Top 5 Luxury Dining Experiences in Singapore
Singapore, known as the Lion City, is a melting pot of cultures, cuisines, and luxury experiences. With its rich history,...
Read More
2-Bedroom vs. 2+Study Units: A Decade of Performance Analysis
TLDR
Over the past decade, 2+Study units (compact 3-bedroom layouts) consistently outperformed standard 2-bedroom units in resale gains across most projects, both for long-term and short-term holdings. Examples include Stirling Residences and Parc Esta, where 2+Study units recorded significantly higher profit margins. Rental yields, however, tend to be slightly higher for regular 2-bedroom units due to their lower price points, though the difference is marginal. The 2+Study option offers a qualitative advantage in rentability, appealing to a wider tenant base such as small families, roommates, and remote workers needing extra space. Buyers should carefully assess the functionality of the “study” space and kitchen design before purchasing. Overall, for those seeking capital appreciation, 2+Study units present better returns, while rental yield advantages remain modest. Demand for these units is expected to grow as affordability for larger units declines.
With current high property prices making 3-bedroom and larger units less accessible, 2-bedroom units, particularly the more spacious 2+Study (often marketed as “compact 3-bedders”), have garnered significant attention. A key question for buyers and investors is whether the additional “study” space translates into better returns or simply eats into rental yield. This analysis examines the gains and rental performance of these two unit types over the past decade.
Resale Gains: 2-Bedroom vs. 2+Study (2014-2024)
An analysis of 11 projects that feature both 2-bedroom and 2+Study configurations, based on new-to-resale transactions from 2014 to 2024, reveals a clear trend:
- Overall Trend: In 8 out of 11 projects, 2+Study units demonstrated higher average gains compared to regular 2-bedroom units.
- Significant Differences:
- At Stirling Residences, 2+Study units saw average gains of $476,290 (36%), significantly outperforming 2-bedroom units which gained $268,719 (22%), a difference of over $207,000.
- Parc Esta exhibited similar results, with 2+Study units gaining $476,266 (35%) versus $323,711 (27%) for standard 2-bedroom layouts.
- Exceptions: Amber Park and Mont Botanik Residence were among the few projects where standard 2-bedroom units slightly outperformed 2+Study.
Interestingly, Martin Modern’s unprofitable transactions included six 2-bedroom units and only one 2+Study unit, suggesting potentially better downside protection for the latter, though this is based on limited data.
New-to-Subsale Performance (Before TOP):
Analyzing new-to-subsale transactions (properties sold by an initial buyer to another party before the condo is fully built), a similar pattern emerges:
- Consistent Outperformance: In 12 out of 16 projects, 2+Study units recorded higher average gains than regular 2-bedroom units.
- Notable Gaps:
- Martin Modern saw 2+Study units gaining $239,094 (12%) compared to $135,969 (7%) for 2-bedroom units.
- At Parc Esta, 2+Study units gained $357,750 (26%) versus $264,129 (23%) for 2-bedroom units.
- Outliers: Kent Ridge Hill Residences and Sky Everton were exceptions where 2-bedroom units yielded better gains.
This data suggests that even for shorter holding periods, the 2+Study layout tends to deliver superior resale outcomes. A notable anecdote from Sky Everton, despite its limited sample size, showed a 2+Study unit incurring a significantly smaller loss ($26,000) compared to a 2-bedroom unit ($132,000), although holding period differences might have influenced this.
Rental Rates and Yields: Landlord’s Perspective
Analyzing rental data to precisely compare 2-bedroom and 2+Study units is challenging due to URA’s broad size ranges. However, by matching unit sizes from sale transactions to corresponding URA rental size bands for 2024, an estimated rental yield comparison can be made:
The data indicates that 2+Study units generally do not offer a significant rental yield advantage. In most cases, standard 2-bedroom units slightly edge out 2+Study units in yield due to their lower price points. For example, Whistler Grand’s 2-bedroom units yielded 3.97% compared to 3.64% for 2+Study units, primarily due to the latter’s higher average purchase price. While the differences are often marginal, the slightly lower yield for 2+Study units is consistent across most projects.
Rentability: A Qualitative Advantage of 2+Study:
Despite similar or slightly lower yields, the qualitative advantage of a 2+Study unit lies in its enhanced rentability. Its versatility allows it to cater to a broader tenant demographic, including:
- Small families
- Roommates
- Single tenants requiring a dedicated home office or additional storage, particularly relevant in a post-pandemic era with increased hybrid work arrangements.
This broader appeal can make it easier for landlords to find and retain tenants, potentially reducing vacancy periods. For landlords willing to stretch their budget, the increased versatility of a 2+Study unit might justify the investment.
Conclusion:
The analysis largely favors 2+Study units in terms of resale gains, both for long-term holding and shorter subsale periods. As the affordability of larger units becomes more challenging, the demand for 2+Study units, bridging the gap between compact 2-bedders and larger 3-bedders, is likely to persist or grow.
However, not all 2+Study units are created equal. Prospective buyers should carefully evaluate:
- Post-Harmonization Status: Whether the project is pre- or post-harmonization, as older designs might include wasted space (e.g., large planter boxes, oversized air-con ledges).
- Functionality of “+1” Space: Ensure the “study” is a genuinely functional, enclosable room with proper ventilation and natural light, not just an awkward corner.
- Kitchen Design: For families, the kitchen space is crucial. Look for functional layouts like nook kitchens with ample cabinetry and countertops.
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 …
Reasons I Might Still Spend $1 Million On A 50-Year-Old HDB—Despite Everyone Claiming It’s A Poor Investment
TLDR Spending $1 million on a 50-year-old HDB flat in Singapore can be a rational choice for older buyers prioritizing...
Read More
The Uncomfortable Truth About Homeownership and Relationships in Singapore
TLDR Property ownership and prenuptial agreements are key for married couples in Singapore. Joint ownership (either joint tenancy or tenancy-in-common)...
Read More
Top 5 : Best Hidden Beaches in Singapore
Singapore, a bustling city-state known for its modern architecture and vibrant culture, is also home to some of the most...
Read More
Challenging the Myth of Lease Decay: Older Leasehold Condos Outperforming Newer Ones
TLDR Older leasehold condos in Singapore, particularly those built in the 1980s and 1990s, have shown annualised price growth exceeding...
Read More
Are You Ready to Take on the Singapore Property Market in 2023? 12 Reasons to Be Hopeful (Or Wary)!
2022 sure was a rollercoaster ride for the property market, and the world! From war in Europe to skyrocketing interest...
Read More
Find Your Dream Home: Top 5 Property Investments for Families in Singapore
As one of the most prosperous countries in the world, Singapore is an attractive destination for families looking to invest...
Read More
The Psychology of Property Investing: 5 Reasons Why Singaporeans Love Real Estate
Real estate investing has always been a popular way to grow wealth and secure financial stability. In Singapore, the love...
Read More
Ultimate Handbook on HDB Income Ceilings for BTO, Resale Flats, and Executive Condominiums
TLDR Owning an HDB home in Singapore depends largely on income ceilings. The HDB income ceiling limits monthly household earnings...
Read More
The Significance of Choosing the Right Condo: A Real-Life Tale of Two $1.8 Million Investments with Significantly Different Results.
TLDR When contemplating property investments in Singapore, consider various factors like rental performance, unit count, access to train lines, and...
Read More
It Seems Like Less Folks Living In HDB Flats Are Chasing After The Dream Of Owning A Condo
TLDR The Singapore property market is experiencing a decline in condo purchases by HDB flat owners due to multiple property...
Read More
Top 5 : Potential Risks Should Be Considered When Investing Property Within Singapore’s Competitive Real Estate Markets
Singapore, a bustling financial hub in Southeast Asia, has seen its real estate market flourish over the years. The city-state's...
Read More
Top 5 Coffee Shops in Singapore for Coffee Lovers
Singapore, a bustling city-state known for its diverse culture and vibrant food scene, has also become a haven for coffee...
Read More
How To Avoid Top 5 Common Investment Pitfalls When Investing In Singapore Property
When investing in Singapore's property market, it is crucial to be aware of the common pitfalls that can lead to...
Read More
The Unconventional Wisdom: Why Choosing a Home You Love Over Pure Profit May Be Singapore’s Smartest Move
TLDR In Singapore’s property market, prioritizing a home you genuinely love over chasing maximum profit may be the smarter long-term...
Read More
Top 5 : Places to Learn About Singapore’s History
Singapore, a bustling metropolis known for its modernity and multiculturalism, is also a treasure trove of rich history and heritage....
Read More
Powering The Lion City: The Top 5 Industries Driving Singapore’s Economy
Powering The Lion City: The Top 5 Industries Driving Singapore's Economy Singapore is widely recognized as one of the most...
Read More
Top 5 Things to Do in Singapore on a Rainy Day
Singapore, the beautiful island city-state, is known for its sunny weather and stunning attractions. However, even in this tropical paradise,...
Read More
5 Top Reasons Why Chinese Love to Invest in Singapore Property Market Today
Here are the top 5 reasons why Chinese love to invest in Singapore's property market today. 1. Political stability: Singapore...
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