8 Main Advantages of New Launch Projects Vs Resale Property Units

Difference between new launch projects and resale propertyNew launch projects are developments under construction. These properties have not yet been built, and developers sell their units off the floor plan. Sometimes, the developer builds show suites or a mock-up of the layout to help prospective buyers to visualise the space and placement of furniture.On the other hand, resale units are completed properties, and buyers go into the actual unit to inspect and observe what they are going to buy.At first glance, it may seem that the resale unit is the better investment choice. Firstly, the buyer can see exactly what she is getting. Is the unit bright and breezy? Is the view blocked? Is the noise from the busy road below travelling up into the unit? In a resale unit, the buyer is able to gauge for herself.Secondly, since the resale unit is completed, the unit can be used immediately for own occupation, or for rental purposes. In a new launch project development, the property may take up to 5 years to construct. This results in loss of enjoyment of property, or loss of rental income.Nonetheless, despite these two disadvantages, there is significant upside to buying a new launch project. Here are the 8 main advantages of buying a new launch project.8 advantages of buying a new launch project1) The buyer enjoys low instalment repayments while the property appreciates in value.The monthly repayment of new launch projects are low, due to the progressive payment schedule. As such, during the construction phase, the monthly instalment is low. At the same time, the market price of the property is increasing. This results in a very good return on investment (ROI).Compared to resale units, the monthly repayment is the full instalment, which lowers the ROI of the investment.2) For project launch, there is no depreciation of the asset before the property is completed.All properties depreciate in value (it is the land that the property is on, that appreciates in value. As such, from year 0 onwards, the property is declining in value. When a buyer buys an older resale property, the property has already lost a significant portion of its value.However, if she buys a new launch project, the property does not depreciate in value. As it is not completed. the property does not even hit year 0.3) In Singapore, there is a Seller Stamp Duty (SSD), levied on the seller, if they sell their units within the first four years of purchase.As such, a buyer of a resale unit must quickly find a tenant. If she doesn’t, she will be paying hefty monthly repayments while having an untenanted unit. Selling is not an option to her as the SSD is very expensive and if she sells, she will make a big loss of her investment.However, a buyer of a new launch project is spared from hefty monthly repayments, as mentioned in point 1. The construction period is counted towards the four year period. Usually, when the property is ready for occupation, the four year is up, and SSD is no longer applicable. The buyer of the new launch project now has both the options to rent the unit out, or sell it away. Both options will give her a gain on her investment.4) A new launch project is a new property. A resale property is a second-hand property, or third-hand property, or more. There is a novelty factor in staying in a new property, for the buyer, or for the tenant.5) In promoting and marketing new launch project, the developer sometimes gives huge discount, subsidies, or vouchers to induce the sale. However, for resale units, individual owners do not give discounts, subsidies, or vouchers. As such, it is possible to negotiate a better deal with developers, than with individual sellers.6) When purchasing a resale property, there could be hidden costs that is not apparent, such as repair costs, or pest termination costs. This is common, especially if the buyer is not accustomed to checking a unit carefully for defects and problems.Thus, the ROI may be lower than expected if the repair costs are factored in.For a new launch project, there is peace of mind for the buyers as developers are required by law to rectify any defects for a period of one year. There is no hidden repair costs, and no nasty surprise when the buyer or tenant moves in.7) When a new launch project is completed, the condominium facilities at new launch are at its best condition to be enjoyed.The gym have fully functional equipments, the gardens are beautifully landscaped and the pool is clean and nice.For an older resale property, the facilities may be poorly maintained, and enjoyment of poor equipments and facilities will not be as complete.8) Lastly, it is always cheaper to buy a new launch project when it is not complete. The price of the same unit is always higher when the construction finishes, and buyers and tenants can move in.For an investor with a keen eye on good ROI, it makes sense to purchase the unit when the price is low (under construction), than when the price is high (completed).Therefore, although buying a resale property offers immediate use of the property, buying a new launch project is the better choice for investors. As elaborated in the eight points, buying new launch project offers a better ROI than resale property, for investors looking to fight inflation and increase personal wealth.

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