New Launch vs resale condo – which is better for Investment ?

New Launch vs resale condo

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New launch condo vs resale condo

A common question that will always resurface whenever a Singapore property owner reaches a milestone in their real estate journey that allows them the opportunity to make purchase considerations. 

Particularly for owners with investment consideration, weighing out the pros and cons of getting a new launch condo vs a resale, extends beyond into finding a comfortable place of dwelling.

No easy answers – not all new launches are better than resale condos

The truth is that there are no easy answers. Both on paper and in reality, new launches do possess more positive investment attributes than a resale property. 

But piercing behind the veil of glitzy new launch marketing and zealous agent speak, there are many unprofitable new launches that underperformed its resale counterpart. 

It is our job as real estate investors to know when getting a new launch is better than getting a resale condo and vice versa. 

The focus of this article

We will first lay out the general advantages of getting a new launch vs resale condo and we will quickly move towards focusing our attention on discussing situations in which a new launch is better than a resale condo and vice versa. 

The general advantages of getting a New Launch Condo

All new launch buyers are aligned towards selling at a profitable price

Some call this the tribe mentality, this is a phenomenon that all new launch development possesses as an advantage over its resale counterpart. 

The challenge with buying into a resale condo development is that different owners purchased their properties at different entry prices at a different time. 

Your neighbours, who purchased their resale units 5 years earlier than you, can be selling it at a selling price that is unprofitable to you, but highly profitable to them. 

As a late entrance to a resale condo development, you would often have to compensate with a longer holding period, 6 to 7 years, to allow the earlier owners to sell out first before you make your exit.

But this challenge does not apply to a new launch condo, all buyers entered at the same time during launch and made their purchase at the developer’s launch prices. And upon the TOP of the new launch, all new launch owners share the common intent of only exiting their properties till a profitable benchmark price is being met. 

What’s more interesting is that, each new profitable selling price, serves as the basis for your to build a case for a higher selling price. This creates a healthy spiral that will increase your chances of enjoying higher price appreciation as compared to a resale condo. 

Leverage on developer’s pricing strategy to enjoy in built price appreciation 

So typically for large or mega sized new launch developments with unit count greater than 500 units, developers tend to launch the units at a lower price during launch day, with the intent to clear majority of the units. They will then gradually raise prices to yield greater overall profit for the project. 

As a new launch buyer, if you are able to successfully ballot for a unit during launch day. You have got a first mover advantage. You will be able to capitalise on the gradual price increase and in-built price appreciation for your property, before any resale transactions even take place. 

Exploit price disparity between different units in the new launch 

With a resale condo development, you will only be privy to select units available for sale at a particular point in time. If you will have to make the best of what is available. 

For the new launch condo, all units are available for ballot during launch day. In addition to that, units are often priced differently based on their facing, their format and their floor level. 

By breaking down the developer’s pricing strategy, you will be able to identify potential value buy. Example, units that are non-pool facing are priced significantly lower than units facing the pool, then it could make sense purchasing such units and eventually reselling it with the proposition of being more affordable. 

On the opposite spectrum, if units that are pool facing are only priced at a slight premium to non pool facing units then it makes sense to go for a pool facing units. 

The same logic is applicable to paying a little more for a 3 bedroom unit vs a 2 + study unit. 

Lower Interest expense for the first 3 years

Common knowledge, but worth mentioning. For new launches, you will be funding the bulk of the purchase netting off 5% booking fee and 15% down payment, under a progressive payment scheme that coincides with the stages of construction. 

In short, the bulk of the mortgage and interest payment will only come towards the 3rd year when the development is about to be fully constructed aka TOP, and towards the 4th year when the development clears its statutory certification, also known as CSC. 

Compared with a resale condo, which you will have to pay the full mortgage and interest upfront. You will at least enjoy a 30 to 40k savings in interest, depending on your loan size and the prevailing interest rate. 

Brand new lease life

Real estate is a game of passing hot potatoes around, or old potatoes for a more fitting term. To make money, investment minded homeowners constantly trade into a newer and younger property and resell it for a profit to home stay focused homeowners who provide exit liquidity. 

A well selected new launch unit with a fresh lease life is a plus for capitalising on this buy and sell cycle. 

Quick intro – Decoupling Expertise

Quick introduction, before you decide to commit the next 5 mins reading this article.

We are decoupling expertise, a team of specialist realtors that specialise in helping Singapore property owners derive the best strategy to purchase their second investment property without ABSD.

While decoupling property is often the go-to strategy that property owners adopt. We pride ourselves for helping our client explore and evaluate other alternatives that best suit individual circumstances and objectives. 

Drop us a text to explore the best strategy to minimise ABSD on your next property purchase.

The general advantages of getting a Resale Condo

Enough said about new launches, let’s dwell into the general advantages of getting a resale condo. 

Ready for immediate occupancy or rental

There is a reason why there is always a demand for resale condo. For buyers that are working with a single property portfolio, waiting 3 years for a new launch development to be fully completed is a tough sell, resale condo will be the go-to option. 

As a side note, if you were ever considering the option of renting while waiting 3 years for a new launch unit to be constructed, think again. 

The $120k rental + $50k buyer stamp duty + agent fee incurred when selling your property for $25k will easily add up to a total cost of $200k. 

A typical new launch makes $250 to $300k, you would be doing a lot of work to make $50k if you were to go down this route. 

Less room for error when selecting unit via physical viewing

Buying off site plan and floor plan could be risky when purchasing a unit in a new launch development. You will need to consider what you will be exposed to in your view based on what’s shown on the site plan and what’s to be built in the future, based on the URA master plan. 

It is not uncommon to hear of a situation whereby new buyers bought a unit with the appeal of an unblocked open view, but met with the unfortunate news of a future BTO to be right in front of your unit when it TOPs. 

Being able to view physical units to inspect for views, air flow, actual layout, neighbours, development’s density is a plus when it comes to mitigating the risk of selecting a wrong unit. 

Larger units with more living spaces

Condos design and built can be categorised into 2 categories, old era and new era. In the old era, developers optimised for space, generously throwing in service yards, bay windows and large living rooms. 

In the new era, developers optimised for affordable quantum, packing all the necessary living spaces into the smallest unit possible. 

So if you are someone that values storage space, laundry space at affordable psf and potentially quantum then there will be a higher chance that a resale condo can fulfil those requirements. 

Profitability of new launch vs resale condos

In this section, we will dive deeper to compare the profitability and capital appreciation of new launch condo vs resale condo. We will see if new launch condo’s price appreciation truly surpasses that of a comparable resale property.

Base on a seperate article where we dived deep into the profitability of new launch condos. We observed that while it is true that new launch condos are generally more profitable than resale condo. The outperformance of new launch condo over its resale counterpart is not uniform across all new launches.

Generally there are 2 category of new launch condos, categorised in terms of their performance.

  • Tier 1 – much more profitable than comparable resale condo
  • Tier 2 – moderately more profitable, if not less profitable than comparable resale condo 

Tier 1 – New launch that are much more profitable than comparable resale condo

Project NameProfitPrice Appreciation (%)Holding Period (years)
Jadescape (new launch)322,32821.75%3.3
Tresalveo (resale)301,91019.52%6.3
Clover by the park (resale)357,18922.12%7.6
Project NameProfitPrice Appreciation (%)Holding Period (years)
Whistler Grand (new launch)278,03725.56%3.1
The Trilinq (resale)182,47913.83%5.2

Tier 2 – New launch that are moderately more profitable, if not less profitable than comparable resale condo 

Project NameProfitPrice Appreciation (%)Holding Period (years)
The Woodleigh Residences (new launch)223,03317.49%3.2
The Poiz Residences (resale)280,04317.77%3.6
Blossoms @ Woodleigh (resale)518,69553.25%5.6
8@woodleigh (resale)140,69811.42%5.8
Project NameProfitPrice Appreciation (%)Holding Period (years)
Seaside Residences (new launch)274,64519.38%3.8
The Bayshore (resale)260,41332.89%10.8

Factors that Influence the profitability of new launch vs resale condo

Referencing the performance of the 2 different categories of new launches above. The following factors plays a significant role in determining whether a new launch condo can outperform a resale condo or vice versa.

  • Price disparity – psf price gap between new launch vs resale
  • Purchase Quantum – overall purchase quantum of new launch vs resale
  • Layout – liveability and efficiency

New Launch Condo is worth buying when …

When the price of new launch is priced at a reasonable premium to surrounding resale development

Entry price is a big deal when it comes to all real estate investment, you can have the best facilities, layout and location. But if it is overpriced and you bought into the hype, you will be looking at marginal profits. 

On the contrary, look for new launch developments that are priced very closely to the surrounding resale development. It is a given that psf would be higher, but have a second at the new launch price quantum. 

Due to its smaller square footage and more efficient layout, you could be marketing the new launch unit at a similar, if not slightly higher premium than a surrounding resale condo. This will equip you with a strong selling proposition to exit with a good profit during TOP. 

When there is limited competing supply in the area 

Another factor to look out for is competing developments within the immediate geographical area for the new launch. For a simple rule of thumb looking at developments within the same MRT station and developments 1 or 2 MRT stations away. 

Consider the age of these developments, its selling price, its selling quantum, its layout efficiency and if there are an abundance of units of the same room type available. 

If the answer errs towards scarcity then you are in a good position. 

When the layout of the new launch is superior to comparable resale

Your prospective exit buyer for your new launch is potentially purchasing for homestay, if not homestay plus investment. 

Hence layout efficiency is very important, the goal is to pay as little in terms of square footage but to have maximal living space. 

The competing resale developments in the area, provides large square footage, bumping up their resale quantum, despite lower selling psf. But offers lots of inefficient corridor space, private elevator, air con ledges, planters boxes or bay windows. 

Then your new launch development would have a strong case for outperformance. 

Resale Condo is worth buying when …

When the launch price of a new launch is a lot higher than the surrounding resale condo

This happens when a new launch that is gaining a lot of hype is being launched. Generally, hype and marketing success is good for new launch developers but bad for buyers. 

If you the new launch is priced a significantly higher psf than surrounding resale development. Then purchasing a resale development would give you an opportunity to sell into the future price appreciation of the new launch, using it as a benchmark and price catalyst to upsell your own resale unit. 

In a separate article, we expanded into this topic of how to find undervalued resale condo development by analysing price gaps between new launch and resale developments. 

When the size and layout of the resale development is superior to the new launch development

There are hits and misses when it comes to a new launch development, of you see opportunity whereby the new launch is offering a sub-optimal layout to its surrounding resale development then it makes sense to capitalise on buying the resale unit and use that as a selling point to prop up the price of your own resale unit. 

So an example of this is the comparison of the Hundred Palms ECs 3 bedroom compact unit type with its comparable 3 bedroom compact unit type in Affinity at Serangoon.

A 900+ sqft 3 bedroom compact unit in Hundred Palms EC features an enclosed kitchen, yard and a utility room, while a similar sized unit in Affinity at Serangoon features only an open, unenclosed kitchen, without yard and utility room. 

Given the area attracts family buyers with children, the Hundred Palms ECs’ layout provides an attractive selling proposition to be marketed against its competing new launch development, Affinity at Serangoon. 

Hundred Palm EC is a EC that is about to achieve its MOP in Dec 2024, it is not exactly a resale development, we are referencing this example strictly for the differences in layout. 

When the resale development possess stronger attributes than the new launch

Due to availability of land plots, not all new launch developments possess superior attributes when compared to resale condos. 

For example, a mega sized integrated new launch condo development can be generating a lot of hype and interest in a particular area. But in actual fact, due to the location of its land plot, it falls short of the 1km radius of a particular reputable. In comparison, its competing resale developments are located within 1km radius of the school. 

In this case, it makes sense to reconsider if it is better to purchase the resale condo that is within 1km radius of the reputable primary, and leverage the new benchmark prices set by the new launch development as a price catalyst.

For a full suite of key investment attributes to look out for when evaluating investment property refer to article “ Which condo is good for investment in Singapore “.

Getting a new launch condo vs resale condo as your 2nd property ?

Having gone through the pros and cons of a new launch condo vs resale condo, you could be interested in finding out more about how you can start making plans towards getting one without incurring ABSD. 

For more insights refer to the following articles. 

If you are a BTO or EC property owner and your property have attained its MOP status refer to the article below for ideas on what your next steps could be 

More reads regarding property research for 2nd investment property 

Author

  • Jue Wen

    Jue Wen is the content marketing lead. This means he spend his waking hours researching and writing all things real estate. He believes life is a hustle and there is no joy in grinding away daily in our little rat races. He believes making wise moves in real estate investment can be a game changer. Aside from writing all things real estate, you can find him in your nearest bouldering gym.

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Jue Wen

Author

Jue Wen is the property analyst and content marketing lead at decoupling expertise.
He specialises in helping clients overcome the complexities involved in owning their second private property in Singapore.
He had over 10 years of experience in real estate investing and have written over 40 detail guides on decoupling and minimising ABSD. He is a licensed real estate consultant and holds a Bachelor degree in Business Management from the Nanyang Technological University.

Kenji

Co-Author

Kenji is the Group Division Director of ERA Realty Network.
He have got over 20 years of experience in real estate and have successfully helped over 50 couples purchased their second property. He specialises in helping client achieve the best approach towards acquiring their ideal investment properties while minimising ABSD.