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 industry. Their track records include Ki Residences Singapore, Royal Square At Novena, Sophia Hills, Arc At Tampines and many more.
Exactly what are the positives to buying a house 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 most of the stress from choosing a property back in Singapore to buy. Since the apartment is brand new there is not any must physically inspect the site and usually the location will be 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 will turn to pre-sell some or each 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 standard transaction is really a deposit of 5-10% will be paid during the time of signing the agreement. Not one other payments are essential whatsoever until construction is finished upon that the balance in the funds have to complete the investment. How long from signing from the contract to completion can be any period of time really but generally will no longer than 2 years. Other benefits of purchasing Off the plan include:
1) Leaseback: Some developers will offer a rental guarantee to get a couple of years post completion to offer the purchaser with comfort around prices,
2) In a rising property market it is really not uncommon for the need for the apartment to boost causing an excellent return on your investment. When the deposit the buyer put down was 10% and also the apartment increased by 10% over the 2 year construction period – the buyer has seen a 100% return on their money since there are no other costs involved like interest payments etc inside the 2 year construction phase. It is really not uncommon for any buyer to on-sell the apartment before completion turning a simple profit,
3) Taxation benefits which go with purchasing a new property. They are some great 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 main risk in purchasing Off the plan is obtaining finance for this purchase. No lender will issue an unconditional finance approval for an indefinite period of time. Yes, some lenders will approve finance for Off the plan purchases however they will always be subjected to final valuation and verification in the applicants financial circumstances.
The maximum time period a lender will hold open finance approval is six months. This means that it is not possible to arrange finance prior to signing a contract on an Off the plan purchase as any approval could have long expired when settlement arrives. The danger here would be that the bank may decline the finance when settlement is due for one of many following reasons:
1) Valuations have fallen and so the property may be worth less than the initial purchase price,
2) Credit policy has changed causing the house or purchaser no longer meeting bank lending criteria,
3) Interest rates or perhaps the Singaporean dollar has risen causing the borrower will no longer having the ability to pay for the repayments.
Not being able to finance the balance from the purchase price on settlement can result in the borrower forfeiting their deposit AND potentially being sued for damages should the developer sell the home for less than the agreed purchase price.
Examples of the above risks materialising during 2010 throughout the GFC: Throughout 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. Listed below are two examples:
1) Singaporean citizen living 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 the internal space of 30sqm. Lending policy in 2008 prior to the GFC permitted lending on this kind of unit to 80% LVR so merely a 20% deposit plus costs was required. However, following the GFC financial institutions began to tighten up their lending policy on these small units with many lenders refusing to lend at all while some wanted a 50% deposit. This purchaser was without enough savings to pay a 50% deposit so were required to forfeit his deposit.
2) Foreign citizen residing in Australia had purchase a property in Redcliffe Off the plan in 2009. Settlement due April 2011. Purchase price was $408,000. Bank conducted a valuation as well as the valuation arrived 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 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 this if they are in a strong financial position. Ideally lisldj might have no less than a 20% deposit plus costs. Before agreeing to buy an Off the plan unit one should talk to a specialised mortgage broker to ensure which 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 out of the acquisition of these properties. There are however downsides and risks to buying Off the plan which must be considered before investing in the investment.