for the choice unit for sale and be willing to give competitive offer among other buyers. 

4. Size and space per dollar

When come to new project, many buyers feel the squeeze as developers downsize apartments to find ways to keep overall prices within the reach of buyers. For example, a 3-bedroom apartment below 1,000 sqft is quite common in the current developer sale market. A common bedroom below 8 sqm is not fresh news anymore. Quantum price play the game amidst a series of cooling measures and increasing higher land cost.

Resale or older condominium are usually larger with more spacious bedroom if you pay the same amount of money.  Those resale homes were developed in old age when property finance market was rather loose and family members are bigger. As the society evolves, the household size is smaller and the number of single homeowners hike too, given low birth rate and high living expense in an international metropolis like Singapore.

Developers are downsizing amid acute price pressure from buyers. Experts say that home quantum prices of up to $1.5 million are the most popular among first-time buyers and second-time investors in the light of the property cooling measures that have tightened their loan limits.

Developer also pointed out that homes in the past were probably larger as they included bay windows, planter boxes and household shelters in the total strata area, yet the actual livable area could have been less. new homes are modular and flexible. The household shelter is now centralised at the fire escape staircase, so there is a more efficient use of space in the apartments.

5. Design and layout

This is where new project conquers old condominium. The design of new project is resolutely future-oriented and with a sprinkle of creativity and technology evolution.  

When we visit the showflat, we are offered by all kinds of design ideas such as high ceiling, kitchen island, open-concept kitchen, flexible space, walk-in wardrobe, dual key, dual balcony, patio-home balcony, smart living technology and so on.

What’s more, new project home are bought together with fashion furnishes and refined fittings. You can enjoy full-furnished kitchen with brand-new appliances, full-flooring ground, air-conditioners, sanitary fittings, built-in wardrobe, digital locks and so on.    

For old condominium, there are old furnishings and decoration. It’s what you see what you get. A personalized renovation is necessary to meet your living preference, which will easily charge you additional cost up to hundreds of thousand dollars. On the contrary, everything is brand new and comes with a one year defect liability period when you buy a new project.

6. Landscape and facilities

New project will offer you with modern landscape and many up-to-date condo facilities when a middle and large-scale development is considered. However, out-of-dated and inadequate facilities can be found in many old condos. More and more multiple 50m lap pools, multiple tennis courts and multiple clubhouses appears in a single new development. Resort living facilities like aqua gym, infinity pool, steam room, and micro bubble pool stand in upcoming condominium.

Highpark Residences in Sengkang West is famous for its enchanting wonderland waterscape, 115 condo facilities, and over 10 complimentary classes from its club to cover your hobby. Kingsford Waterbay in Hougang is well-known for its 250-meter long pool rivers attached many facilities. Those condominiums even also offer dedicated childcare centres and retail shops for its residents.high park residences landscape facilitiesKingsford Waterbay long river pool

Gem Residences which is located in Toa Payoh and builds a pool for dogs, provide comprehensive concierge service such as medical checkup, housekeeping, enrichment classes and many more.

7. Smart home or traditional home

As the development of technology disruption, smart living come into new residential projects. For example, The Visionaire EC and iNz Residences developed by Qingjian Realty have offer small home appliances in apartments and common area. residents with smart mobile home can conveniently control light, washing machine, air-conditioners, in-house camera, unit main gate lock, etc from the place of working or holiday.the visionaire new condo smart home living

The new luxury condominiums such as Martin Modern in District 9 and 6 Derbyshire in District 11 provide smart living packages for their residents. The emerging technology such as the Internet of Thing, Artificial Intelligence and Big Data is going to significantly change our livings.  The upcoming new condominium projects will continue to catch up with the trend.

For old condominium, your first impression is that look like a traditional living. You need invest in a fair amount of money and work from the scratch to enjoy the smart living. This is the extra cost as well.

8. Demand from tenants

We as human being are fond of the new and tired of the old. Tenants prefer to new project, they love new design, new furnishes and facilitates if their budget is not the concern. New project can generate high rental income as well. Old condominium may ask for lower rental with high servicing fee if count into the age of used furniture and appliances.

9. Resale value and potential upside: capital appreciation is the byproduct of rental yield

The resale value of a property is by-product of its demand from tenants and prospective buyers. Like new car and resale car, people prefer to the new than the old if budget is not a limit. When there are more demands for new homes, there are high capital appreciation to be expected too. 

We have heard that many old condominium owners have enjoyed the handsome potential upside for their aging properties during the year 2007 to 2013. At that period of time, newly-completed property owners were even happier because they can make more profits if they sold. That was a special stage of time when there was a significant mismatch between housing supply and demand for both public and private sectors. We were short of houses with increasing population.Caspian vs The lakeshore price trend

Nowadays when we look at the market, there are sufficient supply of both public and private houses year after year while population grow is still quite moderated. Besides, the government has also regulated the property market with fine-tuned policies. When prospective buyers are surrounded by so many condominiums, they will most likely head to the newer ones.

10. Risk management

When compare the risk level of property investment between new project and resale home, we can consider it from the point of entry price and price resistence during the downtrend market. 

The entry price at which you buy property is the critical factor to determine how much risk you will encounter during the recessive market. Let’s look at the following chart about risk analysis on new project and resale condo. For new project, more first-hand owners bought at the similiar prices, it’s very natural that home owners will try the best to protect their purchase price otherwise they will suffer the loss to some extence. There are strong price resistence among all the home owners to sell low. And potential risk is low as well.risk analysis for new launch and resale home

However, for resale homes, individual owners entered at different prices which is usually higher than the launch price years ago. Thus individual owners in the resale homes will expose to different level risks which is in proportation to their entry prices.  Those who bought at the launch price take the lowest risk. Those resale buyers in this development will carry over more risk which actually cover the profits from both developer and first-hand owners sold to make.