OUE is offering potential buyers a form of deferred payments in a bid to sell off remaining units at its Twin Peaks as the market struggles with plenty of unsold stock.
Deferred payment schemes (DPS) were very popular back in 2002 to 2006 but were abolished in 2007 for uncompleted private homes. Developers cannot offer similar payment plans if their projects are still uncompleted.
OUE has obtained its certificate of statutory completion for the project so it is no longer under the Housing Developers Rules. This rule involves strict progress payment rules.
This 462-unit development was completed in February last year. Around 80 units have been sold at one tower with OUE plans to bulk-sell units at the other tower.
Under the second variation, buyers make a 20% down payment and sign the sale and purchase the agreement so they can collect the keys to their new home. The remaining 80% shall pay two or three years later.
There is also a catch – OUE prices in a premium. For example, a 4th floor unit under the DPS appears to go at about 9% more than if it were sold without the scheme, based on approximations from recent transactions.
This could actually still make sense for investors, according to Mr Alan Cheong, a Savills Singapore research head. Assuming interest savings of 2$ annually for three years and net rental yield of about 2% per annum as well, the net gain will be about 12%.
OUE Twin Peaks is believed to be the first instance in recent years where a DPS has been made available. DPS has proven successful in the past. There was a success launch at the MCL Land-Ho Bee and more than 150 homes were sold within weeks of its relaunch with DPS incentive in last 2002.
“Developers who do well are those who are innovative and are able to offer sustainable sale options which respond to current market requirements”, an executive director and head of corporate real estate at TSMP Law Corporation, Ms Jennifer Chia, said.