Ki Residences is developed by Link: Hoi Hup Realty and Sunway Group. The two developers have been doing joint venture projects for 11 years in Singapore and is well known in the market. Their track records include Ki Residences Singapore, Royal Square At Novena, Sophia Hills, Arc At Tampines and much 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 main reason why many expats will purchase Off the plan is that it takes a lot of the stress from getting a property back in Singapore to buy. Because the apartment is completely new there is not any need to physically inspect the website and generally the area is a good location close to all amenities.
Precisely what is ‘off the Plan’? Off the plan happens when a builder/developer is constructing a set of units/apartments and can check out pre-sell some or all of the apartments before construction has even began. This sort of purchase is call purchasing off plan since the buyer is basing the decision 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 agreement. No other payments are essential whatsoever until construction is complete upon that the balance of the funds are required to complete the purchase. How long from signing in the contract to completion can be any amount of time really but generally no more than two years. Other advantages of purchasing Off the plan include:
1) Leaseback: Some developers will provide a rental guarantee to get a year or so post completion to supply the buyer with comfort around prices,
2) In a rising property market it is far from uncommon for the price of the apartment to improve causing an outstanding return on investment. In the event the deposit the buyer put down was 10% and the apartment increased by 10% within the 2 year construction period – the purchaser has seen a 100% return on the money since there are not one other costs involved like interest payments etc inside the 2 year construction phase. It is far from uncommon for any buyer to on-sell the apartment just before completion turning a quick profit,
3) Taxation benefits which go with purchasing a whole new property. These are generally some terrific benefits and in a rising market purchasing Off the plan can be a great investment.
Do you know the negatives to purchasing Ki Residences Floor Plan Singapore Off the plan? The primary risk in purchasing Off the plan is obtaining finance with this purchase. No lender will issue an unconditional finance approval to have an indefinite period of time. Yes, some lenders will approve finance for Off the plan purchases nonetheless they will always be subjected to final valuation and verification of the applicants financial situation.
The highest time period a lender will hold open finance approval is six months. Which means that it is far from easy to arrange finance prior to signing an agreement upon an Off the plan purchase as any approval would have long expired when settlement arrives. The risk here is the fact that bank may decline the finance when settlement is due for one of many following reasons:
1) Valuations have fallen therefore the property will be worth less than the original purchase price,
2) Credit policy has evolved leading to the home or purchaser will no longer meeting bank lending criteria,
3) Interest rates or even the Singaporean dollar has risen resulting in the borrower no longer being able to afford the repayments.
Being unable to finance the balance in the purchase price on settlement can resulted in borrower forfeiting their deposit AND potentially being sued for damages if the developer sell the property for under the agreed purchase price.
Examples of the above risks materialising during 2010 through the GFC: During the global financial 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 ready 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 had been a studio apartment with an internal space of 30sqm. Lending policy in 2008 prior to the GFC permitted lending on this type of unit to 80% LVR so just a 20% deposit plus costs was required. However, after the GFC financial institutions begun to tighten up their lending policy on these small units with a lot of lenders refusing to lend in any way while others wanted a 50% deposit. This purchaser did not have enough savings to cover a 50% deposit so had to forfeit his deposit.
2) Foreign citizen living 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 and also the valuation started 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 author recommends that Singaporean citizens living overseas considering purchasing an Off the plan apartment should only do so if they are in a strong financial position. Ideally lisldj would have a minimum of a 20% deposit plus costs. Before agreeing to purchase an Off the plan unit one should speak to a specialised mortgage broker to ensure 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 a lot of many investors doing very well out of the purchase of these properties. You will find however downsides and risks to purchasing Off the plan which must be considered before investing in the investment.