Unveiling the Truth: Why Freehold is Not Always the Optimal Choice for Property Investment
TLDR When it comes to investing in real estate in Singapore, traditional beliefs may not always hold true in today's...
Read More
There has been significant outcry regarding Singapore’s population hitting a record high of 6.04 million, largely due to an increase in non-residents (which rose by approximately five per cent from the prior year). This issue is particularly sensitive for many Singaporeans, who already perceive our small island as overcrowded and believe there is excessive competition for resources, especially housing. Additionally, there is a belief that property owners and landlords might benefit from this situation, but the reality is not so straightforward:
To begin with the obvious: Singapore certainly seems much more congested.
You might have come across the commentary suggesting that we can reduce density through specific architectural features. I disagree, and I believe the typical Singaporean will definitely feel the pressure.
The referenced commentary discusses Pinnacle @ Duxton, which accommodates around 8,000 residents on 2.5 hectares. That is indeed an impressive feat, and I concur that projects like Pinnacle manage to avoid a sense of overcrowding. However, how many of us can actually reside in a development like Pinnacle? If you can afford the approximately $900,000 to $1 million price tag and have access to some of the finest sky gardens or terraces, you might not feel cramped – but that’s not the case for everyone. In any event, I would argue that it isn’t primarily the sky gardens or terraces that alleviate demand. The location and the limited supply in the vicinity are the key drivers behind its appeal, even without those enhancements.
Similarly, the commentary mentions the development of the Bayshore area, which is somewhat ironic. As someone residing there, I would assert that it serves as the opposite example of crowd mitigation: the allure of living at Bayshore was precisely its solitude and tranquillity. While I don’t oppose the construction of a new HDB estate there (as I recognise its necessity), it illustrates how the need for additional housing is making each neighbourhood progressively denser. One reason low-density neighbourhoods are so costly is indeed their scarcity.
Then there’s the concept of integrated developments or mixed-use projects. Although this may be an excellent idea for urban planning, such developments contribute to congestion and noise. I’ve also encountered numerous homeowners who consider living above a mall – especially one linked to a busy MRT or bus station – to be their worst nightmare.
Moreover, integrated developments are typically pricier. Woodleigh Residences, Lentor Modern, The Reserve Residences, etc., are not among the more affordable options in their respective locations; thus, this approach makes certain financial assumptions.
Furthermore, perhaps some discontent stems from the way land types are utilised in Singapore. There is no denying that GCB (Good Class Bungalow) zones occupy extensive areas, often in prime locations where land is already scarce. While these GCB areas are prestigious and highly desired, they arguably represent one of the least efficient uses of land. Given Singapore’s limited land resources, dedicating such large spaces to a relatively small number of affluent homeowners raises questions about equitable space distribution, especially in light of ongoing housing shortages for middle and lower-income groups.
So let’s be honest with ourselves. Urban planners and architects are not miracle workers, and the average Singaporean (i.e., those who cannot afford luxurious sky gardens or landed properties) will certainly feel the strain. Coffee shops will run out of seating, trains and buses will require close proximity to others, and a constant low-level hum of crowds will be pervasive in certain areas.
I’m not suggesting that we might not have a choice or that we don’t need this population increase; that’s beyond my expertise. However, I do believe we should be candid and recognise that we will pay for this in terms of roominess and comfort. Those who cannot afford low-density areas or more spacious (read: costly) developments will suffer the most.
It may not be fair, but that is the reality we face.
Those who miss out the most are those who cannot afford to purchase their own apartments.
Pure Permanent Resident (PR) families are ineligible to purchase BTO flats and must wait three years before they can buy a resale flat. During this waiting period, they find themselves competing with foreigners in the rental market, unless they have sufficient wealth to consider a condominium.
Lifelong singles, especially those who cannot remain at home due to various circumstances (including some from troubled backgrounds), will face high rental prices for both HDB and private properties; this will be the case until they reach the age of 35. It’s a long wait, and a significant portion of their income will go towards rent.
Lastly, we should not overlook the foreigners in this situation. While some may unfairly hold them responsible for the issues at hand, it’s important to recognise that a 60 per cent Additional Buyer’s Stamp Duty (ABSD) means only the wealthiest can afford to purchase property. In the meantime, they too will experience pressure from rising rents. Except for corporate employees with generous housing allowances, they are unlikely to fare any better than Singaporeans who cannot buy HDB flats. Eventually, the government may need to step in to support essential sectors that rely on foreign workers, such as nursing in hospitals.
So, landlords and investors come out on top, correct? Not necessarily
This is a straightforward assumption, but it won’t hold true universally. Although landlords and investors might notice quick gains from a surge in population, there are certain challenges that could take them by surprise.
The surge in population is driving decentralisation, which may affect the value of expensive CCR/RCR properties
Recent incidents involving the transport infrastructure highlight that it is not feasible for everyone to be commuting to and from the same location in the city—essentially the whole country—simultaneously each day. This is not a new revelation, as the Urban Redevelopment Authority (URA) has been working on decentralisation for many years, resulting in the establishment of various hubs such as Jurong East, Paya Lebar, and the Woodlands North Corridor.
With the growing population, the urgency for decentralisation increases significantly. We are likely to witness the emergence of additional “hub” areas that draw workers away from the conventional Central Business District (CBD).
Although a rising population may bolster rental demand, there is no assurance that this demand will adhere to current trends. This is worth considering before making any commitments to Central Core Region (CCR) or Rest of Central Region (RCR) assets.
Land reclamation and rezoning can influence property values
Let’s revisit Bayshore, as I recently used it as an example. When purchasers of Bayshore Park, The Bayshore, and Costa Del Sol bought their properties, it seemed unimaginable that their views would be significantly blocked, given their proximity to the beach. This was before the Long Island project emerged, which could potentially introduce some flats in the distance decades from now.
To clarify, Long Island primarily focuses on erosion prevention rather than simply increasing housing; however, it seems improbable that the desire for more living space isn’t a contributing factor. Historically, property owners lost their sea views due to the land reclamation for Marine Parade for similar reasons.
Additionally, there is the concern of rezoning. While your condominium may currently be situated in a low-density area, you cannot assume that will remain unchanged with a growing population. The emergence of a mega-project nearby could lead to a permanent decrease in rental rates and limit resale profits; thus, not all investors might welcome the anticipated population growth in the future.
Ultimately, those looking to upgrade could find themselves priced out more quickly than they anticipate.
A growing population may lead to higher rental and property prices; however, it is risky to assume that you will benefit from this trend. The disparity in prices between HDB flats and condos could increase, even as overall prices rise. Furthermore, with the growth of urban density, the value of landed properties is likely to surge even more, making it challenging for condo owners to transition to landed homes.
Therefore, the expanding population may not be equally advantageous for all investors and landlords. While some may experience immediate gains, they should be cautious not to become overly optimistic in their forecasts.
In the end, a rising population seems unavoidable and could provide some support for the anticipated increase in vacant HDB flats as the elderly pass away (as discussed here). Although regulations might mitigate this issue, a growing population can help alleviate its impact.
For ongoing updates on this evolving situation and news about the Singapore property market, follow me here. If you wish to arrange a more detailed consultation, you can reach out here.
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 …
5 Things to do When You Go For A Property Viewing In Singapore
5 Things to do When You Go For A Property Viewing In Singapore Here are 5 things to keep in...
Read More
5 Singapore Property Investing Myths Debunked
In the world of property investing, misconceptions can lead to poor decisions and financial losses. In Singapore, there are several...
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
2024 Will Be A Buyers Market
TLDR 2023 saw a roller-coaster ride in the real estate market, with various challenges like high interest rates and geopolitical...
Read More
Is it Possible for the Government to Truly “Reclaim Your Home” in Singapore?
The Singaporean government possesses considerable authority to reclaim land, whether freehold or not, in accordance with the Land Acquisition Act....
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
5 Points : Singapore’s Property Market vs. Stock Market: Which is the Better Investment Option?
Investing is an important aspect of personal finance and can be a valuable way to grow wealth over time. However,...
Read More
Calculating Your Property’s Annual Value in Singapore 2024: A Simple Guide!
TLDR Understanding your property's annual value is crucial for determining property taxes in Singapore. The annual value is based on...
Read More
Top 5 Singaporean Dishes to Try
Singapore, a melting pot of diverse cultures and flavors, is known for its rich culinary heritage. With influences from Chinese,...
Read More
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
Buying HDB Resale : How to Minimise COV
TLDR Understanding Cash Over Valuation (COV) is crucial when buying a resale HDB flat in Singapore. COV is the additional...
Read More
Top 5 Key Factors that Affect Singapore’s Property Prices?
Singapore's property market has always been a topic of interest for both local and international investors. The city-state's real estate...
Read More
The Best Time to Invest in Singapore’s Property Market: Timing is Everything
Investing in the property market is a significant decision that requires careful consideration and analysis. One crucial factor that determines...
Read More
Top 5 : Most Profitable Neighborhoods To Invest In For Singapore Property Investment 2025
As the global economy continues to recover, the real estate market in Singapore remains a promising investment opportunity for savvy...
Read More
Don’t Get Scammed: The Top 5 Red Flags To Watch Out For In Singapore’s Property Market
Don't Get Scammed: The Top 5 Red Flags To Watch Out For In Singapore's Property Market When it comes to...
Read More
Top 5 Places to Learn About Singapore’s Diversity
Singapore, a vibrant city-state in Southeast Asia, is well-known for its diverse culture and rich history. A melting pot of...
Read More
Top 5 Surprising Benefits of Investing in Singapore Real Estate for Foreigners
Singapore, a thriving city-state in Southeast Asia, has become an attractive destination for foreign investors looking to diversify their investment...
Read More
5 Tips : How To Invest In Singapore Property Without Losing Sleep Over It
Investing in Singapore's property market can be a lucrative venture, but it's important to approach it with caution and a...
Read More
Are We Truly Headed For A Slowdown? How Will This Affect Property Prices?
TLDR The pandemic-induced recession has surprisingly boosted property prices in Singapore, defying conventional economic trends. Factors like cost-push inflation, limited...
Read More
