SIngapore Property Developers Offering Rental Guarantees To Sweeten Deals.

Developers in Singapore are dangling rental guarantees to push sales.

Singapore (I-Newswire) September 4, 2012 - The highly competitive Singapore property market is driving developers to offer rental guarantees to entice buyers to commit. These rentals schemes are used to sweeten deals, and some possibly help investors to secure tenants to achieve a predetermined rental yield.

These offers are usually part of the overall marketing and promotional strategies employed by developers to push sales. It happens when developers are convinced of the long term potential of their development but are unwilling to lower prices during short periods of market fluctuations.

Recently, a Singapore condominium with unsold units in prime Orchard area were offered such a rental scheme by the developer. Buyers were offered a rental guaranteed rental yield of 5 per cent a year for four years for the freehold property completed in 2010. This effectively meant lower prices for buyers. Under the guarantee, if the rental falls below a predetermined threshold, the developer will top up the difference. Buyers who are owners-occupiers were given an outright 10 per cent discount instead.

Investors and buyers felt that such deals let them borrow money cheaply at present low interest rates of about 1 per cent with a potential to earn higher returns in other financial investment products.

Property experts also believe that such guarantees give buyers some level of confidence and reassurance. Buyers should find out the specifics of the rental guarantee, and be aware of the problems that may arise in these details.

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