Does the Developer Impact Your Capital Gains?

Developer can have an impact on your capital gain potential when investing in a new launch property.

Here’s why:

1. Quality of Construction & Design: High-quality materials, modern design, and good workmanship from a reliable developer can enhance the desirability of the property, leading to higher resale value and better rental yields. Poor-quality developments may suffer from issues such as frequent maintenance problems, affecting property value over time.

2. Reputation & Track Record: A reputable developer with a history of successful projects can boost the value of your property over time. Buyers often trust well-known developers, which can positively influence the demand and resale value of the property. Developers with a strong track record of delivering high-quality homes often create properties that retain or appreciate in value.

3. Developer Business Model. How much Profit Margin would Developer be looking at when they are selling the New Development to the consumer. Let’s take a look at one situation, on the extent that Developer has the same LandCost/Construction Cost/Expenses. What determine the selling price would be Developer Profit Margin.

So does it mean Lower Developer Profit Margin mean a better chance of Gain ?

Twin Vew Land Cost 591.5 PSF PPR (15 Feb 2017) vs Whistler Grand Land Cost 800PSF PPR (7 Feb 2018)

But when launch on the Market in 2018, Twin Vew Sold at an Average of $1400PSF vs Whistler Grand at an Average of $1356PSF even though Twin Vew Land Cost is Lower.

The difference is because of Developer Profit Margin and in this Case, Whistler Grand Developer are selling at a lower Profit Margin which mean towards the end, price likely to be increased which as followed

2019 ~ $1399PSF

2020 ~ $1515PSF

2021 ~ $1565PSF (SOLD OUT)

Thus, a good paper profit for all the buyer 😊

In summary, the reputation, quality, and track record of a developer can play a significant role in your property’s capital gain over time. When choosing a property, it’s wise to consider who the developer is as part of your investment strategy.