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.
What are the positives to purchasing 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 many of the stress out of finding a property back in Singapore to purchase. As the apartment is new there is absolutely no must physically inspect the web page and generally the place will certainly be a good location close for 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 look to pre-sell some or all the apartments before construction has even began. This type of purchase is call purchasing off plan as the buyer is basing the decision to purchase based on the plans and drawings.
The standard transaction is actually a deposit of 5-10% is going to be paid during the time of signing the contract. Not one other payments are required whatsoever until construction is complete upon which the balance from the funds must complete the acquisition. How long from signing of the contract to completion can be any period of time really but generally will no longer than two years. Other benefits of purchasing Off the plan include:
1) Leaseback: Some developers will offer you a rental guarantee to get a year or two post completion to provide the purchaser with comfort around prices,
2) In a rising property market it is really not uncommon for the value of the apartment to improve causing a great return. If the deposit the purchaser put down was 10% and also the apartment increased by 10% within the 2 year construction period – the customer has seen a 100% return on their money since there are no other costs involved like interest payments etc within the 2 year construction phase. It is not uncommon for any buyer to on-sell the apartment just before completion turning a quick profit,
3) Taxation benefits who go with purchasing a new property. These are some terrific benefits and in a rising market purchasing Off the plan can be a great 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 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 usually subject to final valuation and verification in the applicants financial circumstances.
The utmost time period a lender will hold open finance approval is half a year. Because of this it is not easy to arrange finance prior to signing an agreement with an Off the plan purchase as any approval could have long expired once settlement arrives. The chance here is the fact that 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 under the first purchase price,
2) Credit policy is different leading to the home or purchaser will no longer meeting bank lending criteria,
3) Interest rates or even the Singaporean dollar has risen causing the borrower no more having the ability to pay for the repayments.
Not being able to finance the balance from the purchase price on settlement can resulted in borrower forfeiting their deposit AND potentially being sued for damages in case the developer sell the property for less than the agreed purchase price.
Examples of the aforementioned risks materialising in 2010 throughout 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 willing 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 an internal space of 30sqm. Lending policy in 2008 prior to the GFC permitted lending on this type of unit to 80% LVR so merely a 20% deposit plus costs was required. However, after the GFC banking institutions started to tighten up their lending policy on these small units with a lot of lenders refusing to lend whatsoever and some wanted a 50% deposit. This purchaser was without enough savings to pay a 50% deposit so had 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 also the valuation came in at $355,000, some $53,000 underneath the purchase price. Lender would only lend 80% of 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 writer recommends that Singaporean citizens living overseas considering purchasing an Off the plan apartment should only do so when they are in a strong financial position. Ideally lisldj could have no less than a 20% deposit plus costs. Before agreeing to buy an Off the plan unit you need to speak to a specialised mortgage broker to confirm which they currently meet home mortgage 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 purchasing Off the plan which have to be considered before investing in the acquisition.