How Profitable is New Launch Condos in Singapore?

Summary

In this video, the speaker analyzes the return on investment (ROI) for various types of new launch properties, such as one-bedroom to four-bedroom units. Using the Kelvin project as a case study, they provide detailed calculations showing the profits investors can make after factoring in costs like agent fees and interest. The video highlights the benefits of leveraging property investments and encourages viewers to act quickly to maximize returns, emphasizing the potential for significant profits over a 3-3.5 year holding period. The speaker also teases upcoming property launches for further comparison and insights.

Takeaways

• 😀 Real estate investments in new launches, like the Kelvin project, can yield significant returns, especially after a 3-3.5 year holding period.
• 😀 The ROI for different unit types in Kelvin ranges from 15% to 34%, with larger units offering higher absolute returns.
• 😀 One-bedroom units (1B) typically return 15-16%, while two-bedroom (2B) and three-bedroom (3B) units offer returns of 17% and 21%, respectively.
• 😀 Four-bedroom (4B) units in the Kelvin project can generate returns between 25% and 26%, and large ‘Giant H’ units offer the highest returns at 30-34%.
• 😀 For maximum leverage, most investors take out a 75% loan for new launches, allowing them to achieve higher ROI on their investment.
• 😀 Down payments for new launches typically range from 28% to 30%, depending on the property's price, with additional 3% down payment for financing costs.
• 😀 Investing in smaller units (1B or 2B) can be a good stepping stone to larger units, as these often yield strong profits and appreciation over time.
• 😀 Property investors who bought in new launches like Kelvin during the pandemic have seen significant appreciation, sometimes doubling their investment in three years.
• 😀 Buying and holding properties, especially new launches, can provide greater returns compared to more traditional investments like fixed deposits or bonds.
• 😀 It’s essential to calculate your ROI after factoring in all costs, including agent fees, interest, and monthly installments, to determine the true profitability of an investment.

Q & A

What is the main focus of the video?

The main focus of the video is on the return on investment (ROI) from purchasing properties in new launches, specifically using examples from the Kelvin project. The speaker discusses various property layouts (1B, 2B, 3B, and 4B) and how they compare in terms of profitability over a holding period of 3.5 years.

What are the expected profits for different property layouts in the Kelvin project?

The expected profits from different layouts in the Kelvin project are as follows: 1B: $158,000, 2B: $267,000, 3B-2B: $400,000, 3B-3B: $550,000, 4B-3B: $590,000, and for giant layouts (4+ Study), it is around $800,000 or more.

How does the size of a property impact the return on investment?

Larger properties typically yield higher returns. For instance, 4-bedroom units (4B) provide significantly higher ROI compared to 1-bedroom units (1B). The ROI increases with the size of the property, especially for larger layouts like 3B and 4B.

How does leveraging loans affect the ROI in property investment?

Leveraging loans significantly increases ROI. The higher the loan amount (up to the maximum of 75% of the property price), the higher the return on investment. This is because the initial outlay is lower, allowing for a larger profit margin over time.

What is the average holding period for a new launch property investment?

The average holding period for a new launch property investment is about 3.5 years, which includes a 3-year holding period and the time it takes to complete the project and sell.

What are the key factors that contribute to the profitability of a property investment?

Key factors include the size and layout of the property, the price per square foot, the holding period, loan leverage, and market conditions. For example, larger units tend to offer higher profitability due to larger price increases over time.

How does the ROI change when using different amounts of loan leverage?

The ROI increases as the loan leverage increases. With a 75% loan (maximum loan amount), the ROI can be as high as 14.1% for a 1B unit. If a lower loan is used, such as 55%, the ROI will be lower.

Why is investing in larger properties, such as 3B or 4B, considered a better option than smaller ones like 1B?

Investing in larger properties like 3B or 4B is considered better because they yield higher returns over time. The ROI for larger properties is significantly higher, making them a more lucrative investment despite their higher upfront costs.

What is the significance of the 'net net net' profit mentioned in the video?

The 'net net net' profit refers to the final profit after accounting for all expenses, including agent fees, interest, monthly installments, and other costs. This gives an accurate representation of the actual profit an investor would make from their investment.

How does the speaker encourage viewers to approach property investment?

The speaker encourages viewers to act quickly and invest in new launches, as waiting could result in smaller units for the same budget. The speaker stresses the importance of leveraging loans and stepping up to larger properties for greater ROI.