Ki Residences is designed by Link: Hoi Hup Realty and Sunway Group. The two developers have been doing partnership projects for 11 years in Singapore and is well known in the business. Their track records include Ki Residences Singapore, Royal Square At Novena, Sophia Hills, Arc At Tampines and many more.
What are the positives to buying a property Off the plan? Off the plan properties are marketed heavily to Singaporean expats and interstate buyers. The key reason why many expats will purchase Off the plan is it takes most of the stress out of choosing a property back in Singapore to invest in. As the apartment is new there is absolutely no must physically inspect the web page and usually the area is a good location close to any or all amenities.
What exactly is ‘off the Plan’? Off the plan is when a builder/developer is constructing a set of units/apartments and definately will check out pre-sell some or each of the apartments before construction has even began. This type of purchase is call purchasing off plan because the buyer is basing the choice to purchase based on the plans and drawings.
The standard transaction is a deposit of 5-10% will likely be paid during the time of signing the contract. Not one other payments are essential whatsoever until construction is finished upon that the balance from the funds are required to complete the investment. The amount of time from signing from the contract to completion can be any amount of time really but generally no more than 24 months. Other features of purchasing Off the plan include:
1) Leaseback: Some developers will offer you a rental guarantee for a year or so post completion to offer the purchaser with comfort around prices,
2) In a rising property market it is not uncommon for the price of the apartment to improve causing an outstanding return. When the deposit the customer put down was 10% and the apartment increased by 10% within the 2 year construction period – the customer has seen a 100% return on their own money as there are no other costs involved like interest payments etc within the 2 year construction phase. It is far from uncommon to get a buyer to on-sell the apartment prior to completion turning a simple profit,
3) Taxation benefits which go with purchasing a whole new property. These are some terrific benefits and in a rising market purchasing Off the plan can be a great investment.
What are the negatives to buying Ki Residences Floor Plan Singapore Off the plan? The key risk in purchasing Off the plan is obtaining finance with this purchase. No lender will issue an unconditional finance approval for the indefinite period of time. Yes, some lenders will approve finance for Off the plan purchases however they are always subject to final valuation and verification in the applicants financial situation.
The utmost time frame a lender will hold open finance approval is 6 months. This means that it is not possible to arrange finance before signing an agreement with an Off the plan purchase just like any approval would have long expired by the time settlement is due. The risk here is that the bank may decline the finance when settlement arrives for one of many following reasons:
1) Valuations have fallen therefore the property is worth less than the first purchase price,
2) Credit policy has evolved resulting in the property or purchaser no more meeting bank lending criteria,
3) Interest rates or the Singaporean dollar has risen leading to the borrower no more being able to pay for the repayments.
Being unable to finance the balance in the purchase price on settlement can result in the borrower forfeiting their deposit AND potentially being sued for damages should the developer sell the property for under the agreed purchase price.
Examples of the aforementioned risks materialising during 2010 during the GFC: During the global financial disaster banks around Australia tightened their credit lending policy. There were many examples where applicants had purchased Off the plan with settlement imminent but no lender prepared to finance the balance of the purchase price. Here are two examples:
1) Singaporean citizen residing in Indonesia purchased an Off the plan Ki Residences Sunset Way in 2008. Completion was due in September 2009. The apartment was actually a studio apartment with an internal space of 30sqm. Lending policy in 2008 prior to the GFC permitted lending on such a unit to 80% LVR so just a 20% deposit plus costs was required. However, right after the GFC banking institutions began to tighten up their lending policy on these small units with a lot of lenders refusing to lend in any way while some wanted a 50% deposit. This purchaser did not have enough savings to pay for a 50% deposit so were required to forfeit his deposit.
2) Foreign citizen located in Australia had purchase a property in Redcliffe Off the plan during 2009. Settlement due April 2011. Purchase price was $408,000. Bank conducted a valuation as well as the valuation came in at $355,000, some $53,000 below the purchase price. Lender would only lend 80% in the valuation being 80% of $355,000 requiring the purchaser to set in a bigger deposit than he had otherwise budgeted for.
Must I buy an Off the Plan Property? The article author recommends that Singaporean citizens living overseas considering purchasing an Off the plan apartment should only achieve this when they are in a strong financial position. Ideally lisldj would have a minimum of a 20% deposit plus costs. Before agreeing to buy an Off the plan unit one should talk to a specialised mortgage broker to verify they currently meet home mortgage lending policy and really should also consult their solicitor/conveyancer before fully committing.
Off the plan purchasers can be great investments with a lot of many investors doing very well from the purchase of these properties. There are however downsides and risks to buying Off the plan which need to be considered before investing in the investment.