Hello Azman!
Your question is a good and simple question, however, the answer that you are seeking is simple, yet escapes this forum, so let me add my 2 cents worth.
"Why are new launch projects more expensive than TOP projects?"
1. The concept of wealth creation.
Real estate behaves very differently in Singapore as compared to cities that have large expanses of land. Much of the spikes you see in new launch projects come from previous enbloc developments.
Thus, after factoring in:
1. Acquisition costs
2. Surveying fees
3. Development costs
4. Building and marketing costs,
How can the new building cost less of a $psf basis than the original development on the same piece of land?
2. There is a common preconception that Real Estate is a perpeptual asset, meaning, compared to cars for example, a house/building cannot lose its value. This is so wrong. A house/building, can deteriorate and depreciate with the simple reason that no building can stand for ever. Thus, a building over time will need to be torn down and rebuilt. The LAND it sits on however IS perpeptual. Thus that is where the key to all this lies.
As the land gets reused again and again, factoring in development and acquisition costs, new launch projects will always cost more to a comparative older development!
Hope this helps answer your doubts!
Your Singapore Condo Specialist Team,
Mervin Tang
Senior Marketing Associates
Developer's Appointed Agency
Huttons Real Estate Group
Call Today:
(+65) 9184 0208
Website: http://www.sgcondospecialist.com
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