Sub-sale: A Market Segment to Consider in 2022

sub-sale under construction
Goh Weihan
Goh Weihan

NextDestinationHome

Congratulations on the sale of your existing property! Many buyers are, however, stuck between a rock and hard place. Exiting their current place of residence with a good price in the current market generally leaves them either having to purchase a resale unit similarly at a high price or limited options in the new launch market, which have been mostly sold out the past couple of years. 

Thus, we have guided buyers to consider a widely overlooked market segment – Sub-sale units.

What is Sub-sale?

The Urban Redevelopment Authority (URA) defines a sub-sale as “the sale of a unit by one who has signed an agreement to purchase the unit from a developer or a subsequent purchaser before the issuance of the Certificate of Statutory Completion and the Subsidiary Strata Certificates of Title or the Certificates of Title for all the units in the development”. 

Simply put, a sub-sale is the secondary sale of a unit before it is completed.

How Sub-sale units will make sense for you?

Early entrants of new launch units will generally stand to enjoy high capital appreciation due to developer stage-up pricing. However, purchasers need to wait out 3-4 years for the entire construction duration, which usually means either staying with a family member or renting a place, which will eat into any sales profits and can be a challenge if your landlord is actively looking to sell off his place too.

Hence, many buyers turn to the resale market which may result in a scenario of selling high, buying higher and not purchasing the actual dream home of their choice. 

In comes sub-sale units which is a good balance of a new launch with capital appreciation but without the long wait time and price tag of the resale market. 

Sub-sale units are generally priced below developer prices of existing stock because on one hand, the original purchaser has made sufficient capital appreciation while on the other, they do have plans to off-load their asset quickly for personal reasons. Through the purchase of a sub-sale unit, buyers obtain a brand new unit with some paper gains right off the bat. 

Also, as these sub-sale sellers want to avoid the Seller’s Stamp Duty (SSD), they will usually request for a longer exercise period, allowing buyers to just put an option fee to reserve the unit whilst having a longer lead time to sell off their existing property, ultimately reducing the wait time for the 2nd property.  

At Next Destination Home, we live by the belief that our client’s home has to not only be a place to create memories but also to be an asset to provide future options to adapt to the family’s ever changing requirements. 

If you would like to find out more, do reach out to our team here. Otherwise, we will appreciate a like and share!

Do check out our insights on other real estate related topics here.

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