Ki Residences is created 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 much more.
What are the positives to buying a property Off the plan? Off the plan properties are marketed heavily to Singaporean expats and interstate buyers. The reason why many expats will purchase Off the plan is that it takes many of the stress from choosing a property back in Singapore to purchase. Because the apartment is new there is absolutely no need to physically inspect the website and usually the location will be a good location close to any or all amenities.
What is ‘off the Plan’? Off the plan happens when a builder/developer is constructing a set of units/apartments and can check out pre-sell some or all of the apartments before construction has even began. This type of purchase is call purchasing off plan since the buyer is basing the choice to purchase based on the plans and drawings.
The typical transaction is actually a deposit of 5-10% will likely be paid at the time of signing the agreement. Not one other payments are required whatsoever until construction is complete upon in which the balance of the funds have to complete the acquisition. The length of time from signing of the contract to completion can be any amount of time really but generally will no longer than two years. Other advantages of purchasing Off the plan include:
1) Leaseback: Some developers will offer a rental guarantee for a year or two post completion to provide the customer with comfort around prices,
2) In a rising property market it is not uncommon for the value of the apartment to boost resulting in an excellent return. If the deposit the purchaser put down was 10% as well as the apartment increased by 10% within the 2 year construction period – the customer has seen a 100% return on their own money because there are no other costs involved like interest payments etc within the 2 year construction phase. It is far from uncommon for a buyer to on-sell the apartment just before completion turning a quick profit,
3) Taxation benefits who go with purchasing a whole new property. These are some good benefits and in a rising market purchasing Off the plan can be a smart 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 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 nonetheless they will always be subject to final valuation and verification from the applicants financial circumstances.
The maximum period of time a lender will hold open finance approval is 6 months. Because of this it is really not possible to arrange finance prior to signing a contract on an Off the plan purchase just like any approval might have long expired once settlement arrives. The danger here is that the bank may decline the finance when settlement arrives for among the following reasons:
1) Valuations have fallen therefore the property may be worth lower than the initial purchase price,
2) Credit policy has changed causing the home or purchaser no longer meeting bank lending criteria,
3) Interest rates or perhaps the Singaporean dollar has risen causing the borrower no more having the capacity to afford the repayments.
Not being able to finance the balance in the purchase price on settlement can result in the borrower forfeiting their deposit AND potentially being sued for damages if the developer sell the home for less than the agreed purchase price.
Examples of the aforementioned risks materialising during 2010 during the GFC: Through the global financial disaster banks around Australia tightened their credit lending policy. There was 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 here are two examples:
1) Singaporean citizen located in Indonesia purchased an Off the plan Ki Residences Sunset Way in 2008. Completion was due in September 2009. The apartment was actually a studio apartment with the internal space of 30sqm. Lending policy in 2008 prior to the GFC permitted lending on such a unit to 80% LVR so merely a 20% deposit plus costs was required. However, following the GFC banking institutions began to tighten up their lending policy on these small units with many lenders refusing to lend in any way while others wanted a 50% deposit. This purchaser did not have enough savings to pay for a 50% deposit so were required to forfeit his deposit.
2) Foreign citizen living in Australia had buy 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 beneath 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 achieve this should they be in a strong financial position. Ideally lisldj could have at least a 20% deposit plus costs. Before agreeing to get an Off the plan unit you need to speak to a specialised mortgage broker to ensure that they currently meet home mortgage lending policy and 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 from the acquisition of these properties. You will find however downsides and risks to buying Off the plan which have to be considered before investing in the acquisition.