Newly TOP Projects – Top 5 winners and losers!

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Have you ever wondered is it true that 1st owners of the newly TOP projects always make lots of money? Is there any cases that they don't really make but lose money instead? In this post, I will show you what's really happening for newly TOP projects in the past few years.

Singapore Private Real Estate Market Situation In The Past Decade

Since 2009 quick rebound of property market, government had been trying to cool the market with several rounds of cooling measures. However, the demand remained firm and prices had continued to rise until 2013, the final and brutal measures of TDSR (total debt service ratio), was implemented.

Since then, private resale prices had been dropping consecutively for 15 quarters and had tapered by almost 13 per cent over the 4 year period.

The market only started to recover from 3Q 2017 fueled by pent up demand and en-bloc fevers.

So, what happened to those people who bought the new launch projects between year 2013-2017 down market? Apparently,there's mixed result. Some owners indeed made more than 30% profit upon TOP (or 5.3% p.a.) some made substantial losses. See the table below for the Top 5 Winners & Losers of these New Launch Projects.

What can you tell from the table?

Some Interesting Observations

Top Winners:

1. All are 99 year lease hold developments
2. All are big scale developments with more than 600 units, top 2 winners are mega projects with more than 1,000 units
3. All are from top 10 reputable developers (from BCA, https://www.bca.gov.sg/Professionals/iquasscorechart/)
4. All are either near MRT or LRT (High Park Residences)
5. Either the area has very limited supply, i.e. no direct competitor or launch price are similar or lower than nearby comparable projects (Refer to Graph: Coco Palms Launch Price CMA)

Top Losers:

1. All are freehold developments
2. All are small scale developments with less than 150 units
3. None of them are built by top 10 reputable developers
4. 3 out of 5 developments are not within walking distance to MRT
5. 4 out of 5 were launched at more than 15% higher premium compared with nearby comparable projects (Refer to Graph: Cluny Park Launch Price CMA)

 

# can not find similar age projects (< 5yrs age difference) within 500m radius

Summary:

1. In general, new launch projects enjoyed faster capital appreciation between 20-30% within 3-5 years, not all new launches would guarantee you making profit.

2. Contrary to what most people thought, freehold developments are not always the best option for investment properties.

3. If you are looking for quick gains upon TOP, you should focus on big developments, which situate at convenient locations with high demand.

4. Developers do play an important role, as the final products need to appeal to your next buyers.

5. And most importantly, you need to know what's the right entry price with thorough market analysis with surrounding projects.

6. Even in the same developments, owners' profits can vary a lot. Some people can make more than $300k profit, while others are making less than $30K. (Refer to Table: Sky Vue owner high & low profits) It all depends on the unit selection, entry price and exit point. Engage an experienced property agent who is able to advise you through the whole process to make sure you maximize your chance of reaping good profits.


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