Property developers have awakened to the fact that discounts are not enough to lure buyers especially in the current market that has property cooling measures. This has led to the now popular deferred payment scheme-DPS.
The first to roll out DPS is OUE Ltd, a listed property group, which did it 2 months ago at its OUE Twin Peaks. This was successful at it helped clear almost all units except a few on one of the twin towers with 231 units. The success has stirred interest in the second tower from bulk buyers and funds. Based on the success, other developers have devised their versions of the scheme.
CapitaLand launched Stay-then-Pay plan on June 13 for The Interlace and D’Leedon. In the scheme, buyers pay a down payment of 15% and the remaining 85% after one year. With it, CapitaLand sold 30 units at The Interlace and 50 units at D’Leedon in days.
TG Development has its Experiential Leasing Scheme in which buyers can lease the property for 2 years before making a decision to purchase it. The pilot scheme was launched on June 16 for Lloyd Sixtyfive, a freehold condominium with 76 units. Under the scheme, a buyer signs a 2-year lease and pays a 10% down payment or advance rental and a refundable deposit of 2.5%. The buyer moves in upon the project completion in first half of 2017. If the buyer opts to purchase the units, the developer refunds the 10% and 2.5%. If the buyer does not opt to buy, the developer only refunds 2.5%. Currently, the scheme is for the twenty 1-bedroom units.
Before its abolishment in 2009 on property cooling measures, DPS was given for projects under construction. Currently, it is for projects that are complete and with a Certificate of Statutory Completion and a TOP. It seems to favor projects subject to extension charges.
This has motivated developers to complete the projects and take advantage of the offers. One such example is United Industrial Corp with 3 incomplete projects namely Alex Residences with 429 units and scheduled for completion in Feb. 2017, Pollen & Bleu with 106 units to be complete in June next year and Mon Jervois with 109 units to be complete by end of 2017.
The developer is subject to 10% ABSD if the units are unsold but not to QC extension charges. After completion, the developer intends to provide flexible sales terms.
Teambuild Land also wants to complete Singa Hills, which has 58 units and 28 unsold. The property is subject to QC charges and 15% ABSD. Upon completion, the developer intends to explore ways of selling the units including DPS.