The price is not always right: Other factors to consider when property buying

As repeated ad nauseum, everyone knows that the crux of the property slowdown resides in the lack of access to ready credit and restrictions placed on repayment tenure. What results is an almost unhealthy fascination with price – bargain-seeking buyers holding out in anticipation for developers to offer discounts or price their projects more competitively for their benefit.

Aside from having to re-examine their marketing strategies for their new and existing projects more stringently to capture the interest of cautious buyers, developers also have to pay close attention to how their competitors price their projects. And with an expectation amongst property seekers that property prices will always have room to decline some more, it seems that the issue of price continues to be factor in heavily in determining the demand of a certain property project.

While it is true that price does matter, it should not be the singular factor serving as a benchmark to determine whether a particular project is a smart buy or not. Property seekers should prudently navigate the lukewarm property market by also considering the following:

•       Always do your homework on the district or area you are buying into

This is (I daresay more so than price) definitely the most important factor a property buyer should be looking at. Prior research must be done on the type and scale of developments already being built and slated to be constructed within the vicinity in the near future to ascertain its potential appreciation.

While it is common knowledge that condos close to nearby amenities such as transport networks, schools and entertainment venues are valued higher than others located further away, buyers must be aware of the short and mid-term developments (between 2 – 10 years from now) projected to occur in certain areas. This will give them a better indication of much their property will appreciate in the coming years.  

Yes, it might come at a higher launch price, but always be forward looking when buying a new condo and consider the growth potential of the location and its surroundings. If future developments in the area can drive up demand from buyers and tenants and at the same time increase the resale value of the property, why not fork out a little more now to reap future returns?

For example, the 1,111 unit The Sail @ Marina Bay, considered to be the first residential development in the heart of Marina Bay when it was launched in late 2004, was sold at a low of $725 psf. Because of the renewed interest in re-furnishing the Downtown Core area, the project’s resale value has risen to an average of between $1,728 – $2,708 psf at present.

•       Consider investing into new areas with high growth potential

Jumping onto the bandwagon and buying in popular districts may not be the wisest decision if the aim is to garner capital appreciation in the long term. Investors must pay attention to the number of private developments slated to be constructed in an area before they shortlist their choices.

After all, the higher the concentration of private properties to be built in a location will mean greater availability of options for future prospective buyers to choose from, suppressing the potential resale value of the respective condo unit in the particular district/area.

Instead, investing into a new and upcoming area might be a more practical choice. It is smart to buy a condo in a location before development in said area occurs because its value and price will increase as the area undergoes transformation. Such locations where buyers can enjoy first mover’s advantage are along the Kallang Riverside as well as the Buangkok and Seletar areas. These locations, and others with confirmed growth potential, can easily be obtained from referring to the URA master plans.

•       Not all private properties are created equal

A memorable brand always helps in driving the recall and awareness, and to some extent, the reputation of a project. A prominent condo will outperform a run-of-the-mill one in terms of capital appreciation because its name and iconic landmark status attracts a bigger pool of buyers and tenants due to the greater publicity it garners.

Factors contributing to the prominence of a condo include size and number of units, first condo to be built in the location, uniqueness of the design as well as name of the condo associated with the location and media publicity.

Another tactic buyers can focus on prior to making a decision is to consider the number of facilities it features. Although this does not follow the traditional wisdom most people subscribe to when searching for property, understanding what a project has to offer can benefit investors aiming to rent out their purchased units to tenants.

For example, a big development, usually those covering above 100,000 sq ft of land, is a good yardstick to judge whether a newly launched condo has comprehensive amenities. Naturally, a condo which has full facilities will appeal to a greater number of prospective renters over one that does not.

•       Monitor the average prices of new launches within the same region  

While the lowest purchase price of a property is generally quoted from the developer before its construction is completed, it is important to be mindful of the average quantum that constitutes a smart buy within the specific region the project is built in.    

For instance, given the current market conditions, price conscious investors seeking to purchase property in in the Core Central Region (CCR) should pay close attention to any unit selling below $2000 psf as this is the standard of what is determined to be an affordable purchase.

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