Depending on who you ask, Singapore is either on track in 2017 for greater success, or is dangerously playing with fire as it tries to involve itself in international diplomacy. Yeah, you’re right, I should really stop talking to uncles at my neighbourhood coffee shop. Especially after they’ve downed several bottles. Each.
But here’s the thing – regardless of what might be in Singapore’s future, you’ll still need a place to stay and right now seems like a great year to invest in a condominium unit. Not only are prices still low because of the ongoing cooling measures, but developers are probably getting desperate and may be willing to push prices lower. But that doesn’t mean you should just grab the first bargain you see – here are three things to look out for when buying a condo unit.
1. How much longer before the property TOP date?
There are essentially 3 types of condos in the Singapore market. The first two are pretty self-explanatory. New launches are little more than a floor plan and an artist’s impression – developers have a concept in mind and are hoping you’ll share their dreams… which are at least 2 to 3 years away. On the other end of the spectrum are resale units, which means you know exactly what the flat you’re getting looks like. Unfortunately, you’re no longer the first occupant of the property and you’ll have to hope that you don’t find any skeletons in the previous owner’s closets. Literally.
The third type is known as “going to TOP”. They’re probably the best of both worlds. Here’s why:
TOP stands for Temporary Occupation Permit. It’s the date when you get the keys to your condominium unit, so under most circumstances, you would prefer it to be as soon as possible. This means that, unlike a new launch, what you see is what you get – no surprises. And unlike a resale unit, there’s no need to worry about wear and tear on your fixtures and fittings.
If you’re buying this condo unit as an investment, getting a condo unit that’s going to TOP means you can start raking in rental income. On the other hand, if you’re planning to start a family, or paying rent for your current place, it’s in your best interests to move into the condo as soon as possible.
Another major reason why you’d want to find a property with a TOP that’s soon approaching is that you’d want to take advantage of the lower home loan interest rates in the market right now. Because the bulk of your loan disbursement only happens at TOP, you don’t want to be locked into a home loan package at a time when interest rates are starting to climb.
Ideally, you should be looking for condos that will TOP within the next 12 months, if not earlier.
2. Is the per square foot price competitive?
While every condo is different, one way to determine if you’re getting a bargain is comparing the condo’s average selling price with another one in the same neighbourhood. There are two reasons for this.
Firstly, it lets you know what a developer’s potential profit margin is. In Singapore, information is readily available about how much the land your condo is built on was sold for. Based on the tender price, one can guess what the developer’s breakeven price is – that is, their cost of developing the land. Based on the average selling price of the condo, we can estimate their profit margin.
Obviously, if a developer is desperate to increase demand, they may reduce their selling prices further, and you don’t want to have paid the developer’s higher price only for your neighbour to get a bargain. A condo that has a lower average selling price could indicate that the developer has already reduced their expected profit margins.
Secondly, getting your property at a price lower than other condos in the area suggests that your property price is likely to appreciate more over time as the other condos raise up the value of the neighbourhood.
Take note of the average selling prices of nearby condos to determine whether your condo is a bargain or not. And to ensure that your bargain remains a bargain, don’t forget to compare the best home loan packages on our site let our mortgage specialists find a home loan that meets your financial needs.
3. How “mature” is the estate?
This is a standard decision to make when buying property in Singapore regardless of whether it’s an HDB flat or a condo unit. There’s no point getting a bargain on your property if it’s so new it doesn’t even exist on a GPS map yet. After the sixth time a taxi driver gets lost sending you home, you’ll wish you splurged a little more for a property within an established neighbourhood.
What do we mean by established? Simply that it has amenities nearby, such as an MRT or LRT station for convenience, and a shopping mall or at least a supermarket for your groceries. And these days, a neighbourhood doesn’t need to be at least 20 years old to be considered established. Punggol and Sengkang, for example have some impressive amenities despite their relatively younger ages.
Is there a condo that meets all these criteria?
Funny you should ask – Riverbank @ Fernvale is expected to TOP in March 2018, which is just 12 months away. This is nicely within the recommended TOP date range we mentioned above in the first point.
But the second point is where it gets interesting. Riverbank @ Fernvale is located next to two other condominium projects, the recently completed H2O Residences and almost completed RiverTrees Residences. A quick glance at recent transactions at all three condos reveals some interesting information. The per square foot price at H20 Residences is around $1,000, while sales at RiverTrees Residences is around $1,100.
Over at Riverbank @ Fernvale, the per square foot price for recent transactions barely exceed $1,000, with the average price at $950 per square foot. What that means is you could get a 1,012 square foot unit for under $1 million. A similar sized unit would cost $1.2 million at RiverTrees Residences which is just next door.
Most importantly, though, the Sengkang West neighbourhood is a fast growing one. Despite only being 10 years old, there are already plans in place to have a new hospital in 2018 and an integrated community facility by 2020. You know what this means – expect your property prices to appreciate very soon.
Are you interested in picking up one of the units at Riverbank @ Fernvale? Apply here.