Firms dangle perks to draw condo buyers

[Musicwhiz]

This "upgrading" mentality makes me uncomfortable. Why the almost always constant need to upgrade? Just to feel good about yourself? And get saddled with a huge loan??

The Straits Times
Apr 5, 2012
Firms dangle perks to draw condo buyers
Steep discounts, rebates offered to gain edge in competitive market

By Amanda Tan & Gan Yu Jia

PROPERTY developers are dangling freebies and other enticements to tempt buyers amid an increasingly competitive market awash with new launches.

The offerings range from steep developer discounts and stamp duty reimbursements to rebate incentives for people living in the vicinity of the new project.

A check on seven upcoming condominiums found that total discounts could slice about 20 per cent off a unit's listed price.

For instance, those who bought units at freehold East Village in Bedok reaped a 15 per cent standard discount on the listed price plus a 3 per cent stamp duty rebate.

This means a three-bedroom penthouse would cost about $1,054 per sq ft (psf) after the discount, a drop from the original $1,285 psf. That would price a 1,668 sq ft unit at about $1.75 million instead of more than $2.14 million.

Some earlier buyers of the 90-unit development by World Class Land also had an additional 3 per cent shaved off the price under an early bird promotion.

As for buyers living in selected postal code areas around CapitaLand's Bedok Residences, they can get a 1 per cent rebate under the firm's 'neighbourhood incentive'.

The same deal is offered to those who own a home built by CapitaLand as well as those who buy two or more units.

At Tuan Sing's Seletar Park Residence in Seletar Road, there is a three-tier discount of '10 per cent plus 3 per cent plus 3 per cent' off the gross price.

The average price after discount would be about $1,200 psf, pricing a 969 sq ft two-bedder at around $1.2 million, down from $1.55 million.

PropNex chief executive Mohamed Ismail said such perks could be due to the healthy supply of units being launched, which means buyers can afford to be picky.

Developers might also offer perks to spur people affected by the recent cooling measures to return to the market, he said.

In February, a record 3,598 private units, including executive condos, were launched - the highest number since July 2009, when 2,878 units hit the market.

Buyers also snapped up a record 3,138 new private homes in February, despite tough cooling measures introduced last December and a cloudy economic outlook.

Some developers credit robust home sales to the carrots being dangled.

Mr Chong Chou Yuen, chief financial officer of Tuan Sing Holdings, said the package offered for Seletar Park Residence is a 'new thing' from the firm as 'we think that's what the market wants'.

'The fact that we have sold 110 units shows discounts are working,' he added.

But consultants are split on whether such packages genuinely lower prices.

'At the end of the day, you lodge the caveat and when you take up the loan, it's based on the net price after all these discounts,' said Mr Alan Cheong, director of research and consultancy at Savills.

'You won't get much out of it, except that perhaps you may have less of a cash drain when the property is completed.'

Mr Nicholas Mak, SLP International's head of research, was more positive: 'I think (discounts) do help, because it does cost the developer money to give vouchers, rebates and so on.'

Ms Joyceline Gan, who works in a bank, agreed that discounts factor in her decision to buy. The 38-year-old, who plans to upgrade her family of four from her HDB flat in Serangoon, said 'cash is the best' of the perks on offer.

Sales marketing manager Grace Tan, who is in her 50s and looking for a private property for her family of five, said discounts may not be a chief factor.

'If I'm interested in buying, then of course the discounts are a bonus. But if the psf (cost) is too high, I won't be attracted to the property.'

tamanda@sph.com.sg

yjgan@sph.com.sg

[CityFarmer]

I recall the day when i get my condo around 2002.

I get lot of perks

- I get to see the actual unit, to view and to feel, before making a selection
- I did not pay the stamp duty, developer paid for it
- I had instant discount of ~2% on top of what already listed then. Result of negotiation with the agent (probably from developer)
- I managed to get low interest rate loan from bank, since then probably we had the negotation power
- I had manage to get extended warranty from developer, i believe typically it is 1 year, but i got 3 years.

Hope the history repeat again around 2014-2015...

[corydorus]

Can anyone post typical maintainence fees now for new condo ? I would think this is an increase in expense if is quite large.

[piggo]

Really depends on the facilities... MMs can have fees of around $150 - 200... While bigger condos are around $300. Think those high end ones with spas etc etc. can going excess of 500

[corydorus]

Assuming S$300 per month and hold for say 10 years this amounted to S$36K.
If we do a compound return of 5% this works out to roughly S$47K.

If i buy a condo likely i need car and a larger loan ... hmmm. Should i upgrade or "wait a little bit" ?

[piggo]

Why would you need a car? And if you're looking from an investment perspective shouldn't it mean that you'll be renting it out and generating income? To stay there is a form of consumption; a loss in income.... Think to expect 5% returns purely from capital appreciation is quite demanding =P

[CityFarmer]

My unit fee is ~$200 per month. I notice that the smaller of condo, with typical type of facility, the fee is normally higher, probably share by smaller group. My friends' fee normally ranges from S$200-350

The fee normally come with a car park lot, which we normally cost $95 for HDB, if you lucky enough, some come with second car park lot if available. The fee also includes Service and Conservancy Charges (S&CC).

So if it is in HDB, with a car, it cost you 95+50 = 145 vs 200, with little extra, you can use the facility, if second car included, the it is 95+95+50 = 240 vs 200 in condo.

I am not here to promote condo living, just to provide some real data to share ;-P

[Contrarian]

They raise the list price, then drop the discount. The first group buyers actually got a cheaper deal.

I am ok with a $200 - $300 mthly charge. Because the condo value will go up more than it. My kids will takeover in future...

[CityFarmer]

To get better deal, it does not always need be the 1st group of buyer, or the later group of buyer. It need your better negotiation power then.

I encounter condo selling at 13% discount now, as incentive to be "early bird". If you die-die need to buy that condo, then probably be 1st batch seem good. That condo TOP around 2015, probably developer have more incentive to sell faster.

If my case, it is proven better to be later batch. I got much better unit, north-south facing, and un-block view, with utilities are facing east (easy for drying cloth). The initial batch does not enjoy the perk. Initially the developer hope the market will get better, but found out later they are wrong, so need quick-sell then

Just MHO

[sgd]

condo facilities fees are monthly running costs can slowly become strain during a recession. How much of facilities would you use in a month? maybe initially when first move in will use a lot, but with office work and preassures of school you and your kids cannot swim and play all the time, how many bbqs tennis squash games can organize before everybody become sick of it.

So as times goes by you will use less and less but still have to pay month in month out whether you use any facilities or not. Best is to buy condo with no or very basic facilities then don't have to pay so much. If you condo fee is 300 a month and you have a 30 year loan more likely you will stay in condo for half that time ard 10-15years, if do the math it amounts to quite a lot over time.