Caspian & Alexis Sells Well – Singapore Property Mid Tier Market Still Strong
Mid Tier Developments Moving After Chinese New Year
Over the recent two weeks, we’ve heard Fraser’s Centrepoint Jurong Lake District Caspian condo selling well (over 60% sold of their 712 units) and Alexis @ Alexandra (of 293 units) by Yi Kai and Fision Group sold out in 3 days.
This shows our HDB upgraders and property speculators are still around despite the midst of the worst economy crisis that has ever happened to Singapore. While it’s a relief that the cash is still there, some of the buyers of Alexis has been seen trying to flip their just bought options for profit (Interest Absorption Scheme was offered and the owners are allowed to have 3 weeks to decide whether to take up loans from the exclusive bank)
With the successful launch momentum that Alexis and Caspian enjoys, Guocoland grabs the opportunity to re-launch its remaining units at The Quartz with a 10% discount on its tag (around 595psf). The Quartz is a 625 unit strong condominium residing near Buangkok MRT Station and has a balance of 182 units till date.
Note that the above mentioned developments are all priced below 1,000 per square foot.
Another reason that could have sparked a good takeup rate from buyers is with the IAS (Interest Absorption Scheme) that the banks have tied up with the developers that worked seemingly like the DPS (Deferred Payment Scheme)
In late 1997, the government allowed developers then to sell their uncompleted projects to buyers to spur homesales by allowing buyers to defer their usual progressive staged payments of a project towards the completion of the project after the initial 20% downpayment.
Late 2007, the government abolishes DPS stating the reasons of robust economy and more financial prudence. This was a good earmark of the property market bursting its bubble.
This was a old scheme that was introduced previously in 1990s to spur sales in the downturn.
IAS was introduced really quickly by local banks after the Government abolished the Deferred Payment Scheme to cool down the speculation. There are quite a few small projects I remember that was introducing IAS with offers coming from local banks such as OCBC and UOB.
Unlike Deferred Payment Scheme, Interest Absorption Scheme offers two different advantage over DPS,
- Financial Risk Assessment Done
- Unlike DPS which buyers doesn’t have to secure a bank loan until the project completes, IAS requires the buyer to take up a loan from the bank which is providing the scheme. This process will effectively deter speculative buyers who hasn’t done any of their own risk assessment. This puts the risk of the developer who will be absorbing the interest for the buyer at the very minimum.
- Interest Rate on Loan Absorbed By Developer Until Completion
- Yes, and that could save you tens and thousands of dollar depending on the loan quantum and the tenure of the property. Also note that developers usually charge lesser for buyers who has taken up IAS than the former DPS since the risk level of the developers is much lower for buyers who has already secured their loans.
Where Are We Heading in This Market?
For property investor, we still can’t tell whether it’s a good time to enter and start parking your funds in properties to ride till the crisis turns to your favour; But for the home seekers, if you have found something that is ideal for your own stay and wouldn’t mind paying a little more for immediate occupancy or ownership, I think it’s a good time to buy since it’s all in your favour. After all it’s not always the case that you might be able to get something which is of more value than taking the advantage of the current crisis.
Should it be for your own occupany, you can always stay till you ride out the storm (aftermath of crisis? recovery!) and start gaining on capital value.