New Launch vs Resale Condo - Which should you buy?
Updated: Mar 31
A very common question that I encounter with my clients and friends are which makes for a better investment - A brand new condo or a well maintained older condo? After all, it seems the buzz these days are new property launches.
This is a typical scenario in Singapore which has one of the highest home ownerships in the world!
To keep things simple, here are the points for you to make the consideration before making your home purchase!
Allow me to weigh the pros and cons for you.
Characteristics of New condo versus Resale condo
1. New condos are generally under construction and there is a waiting period of 2 to 4 years before collection of the key. Since you can’t rent the unit out, there is no rental income these few years.
However, point to note is that it is typical human behaviour to favour the new, as like tenants. In general, tenants prefer newer condos as they are able to enjoy the new design and furnishings.
Newer condos can generate higher rental income as well, depending on the demand within the location.
2. Buildings under construction follow the progressive payment scheme stipulated by URA. Payment is incremental and is called for once a particular segment of the condo has finished construction.
3. Everything in the condominium is brand new including the facilities. As for individual units, most of them come pre-renovated with flooring, kitchen cabinets, bathroom accessories, appliances, air conditioning and in some cases, smart home features.
In my opinion, this is where new condos has an advantage over old condos. The design of new projects are future-oriented with smart living technology designs.
New condos also come with a one year defect liability period, which is an attractive option for home buyers.
4. New launches are generally priced 20% higher in terms of per square foot (psf) compared to the surrounding resale condo developments. New projects are priced by developers which are based on the amount of land cost, construction cost, marketing cost and profit margin.
However, the higher psf in a new project doesn't necessarily mean that you will surely pay a higher quantum price. This is because new condos today are often designed with thoughtful and efficient layout.
5. You will only see the physical product after key collection. However, many new condos today offer you with modern and state-of-the-art landscapes designed to impress the modern home owners.
Services such as concierge services, child care, multiple tennis courts, swimming pools, large clubhouses and resort living facilities such as aqua gym, infinity pool are often features of a new condo these days.
An example of a new launch condo would be Stirling Residences Condo which boasts 80 luxurious facilities, in carefully curated spaces and well designed layouts of high ceilings and thoughtful spaces.
Home owners are sold to the idea of coming home to a sanctuary they can relax and unwind after a long day at work.
1. Choice of units at your preferred condo developments could be limited , as there are only a few owners who are genuine sellers.
Your preference often cannot be satisfied in a particular development or another, and compromises need to be made, as well as be willing to give a competitive offer among other buyers if it is a choice unit.
2. Key collection happens ten weeks after exercising of OTP. Rental income is almost immediate. In some instances, you can even purchase units that come with the tenancy.
Also, you would be able to pick the location that you prefer.
3. The condition is As Is. For older developments, waterproofing works within the unit might be essential. Brand new appliances are almost necessary.
Prices are lower than new launches, and resale condo is usually priced based on the combination of recent competitive transactions and purchase price of the seller. There is room for price negotiations , and payment is via private treaty.
Full payment is to be completed upon key collection.
So, New Launches Versus Resale. Which One Appreciates More?
Now that we understand the characteristics of both resale and new launch condos, the main question is which one appreciates more?
Some people swear by purchasing resale because that is where you can find “gems” and undervalued properties.
While others, on the other hand, prefer new launches because there is a “10% gain” when the project obtains TOP (Temporary Occupation Permit) status.
So who is correct, which one has more myth than fact?
CASE STUDY : COMMONWEALTH TOWERS VS QUEENS CONDO
Both Commonwealth Towers and Queens Condo are located within a stone's throw from the Queenstown MRT.
Although the Queens Condo which is a resale condo is priced cheaper , pricing seems to have trended downwards.
Importance of Risk management and Entry price
Finally, if we compare the risk levels of property investment between the new condo and resale condo, we can consider it from the point of entry price.
This is because the entry price at which you purchase a property is the critical factor to determine how much risk you will undertake during the recessive market.
For new project, more first hand owners bought at similar prices, and there will be a natural tendency that home owner will sell at higher prices, and the potential risk is lower as well.
On the other hand, for resale homes, home owners purchased their property at different prices which is typically higher than launch price years ago.
Hence, the home owners are undertaking different risk levels , depending on their entry price. Those who purchase at launch price take the lowest risk as compared to resale buyers who will carry over more risks which cover the profits from both developer and first hand owners sold to make.
Ok! Let do this - I am ready!
Take home Message - Count your costs
In my opinion, a resale condo still has its advantages. The prices could be lower, and if you decide to be a landlord, you can immediately start earning a from the rental income.
However, if capital gains is an important priority, you should consider new launches.
The pertinent question is- "Which new launch do you choose?" "Is a new condo or old condo a better investment?" are questions that could depend on many factors as well.
It is worth to study the entry price and exit strategy that you plan to adopt. First time buyers, whether investors or home owners, should think carefully at external factors that may positively or negatively impact the value of the property, and the duration of time that you plan to keep it.
Everyone has different needs and financial backgrounds , so you will prefer your own customised options.
Of course, these are my own opinions based on my experience as an agent over the years.
I invite you to contact me for a discussion, so that we can explore options based on your customised needs, or just for the sake of a debate over a nice, warm flat white!
About the author
Marie is a realtor with OrangeTee & Tie and an aspiring property content writer. She loves connecting people with their dream homes, and derives satisfaction when her clients still reminisce happily about their housing adventures (be it selling or buying) with her years later!
Aside from her love of viewing gorgeous homes, she enjoys local fare and travelling.