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 records include Ki Residences Singapore, Royal Square At Novena, Sophia Hills, Arc At Tampines and many more.
What are the positives to purchasing a home 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 a lot of the stress out of choosing a property back in Singapore to invest in. Since the apartment is completely new there is no must physically inspect the site and usually the place will be a good location close to any or all amenities.
Precisely what is ‘off the Plan’? Off the plan happens when a builder/developer is constructing a set of units/apartments and definately will check out pre-sell some or all of the apartments before construction has even began. This kind of purchase is call purchasing off plan since the buyer is basing the choice to purchase based on the plans and drawings.
The typical transaction is actually a deposit of 5-10% will likely be paid at the time of signing the contract. Not one other payments are essential whatsoever until construction is done upon that the balance in the funds are required to complete the investment. The amount of time from signing from the contract to completion can be any period of time really but generally no longer than two years. Other benefits of purchasing Off the plan include:
1) Leaseback: Some developers will offer a rental guarantee for a year or so post completion to provide the purchaser with comfort around prices,
2) In a rising property market it is far from uncommon for the value of the apartment to improve leading to an excellent return on investment. When the deposit the buyer put down was 10% as well as the apartment increased by 10% over the 2 year construction period – the purchaser has seen a 100% return on the money because there are hardly any other costs involved like interest payments etc inside the 2 year construction phase. It is not uncommon to get a buyer to on-sell the apartment before completion turning a quick profit,
3) Taxation benefits which go with purchasing a brand new property. These are generally some great benefits and in a rising market purchasing Off the plan can be a great investment.
What are the negatives to purchasing Ki Residences Floor Plan Singapore Off the plan? The main risk in purchasing Off the plan is obtaining finance with this purchase. No lender will issue an unconditional finance approval for an indefinite time frame. Yes, some lenders will approve finance for Off the plan purchases however they are always subjected to final valuation and verification in the applicants financial circumstances.
The utmost period of time a lender will hold open finance approval is six months. Because of this it is far from possible to arrange finance prior to signing a legal contract upon an Off the plan purchase just like any approval might have long expired once settlement arrives. The risk here is that the bank may decline the finance when settlement is due for one of the following reasons:
1) Valuations have fallen so the property will be worth less than the original purchase price,
2) Credit policy has evolved leading to the house or purchaser will no longer meeting bank lending criteria,
3) Interest rates or the Singaporean dollar has risen resulting in the borrower will no longer being able to afford 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 if the developer sell the home cheaper than the agreed purchase price.
Examples of the aforementioned risks materialising in 2010 throughout the GFC: Throughout the global economic crisis 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 in the purchase price. Here are two examples:
1) Singaporean citizen located in Indonesia purchased an Off the plan Ki Residences Sunset Way in 2008. Completion was due in September 2009. The apartment was a studio apartment having an internal space of 30sqm. Lending policy in 2008 ahead of the GFC permitted lending on this kind of unit to 80% LVR so merely a 20% deposit plus costs was required. However, after the GFC the banks began to tighten up their lending policy on these small units with a lot of lenders refusing to lend in any way and some wanted a 50% deposit. This purchaser did not have enough savings to cover a 50% deposit so were required to forfeit his deposit.
2) Foreign citizen living 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 and the valuation arrived in at $355,000, some $53,000 below the purchase price. Lender would only lend 80% of the valuation being 80% of $355,000 requiring the purchaser to put in a bigger deposit than he had otherwise budgeted for.
Should 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 if they are in a strong financial position. Ideally lisldj would have no less than a 20% deposit plus costs. Before agreeing to get an Off the plan unit one should contact a specialised mortgage broker to ensure which they currently meet home loan lending policy and must also consult their solicitor/conveyancer before fully committing.
Off the plan purchasers can be great investments with lots of many investors doing very well out of the purchase of these properties. You can find however downsides and risks to buying Off the plan which need to be considered before investing in the purchase.