How To Select A New Launch Condo Unit – 5 Ways To Protect Yourself

If you have experienced a new launch balloting process, you will understand that it is designed to benefit the developer.

When you visit a showflat, you may be approached by well-trained property agents who are taught how to sell the development, handle your objections and close you like a pro.

It is a situation where the odds are heavily stacked against the typical property buyer.

Is there anything wrong with this?

Of course not. The developer is running a business where they are essentially answerable to their shareholders.

And like any business, they care about their bottomline.

Just remember this: Whatever that is happening within the showflat has been calculated and strategized ahead for the advantage of the property developer.

Of course, you are not completely helpless either.

Here I will share you 5 ways on how you can stack the odds of success in your favour instead.

#1: Prepare A “Walk-Away” Budget

In any sales situation, the biggest power move you have is the ability to walk away.

This means you have the willingness to not proceed with your new launch purchase at that particular development.

Having a “walk-away” budget prevents you from being trapped with the danger of a stressful mortgage that destroys your holding power.

This means you are not willing to spend beyond a certain figure just to secure that new launch unit.

Now, there is a difference between a “normal” budget and a “walk-away” budget. The normal budget implies that you can still be “stretched” further even if the price exceeds your expectations.

But a “walk-away” budget is a hard stop – you will not compromise on this number.

By doing this, you will be able to manage your emotions during the highly-charged sales-oriented environment.

It means you are psychologically prepared to NOT secure a unit in the development.

#2: Acknowledge That Luck Plays A Part

During the balloting process of a highly-sought after development, it is important to acknowledge that luck plays a part.

Yes, you might have the financial means but it doesn’t mean you “deserve” to own one.

So hold back from placing too much meaning on the outcome – especially if you fail to secure a unit. It is okay not to get one.

Don’t be too disappointed. If it wasn’t meant to be, don’t beat yourself up.

Why am I saying this? Well, I have seen cases where buyers are so laser-focused on getting a unit that they willingly overpay for a unit that is not worth the price.

This is especially so when it is compared to the prices that was paid for neighboring units.

So be careful of how emotions can drive our decisions to write a cheque that can lead to future buyers’ remorse.

Having a zen-like attitude will be helpful in the chaotic sales environment.

Source: https://www.edgeprop.sg/property-news/jden-sales-gallery-draws-over-7000-visitors-preview-weekend

#3: Weigh the Determining Factors In An Objective Manner

In reference to my earlier point of “overpaying” – it is important to weigh the pros and cons of a new launch unit in an objective manner.

For example:

• Should you pay $50K more for that unit with a pool view?
• Or should you pay $100K extra to get that unit on the higher floors – especially if the mid-floor units are all taken up?
• Is being further away from the lift landing worth more for privacy?
• Would future buyers be willing to pay what I will pay for this unit?

These are just some of the many factors to consider when we are selecting a unit.

And that’s why the eventual price lists are so well-guarded.

Being objective in a calm environment is very easy.

But what if you are in a sales environment where people are shouting things like:

• “Unit #05-17, #06-17, #07-17 sold! All mid-floor units in stack 17 are sold!”
• “The developer will increase price in the next round!”
• “Only unit left in stack 19 for this current price!”

Suddenly, being objective about unit selection becomes very, very challenging.

Million-dollar decisions have to be made within minutes.

That’s why managing your emotions becomes very important because it is too easy to be swept up by the stressful nature of the environment.

To be fair, the balloting situation is not always this hectic and not applicable to every new launch.

But it is important to be aware that such situations can arise.

Hence if you are prepared, it becomes easier to keep your cool.

#4: Have Backup List of Alternative New Launch Condos

The key thing to your psychological safety and ensuring that you don’t fall into the trap of feeling “deprived” is by creating a backup list of alternative choices.

Just like how we rank schools for our children’s post-PSLE choices, we create a list of alternative choices that we can consider if our priority choices are no longer possible.

For this, you might need to sit down and expand your criteria and be more open to other options.

Have a discussion with an experienced agent if you need to explore the various choices first.

Feel free to contact me for a no-obligation discussion if you need to bounce off your ideas and choices.

#5: Plan Ahead On Your Exit Strategy

Like it or not, your property will be a significant part of your entire networth.

It might be part of your future retirement assets – especially if consider how we are using significant portion of our CPF monies to pay for it.

Even if you consider the new launch condo your “forever home”, having a plan for an exit strategy is necessary for your own peace of mind.

These are some questions you can ask yourself:

• Do I have a criteria before I exit from this property?
• If this property hits an XX% gains – will I cash out to capture the gains?
• If I were to lose my job, how many months or years will I be able tank the mortgage before I deplete my reserve funds?
• Who would be the future buyers of my unit – investors or the “own-stay” buyers?

To plan ahead for this exit strategy – it will require some detailed financial calculations.

This is where we game out and run through possible worst-case scenarios that can happen, so we understand the safety margins of your financial figures.

Purchasing During Launch Is Not a Sure-Win Strategy

So, what are the new launches that didn’t perform as well as you thought?

Would someone who bought a new launch in 2014 be able to exit with good profits about 7 years later?

Looking at the market today – the answer is yes, right?

But let me introduce you to this development that was only completed less than 7 years ago.

The Glades is a development that is located near to Tanah Merah MRT. It is one of about half a dozen private condo developments in that area.

• Launched in 2014, completed in 2017
• Second-newest condo development in Tanah Merah
• 726 units in the development

Here are 2 units that was bought during the new launch and incurred losses when it was sold 9 and 7 years later.

In a property market that experienced an upswing in prices and inflation in the recent past few years – it is actually quite amazing that losses was incurred for these 2 units.

But it is a great reminder that we have to be mindful that our new launch purchase might not always bring the returns that we hope to get.

For The Glades, what I observed was that NOT all its blocks was located within 1km of Temasek Primary School.

But Blocks 4, 6, 8, 10 at the Glades are within 1km of this popular primary school.

These blocks due to its 1km proximity to Temasek Primary School – seems to be less impacted and managed to transact at better prices.

The Danger of Having Close Proximity to Main Road and MRT Tracks?

I extracted out more transactions below from The Glades.

These are units where the owners essentially made losses if you factor in the costs of the transaction like commission, legal fees and stamp duties.

These units are likely facing the main road or MRT tracks – hence there is a higher probability of buyers becoming unwilling to pay more for the unit.

Comparing The Glades with nearby Grandeur Park Residences

Grandeur Park Residences is a neighboring development to The Glades.

It is the “newest” (for now) condo development in the Tanah Merah area as it was launched in 2017 and completed in 2021.

Here are some of the recent transactions at Grandeur Park Residences:

You can see that these units were bought at launch in 2017 were sold for good profit in 2023.

They benefited from the bullish property market for the past few years.

But more importantly, I think they bought units that were attractive to future buyers.

Here is an interesting fact about Grandeur Park Residences – all its blocks are within 1km of Temasek Primary School.

So not only is this development newer, it also satisfies the needs of parents.

My feeling is this:

Most buyers hold on to this belief that a development being near an MRT is a sure winner.

But The Glades clearly demonstrates that it’s not true.

You can see the overall performance of The Glades vs Grandeur Park Residences in the chart below.

Unforeseen Layout Issues

This photo below is an example of what happens when we don’t really take an in-depth look at the new launch unit we are buying.

To be clear, this photo below is not taken from The Glades nor Grandeur Park Residences. (Please do not ask me which development is this.)

Can you spot what’s the issue with this photo?

That space is designed for the refrigerator.

After the refrigerator is placed in that gap….

The cupboard door cannot be opened.

Can this issue be spotted just from looking at the floor plans that is released by the developer?

Not really. It is not an obvious issue unless you really bother to take a ruler and measure the relative sizes.

But for someone like me who has been studying layout sizes and analyzed floor plans of various developments for more than 14 years – I would have raised the red flags immediately.

Conclusion

Purchasing a new launch unit may seem “easy” on the surface. But making a property choice – whether for investment or for own-stay is not a trivial one.

It is essentially a million-dollar decision that requires some strategic planning to allow you to come out ahead.

In case you are wondering, not all new launches are a “sure-win” – there are many developments where the profits or gains are NOT worth it.

With so many units, layouts and facing – it can be challenging to pick one that has the highest probability of success.

For me, I have guided many buyer-clients towards making a sensible property choice that doesn’t only secure them a dream home…

But also securing their financial future.

If you have further questions on exploring your property options, let me know.

Our discussions are non-obligatory.

Drop me a message via WhatsApp:

https://wa.me/6596285498