Post Launch Condominiums - good buy or good bye?

Understanding Post Launch Units

Let us get the definition out of the way first - Post Launch units for New Launches are the condominium equivalent of SBF (Sales of Balance Flat) in the HDB sector. They are generally the remaining units after the preview portion of the launch of any condominiums.

The Preview segment of the New Launch usually only last about 2 weeks, and is often regarded as the holy grail of timing to get into the property as you have the first dips on units (and hopefully better pricing) in the New Launch development.

However, given that everybody's circumstances are different, there are many situations where buying a Post-Launch unit might make more sense for you.

Benefits of Buying Post Launch Condominium Units

One of the primary advantages of buying post-launch condominium units is price stability.

At the initial launch, prices are often set based on projected demand and market conditions. By the post-launch phase, the prices have stabilized and exact pricing are available, providing a clearer picture of the market value.

• Reduced Speculation: Unlike pre-launch units, where prices can be speculative, post-launch prices reflect actual market demand. (There might even be discounts!)

• Transparent Pricing: Buyers have access to more comprehensive price information, including transaction history and comparable sales data.

1. Price Stability and Transparency

2. Timing of Launches

Sometimes, New Launches can be launched at the wrong time for you.

You might be locked-in due to Seller-Stamp-Duty (SSD), unable to purchase due to ABSD, travelling, overseas, fell sick or have other prior serious commitments. Post Launch units offers the flexibility to visit the show-flats apart from the two-weeks preview period, with also the added benefit of visibility on price, time-line and market-certainty.

• Sticky Price Point: Whilst Preview prices tend to be the lowest (usually), there are times when the preview pricing is continued for the post launch units. Typically, if market conditions are not red-hot, prices tend to persist for at least another few weeks.

• Move-in Soon: Some buyers would want to have something newer, yet do not want to wait the 3-4 years period where the New Launch project is under construction. A Post Launch condominium can be a good alternative where TOP date is just 1-2 years down the road or even move-in ready in some cases.

3. Can Post Launch Condominiums Make Money?

While Post Launch units generally do not command a better price than purchased at Preview-Launch, they are generally on an upwards appreciating trend, as the main capital appreciation "jump" usually occurs after TOP (key collection), where investment buyers at preview tends to want to sell and profit.

Take for example Parc Esta, a New Launch sitting on previous en-bloc land that was launched in 2019. It sold 73% of its released units and was also known as one of the most priciest launch of 2019. After the preview, Parc Esta's prices were steadily increased by the developer, in what we call developer staging.

Parc Esta, Sims Avenue, 1399 units, Launched 2018-2019, TOP-ed End 2022-2023

Hillhaven, Hillview - Post launch units allows much visibility in the actual prices, and other information - no more guessing:)

If we take a look at one of the example here, where different owners bought the unit of 1227sqft, respectively in Y2019 and Y2020.

Both owners (preview and post launch) made money, but what is interesting to note is that the person who bought at post launch actually made more money on an annualized basis than the one who bought at launch. In every investment, it is more important to note the percentage gain annualized rather than just the lump-sum basis. A $1million dollar profit over 30 years is not better than a 300k profit over 5 years, in fact it is less than halved earned!

Timing of purchase and exit is important! Let us look at a case study below

Can post launch units make money?

Yes, but do choose wisely. Not all post launch condominiums can make money. There are 10 major factors affecting how the value of the house will appreciate and will be covered here.

4. There might be discounts

In accordance to Singapore's law, the developers have a set deadline for the building and selling, which is made in part to avoid land-banking by companies, set 5 years after a successful tender bid on the land. Non-adherence can see an Additional Buyer Stamp Duty Tax (ABSD) rate of about 40%.

Example: One Draycot

This pressure on the developer to sell has seen heavy discounts to entice buyers to purchase such as the recent Cuscaden Reserve Post Launch, which saw a 20% dip in prices or One Draycott's promotions, which offered not just a monetary discount of up to 400,000, but also flexible financing models. Read more here

While most post launch discounts might not be as exaggerated as this, there still exists areas of savings for purchasing your house. In fact, in 2024, there were up to 22 Post Launch Condominiums that were holding promotions. These promotions are usually not widely advertised in the mainstream news, and are more often disseminated through marketing agencies. There is a pattern on how these discounts come to be, and it is interesting to note that these condominiums usually have similar characteristics.

Feel free to reach out to me here to check if there's discount in the post launch unit of your choice

Disadvantages of Buying Post Launch Condominium Units

1. Not Enough Choices

The single biggest disadvantage of buying a post launch unit is the availability of units when the new launch is extremely popular. This is especially poignant in the smaller 1 or 2 bedder units which are more often than not sold out during preview, especially in the extremely popular launches. Some New Launch like J'den at Jurong East sold 88% of their units in a single day. If you didn't get in during the preview, the left over units are generally not great - usually the penthouse units left.

2. Slightly Higher prices than New Launches

The second disadvantage of post launch is usually associated with pricing.

People often assume that prices are higher during post launch. That is not always the case.

There are times where prices at post launch are at parity or even lower than at preview. In such a situation, it will actually be more profitable to buy a post launch unit compared to at preview as your profit margin annualized will be higher than the person who bought at preview

Case Study

Let us take a look at Treasure at Tampines

SINGAPORE'S largest condominium Treasure at Tampines moved 272 units at an average S$1,280 per sq ft (psf) over its launch weekend.

That translates to about 12 per cent of the 2,203 units in all, and about 56 per cent of the 490 units developer Sim Lian launched over the weekend.

SINGAPORE — Close to 7,000 visitors thronged the showroom of what is touted to be the largest private condominium launched in Singapore, with over 2,200 units set to go on sale.

Launched on Friday (March 15), Treasure at Tampines sits on top of the former Tampines Court, a Housing and Urban Development Company (HUDC) property which was sold en bloc for S$970 million in August 2017.

Treasure at Tampines was a hot project launched in March 2019 and was hugely popular. There are over 300+ sellers with a 100% profitability rate and 0% losses.

Let's take a look at the data to see if the entry timing early vs late is a factor for profitability:

By taking these data and averaging out the profitability of all the units (from 1 Bed to 5 Bed), we can see the distribution of profits:

We can safely assume that by the distribution that the profit range of the lowest tier 0-999999 is the profit by the 1 bedroom sellers, and so on.

Interestingly, when we take a look at the data with a time-variable, we can see a very interesting pattern, whereby the ones that bought at a later stage make more annually vs those that bought at preview, even when developers raise their prices.

Post-launch purchase buyers do make profits!

Just by taking a snap shot of the bigger units in Treasure at Tampines, we see that, in fact buyers that bought after 2019, make the most profit annualized.

Did Developers raise prices over the course of the launch? Yes

Was it a super popular project at the preview of the launch? Yes

Were there a lot of left over units after the launch? Yes

Did buyers of post launch units make a profit? YES

Conclusion

There are certainly other reasons why this project is very profitable, but the New Launch vs Post Launch is not up one of the factors.

In fact, I have placed the 10 reasons on how and why a project can be profitable in a scorecard here.

Do take a look and join me in a closed group session to learn how to use the scorecard and combine with the current market strategies to build a profitable portfolio