Every three seconds, a new condo development sprouts up in Singapore. Or at least it feels like it, if the rapidly disappearing tracts of green space are anything to go by. And even in a sluggish property market, many developers are still making brisk sales.
As most Singaporeans have the luxury of living with their parents until their property is built, buying uncompleted property that will only be ready for habitation in 4-5 years is very common here. However, few people consider the fact that purchasing property in uncompleted developments is riskier than buying built or resale property. Here are three major risks.
1. Not being able to inspect the property beforehand
The brochures looked stunning and you were agog when you visited the showroom. Well, duh, of course they were nothing less than perfect. It’s the developer’s job to make the property look as tantalising as possible. But when you actually see the finished product, don’t be surprised if it’s not exactly the stuff of your wildest dreams.
Penthouse buyers at fancy condo development The Aristo found that out the hard way when the gorgeous infinity pool they’d been promised turned out looking more like a flooded prison cell. And let’s not even mention the barrage of complaints from disgruntled DBSS buyers about defects and poor workmanship.
2. Risk of the developer going bust
When you buy a property that already exists in the real world, come hell or high water, so long as you manage to cough up the cash, that property will be yours. On the other hand, when you buy uncompleted property, you basically start paying for something that doesn’t exist yet. And things can happen that could screw up even the best laid plans.
One of the biggest screw ups would be the developer going bankrupt. That doesn’t necessarily mean you will lose all the money you’ve sunk into the property, but it will result in a truckload of stress as the outcome of the project hangs in the balance.
If the project is nearing completion, you might be in luck as the contractors will be able to finish it thanks to the fact that your money has been paid into a project account, which cannot be accessed by the developers. You might decide to band together with other buyers to finance the unfinished construction, or a new developer might be appointed. However, in a worst case scenario, yes, you can lose money.
3. Misleading incentives
The property market in Singapore is not so hot now, so developers resort to all sorts of sales tactics to make their properties look more affordable to buyers. The result is that it’s easy to get blinded by deceptive discounts and incentives that really don’t give you any benefits at all.
One tactic is to mark up the price of units before giving a “discount” or cash rebate that will still have you paying market rate and above. Other incentives include freebies like renovation packages or furniture. Of course, the estimated value of the freebies is often inflated by the developer.
If a developer is throwing in a bunch of freebies and discounts, don’t jump right in like some sales-crazed auntie at NTUC. There’s no excuse for not doing your own research to ensure you’re actually getting a good deal.
Have you ever suffered a bad experience when buying uncompleted property? Tell us what happened in the comments!