Even developers who do not face financial penalties for hanging on to unsold units for extended periods must eventually push their units out to the market.
High-end developer SC Global is a case in point and is launching a payment scheme for Hilltops luxury condominium in Cairnhill, completed in 2011 but only 20 per cent sold.
SC Global is not affected by Qualifying Certificate financial penalties which apply to firms with foreign owners which fail to sell their units within a set period.
The company's "enhanced purchase plan" comes after a slew of creative payment schemes used by developers of late. Some have been successful, such as a deferred payment scheme at OUE Twin Peaks which has helped it sell over 160 units.
After a long hiatus, SC Global is seeking to sell its units now as "the market is in a mood to buy into such schemes. Buyers are looking into the next property cycle", said Mr Alan Cheong, Savills Singapore research head.
It could also be wanting to raise capital in order to rejuvenate the company's portfolio, added Mr Desmond Sim, CBRE research head for Singapore and South-east Asia.
Under the latest plan, buyers pay an upfront payment equal to 20 per cent of the unit price, and are given a two-year option to purchase the unit at a price fixed today. A total of 30 units owned and being leased out by SC Global are available under this scheme.
During the two years, buyers get an annual return of 10 per cent on the downpayment - thanks to tenancies managed by SC Global. So, a 20 per cent payment on a $3 million unit, or $600,000, would generate an annual income of $60,000 a year for the buyer.
Should the buyer eventually decide not to exercise the option, the downpayment is forfeited although he gets to keep the rental income.
SC Global chairman and chief executive Simon Cheong said the plan was designed in response to feedback from prospective clients keen on its property but who may need the flexibility of extra time.
Hilltop has 241 units in all, comprising two and three bedrooms from 800 sq ft to 1,700 sq ft. Prices are from $2.5 million to $6 million, or about $2,700 per sq ft (psf) to $3,000 psf - much lower than around $4,000 psf when its units were first sold in Oct 2007.
While SC Global's plan is believed to be the only one in the market now with guaranteed yield, the idea is not new. In 2002, Costa Del Sol by Cheung Kong Property offered a 5 per cent rental yield guarantee or a 10 per cent value appreciation guarantee, said Mr Sim of CBRE.
Buyers pay an upfront payment equal to 20 per cent of the unit price, and are given a two-year option to purchase the unit at a price fixed today.
A total of 30 units owned and being leased out by SC Global are available under this scheme.
"But SC Global's is better than the typical guaranteed yield scheme as it's backed by existing tenants. The only drawback is that one can't move in immediately," he noted. Units under the plan are also sold on an as-is condition.
Mr Dominic Lee, a PropNex Realty branch district director, said the scheme is attractive given the two-year option period, by which time there could be some changes to property cooling measures. "But buyers should consider their view on the market in two years' time - for example, if market prices will still be at similar levels then."