Have you sold a property before or after TOP? What was your experience?
In the real estate market, timing is crucial. The decision of whether to sell their newly launched condo before or after receiving a temporary occupancy permit (TOP) is one of the most important ones for real estate investors. For those unfamiliar, TOP denotes that your condominium is prepared for occupancy.
Is now the ideal time to sell, though? That response might surprise you!
Price Movements: Before and After TOP
It’s important to understand how condo prices fluctuate before and after TOP. Two specific projects have been examined: Seaside Residences (D15), finished in 2021, and Botanique at Bartley (D19), finished in 2019.
Over time, and particularly after completion, the prices per square foot (PSF) of both projects increased. The price trend eventually resumed rising, despite a slowdown during COVID-19. It would appear from this that prices usually increase following TOP. Does this imply that post-TOP sales are always more lucrative, though? Not in every case.
Profitability: Selling Before vs. After TOP
We looked at the average gains and losses from selling before and after TOP in order to make an informed choice. The outcomes could contradict popular belief.
As evidenced by the large number of New Sale to Sub-Sale transactions, data indicates that many buyers prefer to sell their newly launched condos before TOP. In particular, 82% of sales occur before TOP in the Core Central Region (CCR), 97% in the Rest of Central Region (RCR), and 99% in the Outside Central Region (OCR).
Interestingly, regardless of whether the sale takes place before or after TOP, CCR properties are more likely to result in unprofitable transactions than OCR and RCR properties. Selling before TOP offers a higher annualized capital gain by 0.5%, but it may result in a slightly lower profit. The profit difference between selling before and after TOP is negligible. This means that, on an annual basis, selling before TOP might result in higher returns.
Analysis by District
Based on district-level data, D23 (Bukit Batok, Bukit Panjang, and Choa Chu Kang) had an outstanding 8% average annualized return in the New Sale to Sub-Sale category. On the other hand, with an annualized return of -4.25%, D18 (Tampines and Pasir Ris) had the worst performance.
With an annualized return of 5.69%, D20 (Ang Mo Kio, Bishan, and Thomson) were the best performer in the New Sale to Resale category, while D09 (Orchard and River Valley) had the worst performance, returning -1.46%.
Project-Specific Insights
We also examined particular initiatives that were introduced after 2018. Several of the best annualized return performers are as follows:
- Daintree Residences: 22%
- Jadescape: 23.4%
- Parc Esta: 24.3%
- Stirling Residences: 22.4%
- Treasure at Tampines: 22.1%
- Whistler Grand: 27.4%
These projects performed better than the rest, particularly in the New Sale to Resale category, indicating that it might be better to sell after TOP.
Nonetheless, six projects - Daintree Residence and Jui Residences among others performed better when sold prior to TOP, suggesting that the optimal approach varies based on the particular property.
The effects of timing your property sale around the TOP date are often subtle but can have a significant impact on your returns. You should base your decision-making on elements such as the seller’s stamp duty (SSD) and the state of the market.
Waiting until after TOP may make sense for upscale condos, as there is a limited supply of these units. But for condos targeted at the mass market, it might be wiser to sell before an influx of listings floods the market.
As the price of private real estate begins to increase more slowly, investors should be ready to hang onto their properties for a longer period of time and possibly sell well after TOP.
