Tuesday, April 5, 2016

Creative schemes to move unsold units

One developer gets creative to clear its unsold units. According to market sources, OUE is offering two payment schemes for its OUE Twin Peaks project on Leonie Hill Road.

Under the first scheme, also referred as the delayed payment scheme, buyers can put down a 20% down payment and exercise the option by December 30, 2016. Buyers who are subjected to ABSD payment stands to benefit if the Government tweaks the ABSD requirement by then.

The second scheme, similar to a deferred payment scheme, allows buyers to put down a 20% down payment and pay the balance 80% two to three years later. Buyers have to exercise the option within two weeks and collect the key to the unit by paying an additional $2,000. They will also pay the typical stamp duty plus ABSD where applicable.

In addition, buyers will enter into a private treaty with the developer to pay the remaining 80% two to three years later. In the meantime, they are allowed to occupy or rent out the unit.

Buyers can delay interest payment under the second scheme. At the same time, they can continue earning interest on their CPF or invest their rental income. Buyers who are currently constrained by TSDR or LTV requirements can also take advantage of this scheme while they dispose other properties or accumulate more cash to pay the balance 80% of payment.

The second scheme has one drawback. According to market sources, the developer is extending a 15% discount off the listed price under the first scheme but only 12% discount under the second scheme.

The two schemes are possible as OUE Twin Peaks has obtained the Certificate of Statutory Completion (CSC). The project received its Temporary Occupation Permit in February 2015. Based on this, the developer has until February 2017 to finish selling all the units to avoid paying extension charges.

As at September 2015, there were still 392 unsold units in the development. The 99-year leasehold project has a total of 462 units on two towers. Units in the project are on the market fully-furnished.

Upon obtaining CSC, developers are not required to report their sale status to the Controller of Housing. Based on caveat record, there have been four transactions from October to date.

Two of these transactions were lodged this year, both involving 570 sq ft units. One of the units, on 35th floor, fetched $2,918 psf. The other, on 14th floor, was sold for $2,629 psf. Anecdotal evidence showed prices have trended down. In May 2013, a 570 sq ft unit on the 16th floor changed hands for $2,805 psf.