Currently there are several property offerings available to those looking to purchase a first home, to upgrade or even invest in property, however, prior to deciding the type of property one would like to secure, it is best to first familiarise with the types of properties available as well as the benefits and drawbacks that come with choosing a particular property.
Generally, those looking for a property will choose from the wide variety of housing options available in the primary and secondary property market. What do these types of properties respectively entail?
“Primary market properties are sourced from the “developers’ market” which includes single and multiphase projects as well as offerings within townships such as; residential, commercial and industrial projects that are presented to the public.
Subsequently, interested parties would either directly contact the developer’s sales personnel or go through an ad hoc or exclusive agent to secure a particular property.
“Secondary market properties” is the term used for “second hand” developments and are similar with regard to primary market properties; as all property types can also be purchased in this market, via an ad-hoc or exclusive agent,” states REI Group of Companies propenomist and chief executive office Dr.Daniele Gambero.
Gambero adds, “the clear difference experienced when a property buyer purchases a primary market property is that the margin of finance (MOF) is usually prior determined by the developer and banks, as compared to the process needed when purchasing a secondary property; whereby tedious property valuation is required.”
Upon understanding the fundamentals of the aforementioned property market types, those looking to own a property need to evaluate, which chosen property type will perform best and provide one’s hard-earned finances with the best value?
Pros and Cons of Purchasing Primary and Secondary Properties
Back in the year 2010 till 2013, primary market properties were very much in demand despite higher property prices, as some properties were offered with zero down payment and under the developer interest bearing scheme (DIBS) says, Axis REIT Managers Bhd investment head and former Malaysian Institute of Estate Agents president Siva Shanker.
As most of us would be familiar with, properties offered in the said property segment also commonly come equipped with incentive packages by developers offering discounts, rebates, furnishing and fittings as well as subsidies for sales and purchase agreements (SPA) and loan agreement, legal costs and in some cases even stamp duty on the memorandum of transfer (MOT).
Zerin Properties Urus Harta chief marketing officer Aziz Shah conveys, “primary properties would be easier to own, as it is purchased directly from developers who often provide rebates and discounts, resulting in purchaser’s lower entry cost as compared to those in the secondary market.
Furthermore, properties purchased from the primary property market would usually require minimal renovations prior to moving in, thus providing an affordable entry to purchasers.”
Gambero explains, “Secondary market property options do not offer the affordability as experienced with primary properties, however, if you are looking for a “ready to use” property, developments offered in the primary market may not be the best choice for you as most projects will be under construction during purchase, and may take up to a period of 4 years for you to be able to enjoy your newly purchased asset.
Purchasing a secondary market residence may be a suitable option for you if you are looking to generate rental yield instantly especially when the selected property is already tenanted, and the said current tenant has a good payment track record.
“A tenant that has occupied a particular property for a couple of years, is indeed a huge plus point and such aspects should be factored into the sale price of a property, “ Gambero tells.
Siva adds, “it is advisable to buy a tenanted property during the current soft market sentiment that the nation is experiencing, as tenants are not easy to come by.”
Purchasers should be careful when purchasing a property from the secondary market as some homeowners would usually sell their property when refurbishment is due, thus upon purchasing such a property a future homeowner would have to incur high renovation costs before a property is ready for tenancy.
“If you buy an existing property at least you know exactly what you are purchasing, as compared to buying a primary market property off-plan. One may not be able to gauge the quality of a unit and experience the ready amenities that particular property would offer,” Siva enlightens.
One important tip when looking for a secondary market property is to ensure the age of one’s designated property prior to purchasing says MAPEX organising chairman Datuk Ng Seing Liong.
“When purchasing a property from the secondary market if one is unsure about the age of a property, one could end up paying a lot of money due to the property being located in a mature area and the extensive renovation costs required to revive a property to its optimal state,” Ng shares.
Ng adds, “That being said many people move into secondary properties due to its unmatched location and amenities such as schools, hospitals and supporting commercial establishments. Adding to that one will also be ensured, that a selected property would not stall during the construction stage, which has occurred with a handful of primary market developments in the past.”
Aziz cautions, “If a purchaser does decide to buy a property from the primary property market, it is always best to select and secure a property from a trusted developer with a good track record and a location that is desirable to the buyer. Purchasing from unknown developers may result in poor quality finishes or worse, a developer unable to complete construction of a development.”
(By Viknesh Ashley Clarence, 14 May 2019)
What do you think about purchasing a property within the secondary or primary property market? Do let us know in the comments section below!
