Updated: Jun 12, 2020
One of the many common topics of discussion with my clients has to be the comparisons between a new launch condo vs a resale condo.
A recent 2019 comparison chart by Orangetee & Tie Research & Consultancy shows a widening per square foot price gap between resale condos and new launch condos.
While new launch condos are gaining much popularity recently, this option may not always be more suitable or favourable to some buyers. A common question asked for example, which is a better option for if I upgrade and sell my HDB to buy a private property?
So what are some favourable comparisons between a new launch condo vs a resale condo:
What makes a New Launch condo favourable?
You are buying a brand new unit!
One of the main reasons of buying a new launch condo will be that you are purchasing a first hand product. This means that almost everything will be brand new such as the building structures, built in appliances, wall and ceiling paint works, air conditioning, sanitary items, carpentry, interior fittings etc. Also, all the common areas and facilities are brand new as well.
A property being brand new will be beneficial for buyers with the intention of own stay, or for property investors who prefers to rent the property out to Tenants. Being brand new means potentially lesser fuss and issues when it comes to own stay. For renting out, most Tenants also prefer newer houses and they are always on a look out to be one of the first occupiers for a brand new condo.
Lower Maintenance Cost
A brand new condo has its perks of enjoying an overall lower monthly maintenance cost. There are lesser chances of water leakages, wear and tear issues and breakdowns of electrical items. This also includes the communal areas and facilities, which affects the monthly property management fees that home owners will have to pay regularly. Most developers also offer a one year defects liability period, which they will repair for free during its first year of occupancy.
Older resale condos may see rise in management costs over the years due to their upkeeping and maintenance of wear and tear issues, thus affecting the overall return of profits.
There are many units for selection
Property buyers for a new launch condo will typically have more choices when it comes to unit selections. Regardless whether the purpose for purchase is own stay or renting, a wider choice of selection would usually be an easier decision making process after allocating your budget, location, preferred unit facing and layout.
The number of resale units can be very limited for each development depending on the unit availabilities on the market during the time of purchase.
The first mover advantage
Having a first mover advantage by purchasing a new launch condo from a property developer would mean that there might be a potential upside in capital appreciation for the property in the short or long run.
A research done by Orangetee & Tie Research & Consultancy has showed that more than 90% of buyers who bought new launches from developers in the last 10 years made profits from their purchases.
In most cases, resale property sellers would have already consider their potential capital profits before putting up the unit for sale on the secondary market. Also, it is not uncommon that most developers are offering attractive discounts for new launch condos.
Design and facilities for new launch condo are more modern and up to date
New launch developments come with updated amenities and facilities such as themed gardens/lounges, sky parks, infinity pools and roof top gyms. The fittings and built ins provided for the unit itself are also more up to date as developers are opting to provide smart home solutions, digital locks, modern carpentry works and branded home appliances. Some even offering selected new units that come with branded movable furniture and interior design features. We are also seeing more developers engaging world renowned architects to design these brand new buildings and units.
What makes a Resale condo favourable?
What you see is what you get
A resale condo allows you to view the actual site and unit itself before making the important decision to purchase. This is extremely crucial if you need to get the exact measurements of the layouts and fittings, actual views/facings and to conduct any kind of physical inspections on the condition of the unit. Some buyers may also want to look at who their neighbours are before they decide on a property purchase.
However, these are not available for a new launch condo as what you only get to see are the show flats, drawn to scale 2D site/floor plans, mock up models and artist’s impressions from the marketing brochures of the development.
Ready to rent
A resale condo is generally more sought after by investors looking to buy a private property to generate immediate monthly rental incomes.
These investors can also have the option to purchase resale units which are already tenanted instead of a vacant unit, thus making their rental income more predictable when they take over as Landlord upon the completion of sale.
This is not the same case for a new launch condo, as it will take awhile to look for new tenants and start collecting rentals after the collection of keys from developers. This could be due to the time needed for defects rectification and overall rentability for the new development.
Shorter waiting time to collect keys
Buying a Resale unit typically takes about 10 weeks to 12 weeks for sales completion. With a shorter timeline, Buyers with the urgency to move in for own stay or to start their renovations can takeover the premises right after the sale is legally completed.
A new launch condo takes about the same time for legal completion.
However, the actual waiting time to collect the keys to the unit will require a few years due to construction of the new development.
Resales condos are larger in size
True enough, most units for older developments that are completed more than 10 years ago will have an overall larger floor layout as compared to a new launch development. This actually makes resale condos more attractive to buyers or renting to potential tenants with bigger family sizes who requires much bigger room spaces and living area to enjoy.
Chance of encountering a beautifully renovated resale unit
Sometimes we may encounter a beautifully renovated unit that is up for sale on the resale market. This cuts down both time and cost needed for buyers who are looking to do their own renovations and also the opportunity to take over a unit with an interior that is uniquely different from the others in the same development!
Which is the RIGHT one for you?
From the point of view of a first timer investor, a resale condo would be more favourable than a new launch condo with its predictable rental yield returns and lower risks management.
A new launch condo can occasionally face stiff rental price competitions among fellow Landlords for the same development. Sometimes, Landlords of the same development may have to lower their rent expectations as a result of urgency to rent the unit out faster than others in the market.
If you are buying for own stay, both options have to be considered based on the amount of waiting time, the allocation of finances for any renovation and touch up works, preferences of unit layouts/sizes, overall risk management and expectations of the development.
You can only check on your dream home in a few years time when buying a new launch condo as it takes a few years of construction before it is completed. A resale condo will be easily accessible through on site physical viewing, walking the common grounds within the condo and making visible comparisons between the available units for sale in the market.
There should not be a direct comparison of which option is ahead of the other, but rather whether a new launch condo or resale condo will suits your situation better.
Feel free to contact me if you are planning to buy a private property and not sure which - a new launch or resale condo is the right option for you!
Thank you for reading this article!
Since 2009, I have actively been transacting private properties in the prime districts and East Coast while building my team of managers and associates.
I have assisted many of my clients with their property wealth planning needs.
People who have worked with me know me as a driven, reliable and trustworthy person who takes care of the people around me.
Feel free to drop me a Whatsapp message for a non-obligatory discussion on your property wealth planning needs!