In Singapore, buying a condominium is usually a phase that the middle class would consider sometime in their adult life. Investing in a property is a very common mindset which many in their 30s and 40s may consider. The condominium purchase can be either as an upgrade from their current HDB flat or as an investment tool to collect rental income and perhaps sell it off for a profit at a later date. One of the common dilemmas which usually presents itself is whether to go for a new condo or one that is on the resale market. If you are looking to buy a condominium, here are some things to consider when making comparisons between the two.
1) Price
A main consideration would be price. In general new condominium launches will have higher per square foot prices. Higher per square foot prices may or may not translate to a higher quantum based on the size of the property. For example, an 850 square feet 3 bedroom new condominium may be priced at $1500 per square foot whereas an older 1200 square feet 3 bedroom may be priced at $1000 per square foot. The new 3 bedroom condominium will cost $1.275 million versus the older 3 bedroom condominium which will cost $1.2 million. At times the newer 3 bedroom units do not feel that much smaller due to space saving furnishing and well thought out layouts.
2) Price Negotiation
For new condominiums there is usually little or no room for negotiation if you are an individual purchaser. Developers stick to the prices set and usually increase their prices as time goes by. In the resale market buyers can negotiate with sellers and this normally happens. If the seller is in an urgent need to sell there can be more room for negotiation.
3) Choice Of Unit In The Development
If you are one of the early purchasers of a development during its initial launch, you can choose the facing, stack and level to your preference. This is especially useful for buyers who have certain criteria when it comes to these preferences. In an older condominium you may want to purchase a unit in a particular development but the units on sale at that point in time may not suit your preferences. You may then have to wait and if a suitable unit does come up for sale, price does have to be reasonable for you as well.
4) Space
This is where older developments trump over newer developments. Generally older condominiums are larger. They offer more space for the same amount of money. New developments are usually smaller. Hosting a large number of guests in new condominiums may pose a challenge. This is perhaps why the function rooms are usually much larger and better equipped in new condominiums. There are usually more open spaces like pavilions and communal dining and barbecue areas in new condominiums. If you are someone who likes to host guests within your own home then new condominiums are perhaps less suited for you. If you are someone who would like to hold gatherings within your development but do not like guests messing up your own home then a new condominium is ideal for you.
5) New Furnishing Versus Used
In a new condominium, everything is brand new and comes with a one year defect liability period. The fittings are more current and functional. In an older condominium, the furnishings are older and you may require some if not major renovation to the property. Wiring and plumbing may pose as issue if they have been there for an extended period of time. These costs are usually overlooked by buyers when they go property hunting in the resale market. Even if the fittings are well kept, there will definitely be some form of wear and tear. The seller does not have to disclose wear and tear issues to the buyer and you may end up having to replace quite a fair bit of items when you move in.
6) Facilities
There are usually better facilities in new condominiums. In some new condominiums there are multiple swimming pools, badminton and basketball courts and even smart home functions like the one at 6 Derbyshire. Older condominiums usually have fewer facilities and their common spaces look dated and inadequate.
7) Demand from tenants
If you are looking to buy a condominium to be rented out, all things equal, tenants prefer newer developments. Just like most individuals, tenants would like to live in something that is new and unused.
8) Resale Value
The resale value of newer properties, all things being equal, is also generally higher as compared to older properties. Thus you would expect the prices and demand of a newer condominium to remain high after a couple of years of you buying it. That being said, if your entry price is rather reasonable for an older condominium then your downside is mitigated.
These are just some of the few considerations to take note when buyers are looking to purchase a condominium. My list is not exhaustive but I hope it provides a guide for those who are looking to make a purchase.
Yours Sincerely,
Daryl Lum
p.s. At the point of writing Daryl was holding a real estate salesperson’s license. The resale properties that he is marketing can be found at www.lumdaryl.com and the new project launches that he is marketing can be found at www.lovelyhomes.com.sg.
