There are often two schools of thought when it comes to real estate purchases: subsale versus brand new. Although both come with their own merits and advantages, the answer to which is most ideal often comes down to the choice of the buyer/consumer.
The good news is that choices are aplenty in the current real estate market. So, if you are in the market for a real estate purchase then there are some considerations to factor in. After all, research and being informed will ultimately decide if you have made a smart purchase or not.
The Appeal of Buying Brand New
A brand new or upcoming property project comes with several distinct advantages. First and foremost, the freebies/discounts as well as rebates that are offered by the developer. Most developers also require a lower down payment fee and then there are also government incentives and programmes to further entice.
Take for instance the HOC 2020 (Home Ownership Campaign), which includes stamp duty exemptions for first time buyers. There are also rent-to-own schemes (RTO) for PR1MA homes. Buying new or from an upcoming project also allows you to see the potential of the home via the showroom unit. You can also view the overall masterplan of the development.
The purchased unit will be bare, with some items or fittings thrown in, dependent on the developer. This is opportune for how you would want to fashion your future home. A brand-new unit also comes with a warranty for defects. You will also be the first owner of the property so that’s always a plus but there are some considerations when buying new.
For starters, the choice of area may not be to your liking. With land scarcity an issue, most new developments take place in the outskirts of main areas. Granted you may find developments within popular neighbourhoods but that will often translate to a higher purchase price.
Also, the development won’t be ready for the next few years (great, if you’re not in a rush) but it also means you will be locked into it financially. There is also a risk that the project may not be completed on time. We also have all heard horror stories about projects being abandoned as well and that’s also a risk one has to take.
Then there is the day when you finally take ownership of the home. Remember that you have bought the home based on the showroom unit, which has been dolled up extensively with top quality fittings and interior design. To get it close to that would require a hefty renovation budget set aside.
Lastly, the guarantee of the property you bought living up to what was promised. Remember, developers will provide you the best within the plan itself, but there’s also a chance of another neighbouring project or highway propping up next door that will disrupt the view as well peace and quiet.
Going for Subsale
Basically, you’re buying a second-hand unit, one that has been lived in before. That is not always a bad thing, because it means that the building is tenanted, and the defects and teething problems have been taken care off. Sometimes, a seller will even consider selling the unit ‘lock, stock, and barrel’, including furnishings, aircon units, refrigerator and so forth.
Subsale units also offer you the chance to see and explore the unit, its facilities, as well as its neighbourhood. You can also cherry pick the area you want to live. Since the units are already built, there is a choice of moving in or renting it out immediately.
That said, you may have to pay a higher price for some of the properties, especially if they are situated within a prime area. In terms of capital appreciation, any potential rise will be marginal as the development is already somewhat matured.
Additionally, subsale units require a higher down payment along with SPA legal fees, stamp duties, and loan agreement fees. Plus, the unit that you’re potentially buying is most likely renovated or done up to suit the taste and styles of the current tenant. Fixing up the place, rectifying visible damages and give it a new coat of paint aside, you may also face some expenditure to renovate the space according to your liking.
Finding a potential unit to invest in also requires a lot of groundwork. Getting an agent to help is good or you can also regularly check what’s currently available in the market. With the real estate prices softened somewhat in various areas, there is a high chance of securing a bargain. Plus you can also take advantage of overhang units and also explore hotspots as well as the auction market to capitalise on a great deal whenever it presents itself.
So Which is Better?
There is no right answer to this question as it is down to what you are looking for. If you are looking for a long-term investment, perhaps a new project would better suit your needs. A quick check on Mudah.my reveals well over 11,000 brand new units for sale.
This includes units such as this one in Wangsa Maju which averages around RM400-RM500k for a decent sized 1000sq ft unit. There is also this double storey home in Sungai Buloh, priced enticingly from RM450,000 for consideration.
In terms of subsale units, the choices are aplenty with over 260,000 listings. Based on data insights, the popular spots for searches by home seekers include the main states of Selangor, Penang, and Johor. Both Selangor and Penang are proven and established states for real estate, especially within key central areas and neighbourhoods where prices are holding stable.
Johor on the other hand provides an enticing opportunity for real estate investment due to the high number of overhang and unsold units within the state.
Regardless of whether brand new or subsale will suffice your needs better, proper research and multiple viewings are undoubtedly necessary to find that home of your dreams. In fact, it may even present itself as a bargain if you know when and where to look.