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Why buy new property? 8 things to take note.

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Which is better? New property or secondary property?

My first property was from the secondary market (Relau, Penang). My second property was from the developer (Sungai Ara, Penang). My 3rd property was from the developer (Kota Kinabalu) and my 4th property was from the secondary market. (Kelana Jaya). By the way, all of these are high-rise units. I have only recently purchased my first landed unit.

Since they are high-rise, it has to be in levels. In terms of levels, first purchase was on level 5, second one was level 5, third one was level 2, fourth one was level 7. Hey… all are low floors! People say anything below 10 floor is considered low floors. Haha. Okay, the highest level I have bought thus far was level 21. That’s out of 42 levels.

This has always been the same case for me even after so many years of property investment experience and I do not think I have any special preference for new property or secondary property. I love both, as long as it meets my requirements.

Today, we look at just the primary properties, both the advantage and the disadvantages. The next article, we will look at the advantages and disadvantages of a secondary property.

Advantages of Primary Property (New / from the developer)

  1. Contemporary. It is usually based on current trends. Thus, it will look better, nicer and more modern compared to a 10-year old property. Of course, we need to be reminded that new today would still mean old tomorrow. (perhaps 10 years later)
  2. Easier Entry Financially. Home loans of 90% is quite usual from the banks for the particular property. With the current market, this down-payment of 90% could be even lower depending on project and the developer too.
  3. Promotions. These days, developers are more focused on selling versus trying to maximise their profits via high prices. We have developers who are more open to offer something extra such as renovation packages, electrical goods and more.
  4. More unit choices There are more choices in terms of unit availability. Even if the development is left the final 50 units for example, there are still 50 units versus the usual one unit when it comes to secondary unit. There are more choices whether high-rise or landed ones.
  5. Fixed price. Price is fixed versus the many different prices when we buy from the secondary market. Even if there are price differences with the view, the direction, the layout and other circumstances but generally, the price is more fixed.

Disadvantages of Primary Property (New / from the developer)

  1. Initial furnishing cost. Usually, when the unit is new, renovation is needed. In fact, the typical number when it comes to renovation is around 20% of the property price. This is not within the property price and thus is not part of the home loan. Thus, buyer will need to prepare this in advance too.
  2. Possibility of abandonment. While this possibility is not considered high, it is still happening. There are still developers who could not complete the project due to financial difficulties. Sometimes, it may also be a delay and this will mean the buyer will have to continue paying rental while waiting for the new home to be completed.
  3. Not immediately available. Okay, at this moment, this is not entirely true because there are projects which has been completed and there are still unsold units from the developer. However, generally a buyer would have to wait 3 years in order for the project to be completed. Even then, inspection rectification will take another few months followed by renovation which will take more months.

Conclusion

If you like mature neighbourhoods, it’s no longer possible to buy new landed homes. Perhaps high-rise units may be available. If you prefer new townships with lots of amenities and super wide internal lanes for example, then new property would be the only way to go. Older neighbourhoods would have narrower internal lanes. As for all the other reasons, look back above. Then decide if this is indeed for you. Else, wait for the secondary property article tomorrow.

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2 thoughts on “Why buy new property? 8 things to take note.”

  1. Hi kopiandproperty, could you share your views on if a project is good (strategic location, consistent demands despite covid) but bad management. Any suggestions if it’s still a go or how to deal with bad management? or a bad management should already be a warning sign? Would love to know what u think. Thanks.

    Reply
    • There are usually the JMB and the MC. There are usually good and bad apples with both. However, when it comes to bad management, I would personally look at whether the maintenance of the development is still intact, are the management fees collected successfully and last but not least, why is the management bad. If the facilities are mostly damaged, the corridors are dirty and at night, many of the lights along the corridors are no longer working, then this is a very clear sign that even if we have a better management, it will likely take some time and FUNDS to repair all these. The reason is simple. Maintenance fees are good when it is for maintenance. However, if everything is not maintained and the fees have to now cover replacement, then it is likely to be insufficient. Thus things would just get worse. Secondly, must find out IF everyone is paying their maintenance fees on time. If majority are paying on time, then it is easier to take actions against the ones who are not. This is one clear sign whether or not the management can continue with their role. No funds = No maintenance no matter how good the management is. Last but not least is then the management itself. Do we know why? Can the good owners take over the current management? If it is now a MC, it’s possible. Just need get enough votes. Hope this gives you some idea to decide.

      Reply

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