5 Reasons : Why Investing In Singapore’s Property Market Can Be A Good Retirement Plan
Investing in Singapore's property market can be a good retirement plan for several reasons. Here are five key factors that...
Read More
TLDR
The blog post discusses various aspects of investing in condos in Singapore, covering topics such as leasehold versus freehold properties, rental yields, property values, and factors affecting investment decisions. It emphasizes the importance of considering specific projects rather than general property types. Additionally, it provides insights on hidden expenses, market trends, and tips for property buyers. The post offers strategic real estate advice, highlights key considerations for first-time Chinese buyers, and explores potential challenges in the property market.
Recently, I stumbled upon a Reddit thread where people were spilling their regrets about buying condos. The topic of debate was whether investing in a condo is still a good move.
As I scrolled through the comments, some points caught my eye. A few made sense, while others seemed like half-baked truths or twisted facts.
One comment that received loads of upvotes (and I agree) said, “Location is key.” But as I dived deeper into the thread, things got a bit murky. The next hot topic was about the actual value of owning leasehold vs. freehold land.
One user pointed out, “For me, it’s either public housing or private freehold. Leasehold private properties don’t make any sense. Their prices are nearly as high as freehold ones (around 80%?), making the lease decay even harder to swallow.”
But hold on! Before you write off leasehold properties, let’s break this down. Interestingly enough, some wise landlords actually avoid buying freehold properties. Why? Because they yield less rental income.
Let’s take two condos located in the same place: one leasehold costing $1.5 million, and the other freehold priced at $1.725 million. They both generate an annual rental income of $48,000. Yes, you read that right. Tenants don’t pay more for living in freehold properties; it doesn’t matter to them.
When you do the math, the gross rental yield for the leasehold property comes out to be 3.2%, while the freehold one is only 2.78%.
So, it all boils down to this: whether it’s leasehold or freehold, the real deal is if it’s the right investment property.
Imagine buying a freehold condo in an already developed area versus a leasehold one in an area that has future potential. Which one do you think will give you a better return?
It’s not always about the type of ownership, but the real value it holds.
Here’s another:
“If you skip out on Freehold (FH), you’re potentially dropping 1% each year. It’ll take a decade or fifteen years to make up for the insurance premium. But let’s admit it, in the property game, that isn’t a long stretch.
A drop of 1% per year sounds a bit shaky. Let’s take a quick look at how leasehold condos hold up against freehold ones over a span of 15 years (leaving out the Executive Condominiums):
Over this time frame, freehold properties don’t seem to be keeping pace with their leasehold counterparts.
Now, there’s no hard and fast rule here. It all depends on the age of the property you’re considering. But if you’re thinking about buying a brand-new freehold versus a leasehold condo, it’s not quite right to assume that you’ll be losing 1% annually.
In case you’re interested, we’ve done some homework on new freehold and leasehold launches since 2014. Feel free to take a peek right here.”
Let’s look at a few other things:
“It all boils down to the type of condo you’re looking at. They’re not all cut from the same cloth.
Take newly launched condos, for instance. They’re often not worth the dough. Paying 2k per square foot for tiny apartments? Get real. You could get a condo in River Valley for what they’re charging for Pasir Ris 8. Plus, most of these are on 99-year leases.
Check out Ki Residence. They’ve got places ranging from 700 to 1300 square feet, going for 2-2.4k per square foot. And these are on 999-year leases.
Then there’s Clementi Park, just across the street. Their units start at about 1100 square feet and go up to over 2000 square feet. Prices range between 1.4k and 2k per square foot. Plus, these are freehold properties.
Fresia Woods is a bit further away, but it’s a similar deal.
With a budget of 2 million, you could snag a 1065 square foot condo at Fresia Woods or a larger 1400 square foot place at Clementi Park. Your only option at Ki Residence would be a smaller 965 square foot unit. If you’re good with just one bedroom, 1.5 million could get you a 1039 square foot apartment at Clementi Park. For 1.6 million, you could get a 750 square foot apartment at Ki Residence.
Clearly, Ki Residence isn’t the best bang for your buck.
Venture a little further to Pandan Valley, and you’ll find 2000+ square foot condos going for 1.5k per square foot or even less!
So, in my book, older condos are where it’s at. The newer ones? Not so much.”
Someone hit the nail on the head with this comment: “You can’t just eyeball the price per square foot and make a blanket judgement.”
I’ve mentioned this before, but the price per square foot isn’t always the best gauge of value. It tends to increase as the units get smaller and cheaper, but decrease as they get bigger and pricier.
Say you were to buy a bungalow. You could be looking at about $1,600 to $1,700 per square foot. But for a huge 7,000 square foot detached home, that’s a whopping $11.9 million.
On the flip side, a one-bedroom place at $3,000 per square foot, measuring just 500 sq. ft., would set you back a cool $1.5 million.
Also, let’s not forget how rules and regulations have been shaking things up over time.
You see, it’s all well and good to weigh the cost per square foot when everything else lines up. But, when you’re dealing with older condos that come with their own quirks like planters and bay windows, judging them purely on square footage pricing just doesn’t cut it.
Instead of focusing on the cost per square foot, it’s a better idea to concentrate on the overall price. Why? Well, it influences a few things:
1. The stamp duty you’ll owe 2. The amount you need to borrow and subsequently the interest you’ll have to pay over the years 3. How your budget might get strained after the buy
The cost per square foot can be handy in certain cases. For instance, when you are comparing two properties with similar layouts and sizes, it can give you a feel for which one offers more bang for your buck.
However, this approach becomes less helpful when you start comparing different types of properties, like HDB flats and private condos, or landed properties.
Consider this: “HDB flats are definitely a better deal, even if the resale price exceeds 1mil! I regret pretty much everything about buying a condo, except for the fact that it’s just across the road from an MRT station. But, when your combined income is around 20k, your options are limited. You’re not eligible for BTO/EC and can’t afford a landed property…”
Still, if you’re earning $20k a month and have your heart set on a resale flat, go for it! There’s no income cap for these properties.
But somewhere along the line, the conversation veered off track, and became more about buying a home than investing in one. When asked if it’s worth investing in a condo, my response would be: which condo?
Properties aren’t all the same. A savvy investor doesn’t just invest in condos or landed properties as a whole. They invest in specific projects, like The M, Midtown Bay, Pandan Valley, etc.
There are certain condos I’d definitely consider investing in even now; but there are others I’d steer clear of, despite any attractive discounts offered by developers.
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
You May Also Like …
The Secret Strategies of Singapore’s Property Tycoons: Lessons You Can Learn
The Singapore property market has always been a hot topic for both locals and foreign investors. With its stable economy,...
Read More
Top 5 Reasons Why Singapore’s Property Market Is A Haven For High Net Worth Investors
Singapore's property market has long been a magnet for high net worth investors, both local and international. The city-state's strategic...
Read More
What Is The Cost Of Constructing A Landed Property In Singapore?
TLDR Building a landed property in Singapore can be a costly endeavor, with prices ranging from $300 to $500 per...
Read More
The Hidden Hurdles of Purchasing a BTO Flat in Singapore: Unveiling 4 Lesser-Known Challenges During the 5-Year MOP
TLDR When contemplating the purchase or sale of a property under the Minimum Occupancy Period (MOP), it's crucial to consider...
Read More
Top 5 Tips: Gain an Edge in the Singapore Property Market: Steps to Boost Your Investment Returns
The Singapore property market has always been a hotbed for investors looking to make substantial returns on their investments. As...
Read More
Neighbourhood Estate Guide: Is Holland Village the Most Charming and Relaxed of HDB Estates?
According to the 2014 master plan, Holland Village was given the prestigious title of an "identity node," confirming its status...
Read More
When Should You Consider Lowering the Price of Your Property That Has Been on the Market for Months?
TLDR Selling a property can be challenging without the right price strategy. Adjust your asking price to attract more buyers...
Read More
The Cost of Housing – Affordability vs Premium?
TLDR The blog post discusses the challenges Singapore faces in housing affordability, particularly the rising costs of private homes compared...
Read More
5 Proven Strategies for Increasing the Value of Your Singapore Property
In Singapore's competitive real estate market, adding value to your property can be the key to making a profitable investment....
Read More
Top 5 Factors : Why Singapore’s Luxury Property Market Still Has Room For Growth
Singapore's luxury property market has been experiencing significant growth in recent years, with private home sales in the Core Central...
Read More
Top 5 Differences Between OCR, RCR And CCR In Terms Of Lifestyle And Culture
Singapore, a vibrant and diverse city-state, is known for its unique blend of cultures, modern architecture, and thriving economy. The...
Read More
The Advantages and Disadvantages of Purchasing an Auction Property in Singapore
TLDR When considering purchasing a property through auction in Singapore, remember that you can potentially get a great deal below...
Read More
Top 5 Parks and Nature Reserves to Visit in Singapore
Singapore, often referred to as the "Garden City," is a vibrant and diverse nation that has made significant strides in...
Read More
How to Build a Property Empire in Singapore: Scaling Your Investments
Real estate investing is a popular way to build wealth and generate passive income. However, like any investment, it comes...
Read More
5 Reasons : Why Investing In Singapore Property Is The Best Decision I Ever Made
Investing in property is a great way to build wealth and secure a stable source of passive income. When it...
Read More
5 Dangerous Ideas Singapore Property Investors Have
Singapore's property market has always been a hot topic among investors, both local and international. With its strong economy, stable...
Read More
Can You Still Make Money from Older Freehold Condos in Singapore
TLDR While freehold condos might seem like a solid investment, the rise of new developments and aging buildings cast doubt...
Read More
5 Qualities to Look for in an Agent to Ensure a Smooth Transaction
5 Qualities to Look for in an Agent to Ensure a Smooth Transaction Here are 5 qualities to look for...
Read More
Discover 11 Helpful Tips for Buying an Older Condo : A Comprehensive Guide for Buyers
TLDR When considering purchasing an older resale condo, ensure you investigate potential en-bloc bids, lift conditions, parking conveniences, playground safety,...
Read More
