Ki Residences is created 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 industry. Their records include Ki Residences Singapore, Royal Square At Novena, Sophia Hills, Arc At Tampines and much more.
Do you know the positives to buying a home Off the plan? Off the plan properties are marketed heavily to Singaporean expats and interstate buyers. The reason why many expats will purchase Off the plan is it takes a lot of the stress out of finding a property back in Singapore to invest in. Since the apartment is new there is not any must physically inspect the site and usually the area is a good location close to any or all amenities.
What is ‘off the Plan’? Off the plan happens when a builder/developer is constructing a set of units/apartments and will turn to pre-sell some or each of the apartments before construction has even began. This sort 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 really a deposit of 5-10% will be paid at the time of signing the contract. Not one other payments are required whatsoever until construction is done upon which the balance of the funds must complete the purchase. The length of time from signing of the contract to completion can be any length of time really but generally no longer than 24 months. Other features of purchasing Off the plan include:
1) Leaseback: Some developers will offer a rental guarantee for a year or so post completion to supply the customer with comfort around prices,
2) In a rising property market it is far from uncommon for the price of the apartment to boost leading to a great return on your investment. If the deposit the customer put down was 10% and also the apartment increased by 10% on the 2 year construction period – the purchaser has seen a 100% return on their money because there are hardly any other costs involved like interest payments etc in the 2 year construction phase. It is not uncommon to get a buyer to on-sell the apartment prior to completion turning a quick profit,
3) Taxation benefits who go with purchasing a new property. These are some great benefits and in a rising market purchasing Off the plan can be a smart investment.
Exactly what are the negatives to purchasing Ki Residences Floor Plan Singapore Off the plan? The key risk in purchasing Off the plan is obtaining finance for this purchase. No lender will issue an unconditional finance approval for the indefinite time frame. Yes, some lenders will approve finance for Off the plan purchases but they will always be subjected to final valuation and verification from the applicants financial situation.
The highest period of time a lender will hold open finance approval is six months. Because of this it is not easy to arrange finance before signing a contract on an Off the plan purchase as any approval would have long expired when settlement is due. The danger here would be that the bank may decline the finance when settlement arrives for one of many following reasons:
1) Valuations have fallen and so the property is worth less than the first purchase price,
2) Credit policy has changed resulting in the house or purchaser will no longer meeting bank lending criteria,
3) Interest rates or perhaps the Singaporean dollar has risen leading to the borrower no more having the ability to pay 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 house for less than the agreed purchase price.
Examples of the above risks materialising in 2010 during 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 willing to finance the balance in the purchase price. Listed 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 actually a studio apartment having an internal space of 30sqm. Lending policy in 2008 before the GFC permitted lending on this kind of unit to 80% LVR so just a 20% deposit plus costs was required. However, after the GFC financial institutions began to tighten up their lending policy on these small units with many lenders refusing to lend whatsoever while some wanted a 50% deposit. This purchaser was without enough savings to cover a 50% deposit so were required to forfeit his deposit.
2) Foreign citizen residing in Australia had buy 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 beneath the purchase price. Lender would only lend 80% from the valuation being 80% of $355,000 requiring the purchaser to place 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 should they be in a strong financial position. Ideally lisldj would have at least a 20% deposit plus costs. Before agreeing to buy an Off the plan unit you need to speak to a specialised mortgage broker to verify which they currently meet home mortgage lending policy and should 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. There are however downsides and risks to buying Off the plan which have to be considered before investing in the investment.