Transacting homes off-plan in Singapore is a win-win proposition
Transacting homes off-plan in Singapore is a win-win proposition. In Singapore, 2021 was a successful year for real estate developers. According to data from the Urban Redevelopment Authority, developers sold 13,027 private homes in 2021, excluding executive condominiums, as the price of a private home increased by 10.6% from the previous year (URA).
Following the implementation of property cooling regulations on December 16, 2021, the private housing market became more subdued in early 2022. However, private home prices increased by 3.5% quarter over quarter in the second quarter of 2022, while Q2’s transaction volume increased above Q1’s. The year’s first significant new launch in the Outside Central Region, the private residential complex AMO Residence, sold virtually all of its apartments within the first day of its launch on July 23.
New residences are frequently marketed off-plan and paid for in Singapore using a schedule of escalating payments. In 2021, about 98% of the brand-new homes that developers were offering were still under construction. Think about a construction site you bought from the Government Land Sales program. After getting the site for their project, a developer has between 12 and 18 months to start selling the products related to it. The project’s construction may still be very early in the process.
By collaborating with marketing advisors, developers create excitement for their most recent launches. After being enticed by seductive marketing materials and opulent showcase flats, buyers enter into contracts to buy their brand-new, unfinished residences. Typically, a buyer will have paid 20% of the price plus stamp duties within eight weeks of getting the option to buy a new unfinished condominium unit. Following that, the remaining 40% of the purchase price is paid in installments based on various building milestones, which may take two to three years to complete. A buyer pays an additional 25% of the purchase price and picks up the unit’s keys after the project’s Temporary Occupation Permit is approved. The remaining 15% is due when the project receives its Certificate of Statutory Completion, which could be many months from then.
Purchasing a home off the plan carries certain risks. The debt problems of certain Chinese developers have had an impact on home buyers in China who had made payments for unfinished homes in stalled projects. Local developers, however, frequently have a good history of providing homes to buyers on schedule. Off-plan purchases of new homes can be lucrative for both buyers and developers.
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