A first mover is a service or product that gains a competitive advantage by being the first to market with a product or service. In the case of a new launch condo, it would be buying at launch prices from the developer and gaining from capital appreciation in the resale market. This is especially true when you buy during the VVIP preview or soft launch when prices are discounted for those who commit first.
Does the early bird really catch the worm?
As a common practice in the industry, developers tend to gradually increase the sale price after the soft launch, into the official launch. Generally that would seem to be the case, but not always.
In many cases, developers would only reduce prices when they want to clear a few remaining units very quickly. However, there were also scenarios for developers to subsequently reduce price when the original launch prices were on the higher side as compared with nearby similar projects.
An example of first-movers not gaining an advantage in pricing are the buyers at the soft launch of The Levelz in August 2001 at an average price of $830 psf. The project was officially launched in December 2001 at an average price of $788 psf.
Another project that did not have the first-mover advantage was Tanamera Crest. Launched in February 2001 at an average price of $560 psf, it was subsequently relaunched in December 2001 at a reduced price of $445 psf.
First-movers of a new project would only have an advantage if the property is priced competitively or if there are major developments/redevelopments in the area, such as a new MRT station or a prestigious school relocating there.
The best case scenario for first-mover advantage would be to be “first” in both project and district. What do we mean by that? Take the example of the HDB town Punggol. Punggol 21 was first conceived in 1996 as more than just a usual HDB new town. The idea was to create a housing environment appealing to a new generation of better-educated and more sophisticated Singaporeans. Punggol, previously home to pig farmers, was to be transformed into a vibrant, lively town offering well-designed HDB flats with parks, shopping centres and a host of recreational and social amenities.
The first executive condominium (EC) launched in Punggol was Prive in 2011, at an average price of $680 psf. As the first ever EC in this town, the first-movers of this project would have gained a tremendous advantage as the town developed. In 2020, the average resale transaction price of Prive was about $1,018 psf. Several ECs were subsequently launched in Punggol with the latest being Piermont Grand in 2019 at an average price of $1.098 psf.
This is a good example to demonstrate that one must be able to take a calculated risk, bite the bullet to be a ‘first-mover’ in a new vicinity to sow the rewards of larger gains.
If you are buying a property for investment purposes, a first-mover might not be so advantageous as it would seem. Buying a new launch at the soft launch means waiting at least 3 to 4 years before TOP to start collecting rental income. If you are buying to stay in it yourself, it is likely you may have to rent another place to live while the new launch project is being built.
However, buying at the soft launch does still come with its perk. You get the privilege of choosing your favourite unit. If you like a high floor or an unblocked view, your chances of getting that choice unit would be much better when you are a first-mover.
Buying a new launch project that is near its TOP date means you can almost rent it out immediately for rental income or you can move in without having to worry where to stay during the construction period. Early buyers however, have to put up with the hassle of getting a temporary place of residency.
Another plus point is that almost all the facilities would be completed and you can enjoy what you pay for. Do take note that some facilities within the development may not be available yet as there are final works to be completed by the developer/contractor. TOP, as the name implies, is a temporary occupancy permit which does not equate to a statutory completion. There are bound to be outstanding works to be completed and minor clearances from authorities to obtain post-TOP before a Certificate of Statutory Completion (CSC) is issued.
Progressive Payment Scheme (PPS)
One huge advantage of buying a new launch condo is the PPS where you pay a certain percentage according to the project progress. Aside from the initial 20% down payment, you pay progressively as the project is being developed, in the following sequence:
Foundation work 10%
Reinforced concrete work 10%
Partition walls 5%
Roofing 5%
Doors, window frames, electrical wiring and plumbing. 5%
Car parks, roads, and drains 5%
Temporary Occupation Permit (TOP) 25%
Final Payment / Certificate of Statutory Completion 15%
While it is true the early bird usually catches the worm, not all first-movers have the upper hand. It all depends on market sentiment, government policies or rather the timing of the policies and the economic outlook.
If you are in the market for a new launch condo, private or HDB resale property, be sure to check out www.mogul.sg with its smart keyword search, 3D map and “Sun Direction” feature to find your next dream home.
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