Overhang units and unsold units, same same?
Overhang for residential units
After residential units have obtained their Certificate of Completion and Compliance (CCC) and Temporary Certificate of Fitness for Occupation (CFO) and they are STILL unsold, they are still classified as unsold units. They will move into the overhang units category after 9 months of the CCC an CFO. So, briefly, overhang residential units is really units which did not receive enough demand from the people! Here’s an earlier article about overhang which is good reading.
Unsold residential property?
As explained slightly above, unsold residential property may NOT be overhang property. Unsold properties can be residential units with building plan approval that has not yet begin construction and it remains unsold for 9 months after official launch. Note that it is official launch and not some other terms like ‘soft-launch’ or ‘vip launch’ or ‘promo launch’ or whatever.
Official Launch is usually mentioned when it’s an Official Launch
There will always be the term “Officially Launched” in the press release of property developers. These properties, if unsold will be defined as unsold NOT constructed property. So, remember, these can also be included into the UNSOLD category and that’s precisely why unsold and overhang units should be clearly distinguished and many of these writers for media SHOULD KNOW versus writing as if both are the same.
Then when they start construction…
Meanwhile, as soon as the construction begins, then these unsold units will be moved to under-construction property category is it remains unsold more than nine months. Again, unsold and overhang even for this category is very different from one another. Please do write properly yeah, so that people do not have the wrong idea and suddenly thinks the market is in danger and they all hold back from buying. More unfortunate thing is, the downpayment they saved, they went on to spend in Shopee. 🙂 Here’s an article about Shopee’s Buy Now Pay Later article. They offered me up to RM3,000! Did they offer you the same?
Whenever we read articles, note the actual words used
Hopefully now when we read articles about overhang and unsold residential properties, we are aware if the writer knows what he / she is writing. By the way, the overhang residential units is BY FAR lower than the total unsold properties. Briefly, overhang means the unit has gotten COO + CFO and unsold properties can just be any property which is not yet constructed or in-construction.
Why do properties go into the overhang statistics?
First, if the overhang property was the property which is loved by everyone, would it go into overhang statistics? Usually, the are sold out fast.
Secondly, if the property was loved by many people but the price was just too high, would it go into overhang statistics? Usually, when the price is just too high, people have to move on.
Th, if the property was loved by many and price was great BUT the neighbourhood was NOT loved by the targeted buyer group, would it go into overhang statistics? Many times we have those ‘popular’ places people love, so there are definitely areas which are lower in demand too.
Sometimes, it’s just due to unforeseen circumstances too
There are many reasons why the property goes into the overhang statistics and sometimes it is just because of a slow market (wrong timing), for example Covid-19 lockdowns will definitely slow down the viewing and signing of Sale and Purchase Agreements too. This is why not all overhang properties are equal and there are definitely some gems to be found there. In fact sometimes, if it’s the final few units, the developer may even offer a very good offer for it!
If I am a developer and I have old unsold units a.k.a overhang units, would I like cash or the unit?
If I am the developer, I would prefer money versus holding on to the property even if the market value for that property is higher. It makes better sense for my financial reports yeah. Remember, once the developer has managed to break-even, every unit sold after that contributes to the profit numbers too. This is why occasionally the very old units which was left unsold (thus part of overhang units) may be sold at an attractive price a few years later.
Happy viewing and buying whether overhang, unsold or even newly launched or secondary market units.
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