When should I sell my new launch condo after it TOP ? 

The key consideration on your mind …

The fact that you landed on this article. You probably fall into either one of the following categories of property owners.

• You are looking to purchase a new launch and wonder how long it would take to make a profitable flip out of it.
• You already owned a new launch that had TOP and are considering when is the best time to sell it and redeploy the capital into another new launch.

The focus of this article 

This article seeks to examine the common belief that you can flip a new launch once it TOP, and make a handsome profit over a short 3 year holding duration.

The goal is to equip you with the right data backed insight to discern truths and half truths when faced with marketing pitches on the ground.

The insights could potentially help you avoid selling your new launch investment property prematurely before it achieves its maximal return, or prevent you from over extending your holding duration for a new launch.

We are Decoupling Expertise

Before committing the next 5 mins reading this article, it helps to know who is behind the pen. 

We are a team of specialist realtors that specialises in helping our readers research, shortlist and purchase investment properties. 

We believe in delivering informational value upfront without obligations through practical, detailed and data backed long form articles. 

If you like a more personalised solution tailored to your current consideration drop us a whatsapp text. 

Basis of our research 

With the goal of deriving profit levels correlating to the number of years of holding after a new launch TOP. 

We centred our research on 21 key new launch developments and tracked its average profitability across the number of years of holding prior its TOP date.

Research results overview

The core of the study revolves around new launches that achieved its TOP status from year 2020 to year 2022. We will proceed to share insights derived from analysing these results in the sections that follow. 

#1 – Selling on the 1st year after a new launch TOP is a myth

Right off the bat, referencing the sub optimal average profit number of $190k plus derived from selling the new launch within 1 year of the property achieving TOP,  indicates that it is a stretch for most owners to consider exiting their investment immediately after the new launch TOP. 

The common pitch of flipping a new launch within 3 years is not an optimal strategy for most new launch developments. Having said that, there are a group of new launch developments that have outperformed the rest and deliver decent profits worthy of an exit in year 1. 

Cluster 1 – Average Performers – Year 1 TOP Profits below $200k

Cluster 2 – Outperformers – Year 1 TOP Profits above $200k 

Common traits amongst new launch outperformers

Aside from possessing several of the fundamental positive attributes of an investment property, the most obvious commonality amongst these outperformers lies in the fact that they are all mid to large sized developments with no units exceeding 700 units. 

This supports the theory that the speed to exit or speed of price appreciation hinges on the volume of profitable transactions being inked. The greater the velocity and quantity of new launches changing hands after TOP, the faster the benchmark prices and profitability gets built up. 

#2 – 3rd year after TOP is the year of profit maximisation

From our study, 3rd year after a new launch TOP marks the year in which the most profit is being generated. 

Referencing the table before, almost every new launch development attains its highest quantum of average profit generated in the 3 year mark after attaining its TOP status. 

Average profits across 15 developments stands at $266k, with the higher end of the profit spectrum marked by over $421k average profit being generated by Parc Esta, followed by $381k average profit generated by Jadescape. 

But note, profit maximisation does not take into consideration the additional opportunity cost of holding on to a property for another year. Exiting a new launch investment 1 year earlier could mean re-deployment of capital into another new launch, initiating another cycle of new launch profit generation. 

Maximising profit over a longer 3 to 4 year duration would work very well with owners that have a dual objective of living in the property while optimising investment return. 

For investors that are looking to balance both holding duration and investment return, the next section would be relevant for your consideration. 

#3 – Selling on 2nd year could proved to be an optimal mix between return and duration

For investors looking to balance both holding duration and profits, selling upon the 2nd year after TOP seems to be the sweet spot. 

Referencing the table above that averages the profit for the 15 new launches, it can be observed that the average profit increase from year 1 to year 2 is the most significant. Profit increments in the preceding year 3 and year 4 will start tapering.

Particularly for the new launch development above, the profit increment from year 1 to year 2 is most jarring, with a over $50k to $100k jump in average profit. 

#4 – Profit may not increase with time if you are holding on to a sub-optimal product

This is going to be a tough call for many owners to make, sometimes it will be better to breakeven and exit a property investment quickly to prevent any further opportunity cost incurred. 

Staying vested in a property results in a lock up of 3 precious resources, 1) capital, 2) name i.e eligibility to purchase another property without ABSD, 3) age, affecting maximal loan tenure. 

Hence, under specific circumstances when the property is strictly for investment. It could be better to exit it, and quickly re-deploy the resources stated above into another higher growth property. 

Referencing the table above, the new launch developments above have not experienced step ups in average yearly profits as years passed after it TOP. 

Take the reference above with a pinch of sale, we could be over generalising stuff to bring the point across. Some of these projects, like The Garden Residences, prices could be pending upcoming price catalysts like the launch of a new launch and a MOP of an EC around its vicinity to prop up its prices. 

But the point to note is that you shouldn’t be over extending your holding duration if you do not see any positive price catalyst in sight. 

#5 – Post pandemic average profit could be tapered

Taking a balanced and prudent view, the new launches that we referenced in our study are new launches that TOP during the tail end of the pandemic and sold during the pandemic recovery phase. 

This is a period which marks a heightened level of profits for sellers due pent up demand being unlocked during the pandemic recovery phase. 

We may have to adjust our profit expectation and lengthen our holding duration post pandemic. 

To provide a potential glimpse of things post pandemic, we took a snapshot of new launch development that TOP pre pandemic in the 2016s and sold its units prior to the pandemic taking place in 2019. 

By no means this data is empirical, but it can be observed that average profit levels derived for each year is lower than that of new launches selling into the pandemic recovery phase. 

Next Steps  – Groundwork

Aside from being an armchair researcher, this phase requires you to walk the ground. You will need to work with a competent new launch condo specialist to visit the showrooms.

The key takeaway in this phase is to have detailed understanding of the site plan, unit type and floor plan.

You must know which is the value stack, which is the premium stack, which is the stack to avoid and which unit type has the best layout.