Ki Residences is designed 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 business. 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 it takes many of the stress away from choosing a property back in Singapore to buy. Because the apartment is completely new there is no need to physically inspect the site and generally the place will be a good location close to all amenities.
Precisely what is ‘off the Plan’? Off the plan is when a builder/developer is constructing a set of units/apartments and can turn to pre-sell some or all of the apartments before construction has even began. This type of purchase is call purchasing off plan because the buyer is basing the choice to purchase based on the plans and drawings.
The conventional transaction is really a deposit of 5-10% is going to be paid at the time of signing the agreement. Not one other payments are essential whatsoever until construction is complete upon that the balance from the funds have to complete the acquisition. The amount of time from signing of the contract to completion can be any length of time really but generally will no longer than 2 years. Other advantages of purchasing Off the plan include:
1) Leaseback: Some developers will offer a rental guarantee for any year or so post completion to offer the customer with comfort around prices,
2) In a rising property market it is really not uncommon for the need for the apartment to increase resulting in a great return on investment. When the deposit the buyer put down was 10% and the apartment increased by 10% over the 2 year construction period – the purchaser has seen a 100% return on their money as there are not one other costs involved like interest payments etc in the 2 year construction phase. It is not uncommon for any buyer to on-sell the apartment before completion turning a fast profit,
3) Taxation benefits who go with purchasing a brand new property. They are some great benefits and in a rising market purchasing Off the plan can be a great investment.
Exactly what are the negatives to buying Ki Residences Floor Plan Singapore Off the plan? The primary risk in purchasing Off the plan is obtaining finance for this purchase. No lender will issue an unconditional finance approval for the indefinite time period. Yes, some lenders will approve finance for Off the plan purchases but they will always be subject to final valuation and verification in the applicants finances.
The utmost period of time a lender will hold open finance approval is six months. Because of this it is not possible to arrange finance before signing an agreement with an Off the plan purchase just like any approval might have long expired when settlement is due. The risk here is the fact that bank may decline the finance when settlement is due for one of the following reasons:
1) Valuations have fallen therefore the property is worth under the original purchase price,
2) Credit policy has changed leading to the home or purchaser no longer meeting bank lending criteria,
3) Interest rates or the Singaporean dollar has risen leading to the borrower will no longer being able to pay for the repayments.
Being unable to finance the balance of the purchase price on settlement can resulted in borrower forfeiting their deposit AND potentially being sued for damages if the developer sell the house cheaper than the agreed purchase price.
Examples of the aforementioned risks materialising during 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 ready to finance the balance from 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 having 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, following the GFC financial institutions began to tighten up their lending policy on these small units with many lenders refusing to lend at all and some wanted a 50% deposit. This purchaser was without enough savings to cover a 50% deposit so had to forfeit his deposit.
2) Foreign citizen located 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% of the valuation being 80% of $355,000 requiring the purchaser to place in a bigger deposit than he had otherwise budgeted for.
Must 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 when they are in a strong financial position. Ideally lisldj could have no less than a 20% deposit plus costs. Before agreeing to get an Off the plan unit you ought to contact a specialised mortgage broker to verify 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 from the buying of these properties. There are however downsides and risks to purchasing Off the plan which must be considered before investing in the purchase.