Here are some compelling reasons why sub-sale of TOP projects will be a safer bet than selling new home units this year.

2010 A VINTAGE YEAR FOR FREEHOLD TOP PROJECTS

This case study shows that among the 41 condo projects that will be ready for vacant possession in 2010, 18 of them (or roughly 44%) are well placed in prime locations including Districts 9, 10, 11, the Marina Bay and Sentosa Cove. And out of the 18 prime projects, 15 of them (or 83.4%) are of the coveted Freehold status. [See Table 7 for details of projects]

Likewise in 2011, from among the 23 quality condo projects to be ready for occupancy, 14 of them (or roughly 61%) are in the prime districts, with none of them being 99-year leasehold projects. [See Table 8 for details of projects]

In all, the next two years will see a total of 71 quality projects ready for occupancy, and among them 56 projects or 80% of them will boast of the highest prestige of freehold tenure.

As such, owners of such ‘soon-to-be’ completed units will undoubtedly have the upper hand over the majority of leasehold projects that were sold in last year’s property rally.

HISTORIC LOW INTEREST RATE A BIG HELP TO INVESTORS

The received wisdom today calls for the investors to get their feet wet while bank interest rates are still at their historical valley so as to enjoy the fruit of passive income made possible by the unprecedented low costs of capital; rather than waiting for the interest rates to eventually rise when the economy gets better.

The same argument has converted many prospective buyers into believing that real estate investments are the best hedge against inflation.

While there are no obvious flaws in the optimistic assessment of the current market, it is not to say that there are no inherent risks in property investments. But before we discuss the risks, here are some useful information on the candidates for sub-sales in this year and next. [Table 7]

Table [7] – Condos projects likely to receive the Temporary Occupation Permit (TOP) in 2010

Table [8] – Condos projects likely to receive the Temporary Occupation Permit (TOP) in 2011

WORST CASE SCENARIO

However, there is a flip side to the same coin. Luckily, it is not at all bad for the man in the middle – the real estate agents.

Since the 2008 market dip, there have been some signs of incipient fears that some of the condo units which were purchased under the now-defunct Deferred Payment Scheme (DPS) at the height of the 2007 bull-run may be up for distressed sales due to the increasingly cautious banks. Some speculators may have their attempts at bank financing snubbed at these tentative moments.

Financial institutions in developed countries, including China, are being warned by their central bank to tighten credit risk management to prevent a runaway asset bubble. Some buyers who had back in 2007 taken advantage of the DPS may find themselves at the receiving end with the banks becoming more cautious after MAS had raised the alarm in November 2009.

The worst case scenario depicts a sudden collapse of the market confidence in Singapore after a few high profile defaults a.k.a. the Dubai World fashion.

BEST CASE SCENARIO

However, many property investors seem to have firmly subscribed to the best case scenario which forecasts that property prices will continue to rise by 3% to 5% in 2010, if not higher, because of the impending opening of the two Integrated Resorts.

However, regardless of how the scenarios pan out, this should be good news for real estate agents as the sub-sale volume should be much higher than last year due to the record number of new units ready for vacant possession and the uncertainties ahead.

And the best case scenario seems to be gathering currency at this moment as many housing developers are prepared to roll out the high-end projects that they had shelved in 2009 in anticipation of the better times ahead.

• LOOKING OVER THE HORIZON

Buoyed by the renewed optimism, housing developers are lining up more projects located in districts 9, 10 and 11 as well as in Sentosa Cove and Marina Bay for launch in the first half of 2010.

A 228-unit condo in Sentosa Quayside and a 151-unit Seascape will be launched in Sentosa Cove.

In District 9, a 20-unit 42 Stevens was launched in mid-January 2010 at an average price of $1,900 per sq ft (psf). In District 10, 8 Nassim Hill has been launched at $3,100 psf on average in mid-January 2010.

A 229-unit The Laurels and the 64-unit Urban Resort Condo will be launched in the Cairnhill area.

Other projects will be in the vicinity of Ardmore Park, Emerald Hill Road, Handy Road, Thomson Road, Holland Residences, The Holland Collection, Emerald Hill Residences and a condo project along West Coast Crescent.

CDL and Hong Leong Group will commence construction on sites they bought in Chestnut Avenue in 2009. Two other GLS sites, Dakota Crescent and Serangoon Avenue 3 will be launched in the second half of 2010.

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