• TT Lum

New Launch or Resale? Which Is Better?

The burning question on everyone’s minds…so which is better?


For clarity purposes in this article:

- New Launch = Uncompleted or Building-Under-Construction (BUC) projects that have yet to obtain TOP

- Resale = Projects that have obtained TOP & older


If you have been looking around for options, I’m certain you would have been overwhelmed by sales pitches from agents asking you endlessly to proceed down to showflats.


With so many agents pushing for new launches, it is only understandable why we would be curious whether New Launches could actually be the right choice for us?


Of course if you are just looking for a place for purely own stay due to a strong need to stay in specific area and do not mind the property depreciation, then this article may not be for you.


However, if you are looking more for either investment or own stay with potential future appreciation, this is where you might wanna read on.



Now let’s proceed with a few case studies..


Case Study 1 – Coco Palms & NV Residences


In Case Study 1 (CS1), let’s examine two developments: Coco Palms (a New Launch in 2014) and NV Residences (an existing Resale condo in 2014).


In terms of location, both are similar, in fact side-by-side with close proximity to the Pasir Ris MRT.


Let’s look at the prices for both developments back in 2014, when Coco Palms was just launched for sale as a BUC.

Prices of NV Residences in 2014

Prices of Coco Palms in 2014


Both were transacting at an average range of $1000 - 1100 psf, with Coco Palms just a tad below that of NV Residences.


Suppose you were a prospective buyer interested in that area back in 2014, given the transacted prices for the two developments…


Which condo would you have chosen?



In this case, most people would have chosen the NV Residences without much hesitation.


After all, "why should I pay about the same price levels for something I would need to wait for 3-4 years to build when I can move in or rent out to tenants very quickly, at roughly the same location too"?


If those were your thoughts, it does seem perfectly logical right?


Now let’s compare the performance of both developments from then till present.

Price performance of both condos in CS1


Unfortunately, for those who had chosen to not to wait for the new development and went ahead with NV Residences in 2014, they suffered an average loss of 20.61% over a period of 6 years.


Prices of NV Residences in 2020


Which means for the buyer who had decided on the large $1.55 million, 1453 sqft unit in NV Residences, he would have $319,000 wiped off the value of his property in 2020!


On the other hand, the patient investor who chose to wait and bought the 1378 sqft unit in Coco Palms for $1.28 million back then would be sitting on a handsome gain of $274,000 for his unit in 2020, based on a 21.47% average gain.

Prices of Coco Palms in 2020


If we add up the values, it would be mean a difference of $593,000 in only 6 years, just for making a choice between a resale or new launch unit!


We suppose it really pays to make an informed decision. Literally.


 

Case Study 2 – Melrose Park & RV Residences


For our next contenders in Case Study 2 (CS2), we zoom in to RV Residences (a New Launch in 2013) and Melrose Park (an existing Resale condo in 2013).


In terms of location, both are not too far apart, just 100m down Kellock Road from each other.


Let’s look at the prices for both developments back in 2013, when RV Residences was just launched for sale as a BUC.

Prices of RV Residences in 2013


Prices of Melrose Park in 2013


Suppose again you were a prospective buyer interested in that area back in 2013, given the transacted prices for the two developments…


Which condo would you have chosen?


You may be thinking.. “Wah TT, just now you showed me New Launch made money. Of course this time the RV Residences too lah!”


So it's only normal if you chose RV Residences this time haha..


Now let’s compare the performance of both developments from then till present again.

Price performance of both condos in CS2


Unfortunately, for those who had chosen the New Launch this time, they would have found themselves on the shorter end of the stick.


After 7 years, RV Residences only gained 0.65% on average.


ikr


Doesn’t seem like what most of the agents are telling you isn’t it?


(Disclaimer: It’s unlikely the names of “RV, NV or ?V Residences” before you suspect it could be!)

Prices of RV Residences in 2020


Fortunately this time, for the buyer who had decided on the large $2.31 million, 1216 sqft unit in RV Residences back in 2013, at average prices of $2100 psf in 2020 he would have still seen about $243,000 in profits.


However, for the resale buyer of Melrose Park in 2013 who had bought the 1313 sqft $2.28 million unit at $1736 psf, at an average of $2100 psf in 2020, his unit would have been worth $478,000 higher than it was 7 years ago!

Prices of Melrose Park in 2020


Now that would mean a difference of $235,000 in 7 years for making a choice between a resale or new launch unit!

 

Case Study 3 – Urban Vista & Grandeur Park Residences


If you’re thinking..


“…maybe that 100m nearer to the MRT for both case studies might be the reason why lah!”


You might wanna read on…


For Case Study 3 (CS3), we’ll examine two developments near Tanah Merah MRT, both almost equidistant from the station in fact. (Whether a stone’s throw depends on how strong your throw is!)


Before we make a choice, let’s look at the prices back then in 2017 when Grandeur Park Residences was launched.

Prices of Urban Vista in 2017

Prices of Grandeur Park Residences in 2017


Both were transacting at an average range of $1400-1450 psf, with Grandeur Park Residences just slightly below that of Urban Vista.


After two case studies with differing results, you may be rather confused now on which development to pick isn’t it?


Well maybe most people would still choose to stick with the ready resale unit in Urban Vista, since it would save the hassle of moving houses twice from having to rent waiting for a new launch condo.

(Definitely one of the main reasons people are reluctant are rent too)


Let’s examine both of their performances again:

Price performance of both condos in CS3


Somehow, the resale option this time seems to underperform again, this time retreating by 13.58% over 3 years.


Prices of Urban Vista in 2020


Conversely, the new launch option advanced by 10.49% in the same 3-year span.


Prices of Grandeur Park Residences in 2020


A point to note is that the larger-sized units in Grandeur Park Residences were very well-received towards its TOP, as large families become eager to move in and were willing to pay higher prices to shorten their waiting time, some going as high as $2.29 million.


This means the buyer of the 1453 sqft unit for $1.86 million back on 5 March 2017, would be looking at an generous appreciation of $430,000 on his unit, perhaps for his willingness to wait for an additional 3 years!

That…is an annual gain of $143,000, an amount which most of us wouldn’t be likely to be saving in a single year!

 

Conclusion


We have observed that while new launches have the potential to make large profits, it is not always the case for every single new launches.


Contrary to what is being preached out there, certain resale choices can have decent appreciation potential too, though it can be rather difficult to find, reasons being:


- Most resale units will likely bear the risk factor of earlier owners entering the development at a way lower price than the current buyer, and hence more willing to settle for a comparatively lower selling price

- Unit choices are more limited, as it is subjected to whether owners are willing to let go of their units, which dependable many factors such as changing needs or market conditions - Most owners would prefer to let go of their units at the maximum price according to the existing market conditions

- More often than not, severely undervalued units will be snapped up extremely fast, making it hard for most people to catch the opportunities



On the other hand, new launches tend to be easier to see profit margins due to:


- Majority of owners entering the market at the same price, hence enabling price protection for the first-movers

- Most developers prefer to engage in Dollar Cost Averaging strategies instead of pricing every single unit at the maximum price, as clearing the bulk of their stock on time to avoid ABSD penalties tend to be their priority. - General preference for most buyers to prefer brand new developments with fresh facilities, leading to cases of homeowner families shelling out premiums to reward first-mover investors nearer towards the TOP date


Nevertheless, in spite of the benefits of the new developments, given their higher prices, we must be cautious and well-informed on whether the entry price is on the safe side before jumping into an overpriced development.


At the end of the day, whether a resale or new launch unit is better really depends on what your ultimate goal, risk appetite, and ownership horizon are.


Regardless, it is critical that we take many factors like entry price and transformation of the area into consideration before we make any property purchase.


For instance, we base our property analysis on our proprietary TT’S REAL framework when exploring the various options for our clients in order to minimize risk and maximize returns in their investment purchases.


Being aware of the pros and cons of the possibilities available in the market at any point in time is key, and a well-equipped real estate professional will be able to research and analyze the most suitable choice for you.




If you would like to find out more about how we can use our TT’S REAL framework to help you decide if it is time to move a move, and if so, zoom in on the better options in the market, do drop us a text at 9149 9929 and we’ll be happy to assist you towards the right step forward.

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