There’s Value in Buying Early – Pre-selling Real Estate
by Property Investor
Posted July 13, 2018
Benefits of Being Early
There is a common saying that the early bird gets the worm. Being early in most cases opens up more choices and places you in a better position to act. Whether it be in work, business or in personal matters, it is usually the early movers who find themselves on top or enjoying the fruits of their decisions. Let’s put this in the perspective of pre-selling real estate.
Getting Early in Real Estate
The decision making process when investing in real estate can indeed be a tedious one. With potential buyers facing a deluge of information and options regarding available properties, one might just wonder what factors one should consider when finally committing to a property.
After taking into account the typical criteria of location, price, amenities etc., it would be wise for property investors to look beyond that and see if they are getting in early.
Being “early” in real estate would usually mean buying a property during its pre selling or its initial launch phases. Yes, there is some waiting time when purchasing pre-selling developments as compared to buying a property that is already up and usable, but for real estate investors, special offers and payment terms, or even property potential can be a huge difference in tipping the scales towards buying early in a development.
Prices – Developers want to launch their project strong and make a quick impact. Early buyers in newly launched projects usually enjoy an introductory discount of anywhere between 3-7% of contract price during the initial phase of selling. This could mean an automatic 3-7% appreciation after the first phase of selling when the investment was made.
Terms of payment – A pre-selling project usually takes between 3 to 5 years to be completed. Since the project is still being constructed, developers often offer different payments that would coincide with the time it takes to finish the project. With this is mind, buyers begin to be property owners without the shock of a huge cash out. The availability of low or no down payment schemes and special payment terms mean investors can tailor owning a property to their cash flow.
Options, options, options. – Being first means more options. Wouldn’t it be great to live in a place where you are still able to choose your preferred view or pick a unit number with some significance such as a special date or the same as your birthday? Furthermore, buyers and investors can choose from different layouts, sizes and price points when all options are still available rather than being left with a slim option of what’s left.
Anticipation for appreciation – Buying a pre selling property means that one is investing in the potential of a project and showing trust in the developer’s vision. A wise investor should always look towards the future of a development. Be it looking for a home or a real estate investment, being able to spot such opportunities and taking action can indeed deliver huge gains to any property investor.
Pre-selling Prices vs. Current Prices per Sqm
Source: Leechiu Property Consultants
Huge Growth in Pre-Selling Investments
A 200% growth in investments over the past 8 years has been not an uncommon trend in pre-selling real estate. Take for example a Serendra Two Bedroom (100 sqm) unit during its launch in 2008 would have cost 10.8M. Today that same unit is valued at 22M which is more than double its value 10 years ago. Putting these rates in to perspective, investors in pre selling projects have been enjoying an appreciation of about 20% per year – higher than most bank rates, bonds and investment funds.
With most of these properties now delivered and ready for use, the possibility of rental income or personal are just more reasons why most pre selling investors are now enjoying and reaping the fruits from their decision to get in early.