How to select a good unit in a new launch property that outperforms? (17 Sep 2019)

This write-up was reproduced with permission from Ray’s Estate Clinic, written by Founder, Raymond Chng. Please refer to the end of the article for more information on Raymond.

title image 1 - top photo

Over the years, I have had the opportunity to market numerous properties in different developments, some within the same developments. What I noticed was, even within the same condominium, there are units that sell within 3-4 weeks, while some took more than 3 months. There are some units that are just more desirable by most buyers.

There are also some owners that managed to make significant profits while some struggled to make any profit. The owners who made significant profits bought into units that are most desirable within the development. After more than a decade of watching, analyzing and collating all the information, I’m happy to share some of the factors that I personally believe will make a unit desirable to the most property buyers.

1.Avoid units with loud road noises

From experience, whenever I bring buyers to view properties that are facing the expressway or a very busy road as seen in Image 2 below, the marketing agent would likely close all windows and turn on the air-con to reduce the noise. Buyers can easily identify all these, and would still want to have a feel how the noise is. When buying a new launch property, it is important to identify such issues immediately and avoid such units.

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Image 2: Properties along AYE / Source: The Architecture Review

There are some buyers who are comfortable with units with loud road noise, these are the minority, when buying a property and if considering the resellability of a unit, a property buyer must think of the future market when selling the unit in future.

2.Avoid units that can get too hot

I once met a tenant who jokingly said that in Europe, they would look for units with afternoon (west) sun, as it can get very cold. However, they would avoid it in Singapore as it is hot all year round.

Direct west sun, would likely reduce the number of tenants and buyers for a property. Some homes with direct east sun can also be extremely hot, although east sun is more acceptable, a home that is too hot can also be an issue. Therefore, it is important to take this into consideration when buying a unit. A home that is not either direct east or west could be more desirable to buyers.

3.Avoid units that are too near the refuse collection points, etc

If the unit is purely for tenancy, perhaps this wouldn’t affect you as the owner much. Tenants will consider renting the unit if the rent is attractive. However, in order to get a good price when reselling your unit, your target market should both be buyers buying for their own-stay and investment, so that there is a bigger buyer pool. Buyers who are buying for own-stay generally avoid units that are too close the refuse collection point, too close to the power room, etc.

4.Consider the proximity of unit to side gates or entrance (especially in a huge condo)

If buying a unit in a huge development, walking from your unit to the side gate or entrance could be a 5 minutes walk. It is important to consider this especially for properties that are near an MRT. The condo may be 7 minutes from an MRT, but the total walking time from your unit to the MRT could take 12 minutes, which could reduce the buyer pool.

Just to illustrate an example of a large condo development, Image 3 below is a site plan of a condo located at Farrer Road, this development’s land area is so huge such that it takes more than 5 minutes to walk from one end to another. Therefore, if you are buying a similar development for investment to rent out, you may need to consider if a tenant will prefer units nearer to the side gate to the MRT station.

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Image 3: Example of Siteplan / Source: Capitaland

5.Consider whether inward or outward facing is better

If the new launch property is located within a growth area, that would mean a lot of construction within the area. For the next 10-20 years, expect a lot of cranes, road works, etc. Buying a unit that is facing inward (facilities, etc), could reduce your risk as the views of outward facing units will constantly change.

Such consideration should be thought about especially when buying a unit within the Greater Southern Waterfront (GSW) area where the development plans could take at least 20 years.

6.Greenery facing may be better than other views

Can a lower floor unit rent out at a higher price than a higher floor unit?

A unit with this view certainly did an almost S$600 higher rent than the unit on the higher floor.

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Image 4: View from a unit in Botannia / Source: Raymond Chng

The reason is because only this unit on this level has a full greenery view that makes staying in the unit so comfortable. The unit on higher floors will not have the same feel.

This unit was sold at an S$500,000 price difference from the rest of the units in this development, while the rental is a good 15% higher than the average rental transactions around the area.

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Image 5: View from a unit at The Arcadia / Source: Raymond Chng

These case studies speak for themselves. Many clients were shocked when I shared these examples with them, but over the years, some of my clients who bought low floor greenery units have benefited from this interesting and unique way of property selection.

7.Look for units that have scarcity factor

When my client bought their 2-bedroom unit at One Shenton almost 10 years ago, they bought the unit because they liked the layout. What they didn’t know was that they have bought a unit that is scarce. There are only 8 of such units in the whole development. It was a 2 bedroom without balcony, and the 2nd bedroom can be converted into an extended living room because the room had sliding doors. The layout was very efficient, bedroom was huge, and the buyer could use it as a 2 bedroom or a huge 1 bedroom. Tenants who rent in the area also have the budget to rent a 2-bedroom unit as a couple or single tenant.

The longest that they had the unit vacant from tenant transitions was 10 days. When they decided to sell the unit in order to migrate overseas, it took less than 1 month from the day then listing went live.

8.Find a unit that has efficient layouts

Having an efficient layout is an evergreen characteristic of a good unit. In space constrained Singapore, a unit that is designed with space efficiency and planning in mind will be more desirable than one that is not.

Some units look bigger when it is actually smaller. When visiting showflats, we often see different combinations of space planning.

  1. Generous living area, compact bedrooms
  2. Small living area, generous bedrooms

While every one of us has different preferences, the majority of buyers prefer one that is balanced, just the right space in all parts of the home.

In addition, squarish layouts allow for better space planning when a homeowner is planning for renovation, while an odd-shape layout may pose a challenge when designing to maximize space.

9.Compare the price differences between unit types

In some developments, we would see a 2 bedrooms with a excellent view (for example – Sea view) going for $2.3 million priced the same as a 3 bedrooms with a regular view (for example – Landscape view).  The size difference is probably 200sqft or so.

For the same price, homebuyers will need to weigh if the view is really worth that much?

As a homebuyer, if the Sea View is not a necessity and a “die-die” must buy, perhaps going for a bigger space would be ideal. In the case of renting out, a 3 bedroom potentially has more tenant pool than a 2 bedroom and can potentially rent out at a higher price.

The point here is unless the view of the unit is really scarce, paying a premium for the view (I personally stayed in a unit with Sea View, but after 2 years, I stopped admiring it), may not really be worth it. A homebuyer could extract more value by buying the bigger unit with a less premium view, but still be able to enjoy a good living environment and lifestyle.

There are many more examples which I can share in future blog articles, homebuyers should consider to think logically about what future buyers will be thinking, also taking into consideration of future buyer’s needs and wants.

10.Find a unit that fits your comfortable price range

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Image 6: Budget planning / Source: Wealth flow

This is the most crucial factor on selecting a good unit. The price point should be within your comfortable range. Avoid overstretching your finances, as even if you have bought the best unit and have high probability of making a profit, not having the ability to hold will turn a good property into a bad investment.

Therefore, price point should be taken into consideration when selecting a good unit.

 

Our Views

Property can be either an asset or liability. Every homeowner should aim to buy a property that becomes a slave to you (increasing your net worth). We hope that this article can help every homebuyer looking at a new launch property to make well-informed decision.

There are many factors that determines the profitability of a unit, if you are looking to reduce your risk of buying a bad investment, do feel free to have a chat.

About the Author

Ray’s Estate Clinic (REC), founded by Raymond Chng, is a platform for Investors’ and homeowners to have a Property Portfolio Health Check by utilizing data analytics, ensuring that their portfolio remains healthy providing optimized returns.

“Health is Wealth” is what Raymond believes in, and it is not related only to your own body’s health, but it also refers to one’s financial health. Having a Property Portfolio that is not performing does not help improve an investor’s wealth. Hence, converting non-performing assets into optimized performing assets is essential to portfolio’s health improvement.

Raymond can be reached at raysestateclinic@gmail.com. Do visit his blog HERE for more information.

 

Disclaimers

Please refer to Raymond’s blog for the disclaimer HERE

Also, please refer to my disclaimer HERE

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