How to Get Great Investment Deals in Singapore
How to Get Great Investment Deals in Singapore
You can find a good property deal in Singapore through:
- Uncompleted/New property sale buying off the plan. Usually known as New Launch in Singapore. (New property from developers - most commonly purchased by foreign and local investors)
- Resale or Subsale
New Property
Finding that Great Deal through New Launch
Buying off the Plan (New Property)
Uncompleted (New property from developers)
Many residential Singapore property sales involve buying property in Singapore at new launches. These are usually homes under construction, being sold new by developers. Any developer who intends to carry out a project of more than 4 units of housing accommodation is required to obtain a Housing Developer's licence before they can start construction.
After that a Sale License (subject to government conditions & with the intention to protect property buyers in Singapore) is required for the developers to proceed to sell units in his development. They will then officially launch the development for sale, usually with publicity and ads in the major newspapers. A large development may even merit a media campaign. There is also usually a showroom, with models and showflats, where the preview takes place.
Buying off the Plan (New Property)
Uncompleted (New property from developers)
Many residential Singapore property sales involve buying property in Singapore at new launches. These are usually homes under construction, being sold new by developers. Any developer who intends to carry out a project of more than 4 units of housing accommodation is required to obtain a Housing Developer's licence before they can start construction.
After that a Sale License (subject to government conditions & with the intention to protect property buyers in Singapore) is required for the developers to proceed to sell units in his development. They will then officially launch the development for sale, usually with publicity and ads in the major newspapers. A large development may even merit a media campaign. There is also usually a showroom, with models and showflats, where the preview takes place.
How to Get that Great Deal
- Attractive Pricing. Developers usually give "Early Bird Price" to entice take up rate for their new properties.
- Choice unit. Buyers usually get to choose the "best possible" unit.
- Lesser upfront Capital. Progressive Payment Scheme.
- Some properties maybe even cheaper than the resale units available in the market.
Disadvantages:
- Balloting involve when market is hot.
- Some new properties are selling at future price.
- No immediate rental income.
- Need an experience to get the "best possible property".
VIP Preview Sale Procedure
Usually even before official launch of the development for sale, the developer will soft launch it with a preview, called a VIP Preview, where buyers are invited to buy units first.
The advantages of buying at this point are:
The moment the developer removes the discount, their unit is automatically worth more. Maybe 10% more. Some investors sell or flip their buys for a quick profit, in a sub-sale. So for an outlay of $200,000 on a $1,000,000 unit in a rising market, he could be looking at $100,000 profit within a couple of months. (The reverse happens in a falling market.)
If you are interested in buying property in Singapore, previews are a good place to be at.
Usually even before official launch of the development for sale, the developer will soft launch it with a preview, called a VIP Preview, where buyers are invited to buy units first.
The advantages of buying at this point are:
- First pick of units.
- Usually lower prices, as developers normally price to stimulate demand at this point.
- They may give a discount known as the Early Bird Discount, of typically up to 10 to 11%. (Subsequently developers remove the discount to maintain their profitability.)
- Usually attended by savy investors & experienced property buyers, as this is where the most value-for-money choicest picks are to be had.
- Typically up to 20% downpayment within 3-4months time. Usually no payment required until at least another 12 to 18 months time.
- Developers' guarantee period.
- All monies from buyers goes into a project account instead of the Developers' account. Monies can only be withdrawn for project related matters.
- 75% of the initial downpayment will be refunded in case buyers decide not to go ahead with the sales.
The moment the developer removes the discount, their unit is automatically worth more. Maybe 10% more. Some investors sell or flip their buys for a quick profit, in a sub-sale. So for an outlay of $200,000 on a $1,000,000 unit in a rising market, he could be looking at $100,000 profit within a couple of months. (The reverse happens in a falling market.)
If you are interested in buying property in Singapore, previews are a good place to be at.
Resale Property
Getting that Great Investment Deal through Resale/Subsale (Immediate occupancy)
How to Get that Great Deal
- Register yourself with a realtor.
- Let them know the property you wish to invest in and the estimate price you would like to pay for the property.
- The realtor will keep you updated on potential deals.
- Maybe difficult to agree on a price.
- May not be able to get the best possible property.
- Opportunity for further capital appreciation may have diminished with age.
Buying Procedure
When a buyer decides to buy a property, he gives a cheque of 1% of the purchase price to the seller. In return, the seller issues an Option to Purchase to the buyer. The OTP states that for 14 days, the buyer can choose to proceed with the sale. If not, the buyer loses his 1% deposit.
However, the seller cannot sell the property to another buyer within the 14 days, nor issue an OTP to another buyer. If the buyer chooses to proceed with the sale, he hands over 4% of the purchase price to the seller's lawyer. After that, it is mostly the buyer who has to do things (paying stamp duty, find a solicitor, get bank loan etc).
The general procedure for buying resale condos is:
The advantages of buying at this point are:
However, the seller cannot sell the property to another buyer within the 14 days, nor issue an OTP to another buyer. If the buyer chooses to proceed with the sale, he hands over 4% of the purchase price to the seller's lawyer. After that, it is mostly the buyer who has to do things (paying stamp duty, find a solicitor, get bank loan etc).
The general procedure for buying resale condos is:
- Initial 1% cash of the purchase price called the "option fee" (writing a cheque) is made to the seller upon buying. The seller then issues the "option-to-purchase" document to the buyer via his agent or himself.
- The "option-to-purchase" has a 14-day grace period (counts from the date of the issuant of the "option-to-purchase"), which deters the seller from considering other offers.
- The buyer will need to exercise (i.e. signing the acceptance copy) the "option-to-purchase" & made payment for next 9% cash called the “option exercising fee” (writing a cheque) within or by the 14-day grace period, preferably in the presence of the buyer’s solicitor. Failing to do so will result in the initial 1% “option fee” to be forfeited by the seller.
- The balance 90% of the purchase price will be due upon completion date of the transaction, usually 8 to 10 weeks from the date of exercising the “option-to-purchase”. Shorter or longer completion period has to be discussed and mutually agreed by the seller and buyer.
The advantages of buying at this point are:
- If invested wisely, in purchasing a property may run you profit.
- Lower upfront commitment.
- Making repayments on your mortgages like a type of forced savings. The more you pay off, the more of your home you will own.
- As long as your property is appreciating or maintaining its value, you are growing an equity (ownerships) in your property. This equity can later be used to secure further loans and will also provide security in retirement.
- There is no estate duty tax in Singapore and all your investment profits are free from capital gain tax.
- If you purchase a property and rent it out for investment purposes ( you become a landlord), the interest on your mortgage payment is tax deductible.
- Owning your own home brings sense of satisfaction, security and stability.
- There are no lease conditions to worry about and you are not subject to the whims of a landlord who has control over the length of your tenancy and the rent.
- The satisfaction of knowing you are part of the selected few who owns a home is most gratifying.
- Provide you with a permanent home which you can find tune and sculpt to compliment your lifestyle. Restriction in leased property restrict you from doing so. Also, additions and alterations to the premises may enhance the value of your property at the same time.
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