In this article, we going to look into how freehold condos from around different areas in Singapore performs over time. This is at the back of every buyer’s mind- to buy a freehold property because you own it forever as compared to a 99 year leasehold property.
Instead of relying on casual hearsay based on opinions, we hope that with this detailed research, we can help you make a better buying decision for your next purchase.
We can see that most of the freehold condos in outer core region performs quite similarly to leasehold condos. Most of them tends to stagnate after the initial “TOP effect”. The Parc condominium at Clementi performs better as it continues to appreciate though at a much slower rate.
The Ferraria Park at the far eastern side of Singapore is the complete opposite to the The Sea view at the prime and desirable area of Amber rd at Katong district 15 in performances.
Though the Sea View continues to appreciate at an average of 1.5-2% per year, we can see the appreciation is not as steep compared to the initial growth during the TOP effect and when it was much newer.
I would like to specially highlight a few examples here. I have always mention to my clients every 28 district in Singapore performs differently, and inside a particular district, every zone performs differently as well. As simple as i try to explain real estate to you, do understand real estate is a very broad and complex and there is not one answer for everything. You would still need resale experiences and understanding buyer behaviour to know why things are the way it is.
Rv Edge even though freehold and its inside core central region and along the river valley area, it performs differently from Rivergate because Robertson quey area is more prime and has higher demand from buyers who are willing to pay more.
Helios sits in Cairnhill area another prime area in singapore and within minutes walk only to Orchard. Many consumers do not understand there is something call market acceptance value. It means a value perceive by how much one is willing to pay. One of the reason why newer developments in cairnhill performs poorly is because the market acceptance value in cairnhill area is around $2500/psf on average. Of course there are many other factors like price quantum, development finishing, layout, facing, unit size, location that also determines why a development performs poorly.
What do i mean by that? Lets compare Helios to another project just within walking distance away. Richmond Park T.O.P in 1996 performs way better than Helios and continues to appreciate even thought it is way much older and it is commanding a higher selling $/psf as well.
Another city fringe area that is populated by affordable freehold developments is the infamous Geylang and Balestier area. Many buyers falls into the assumption that these are value buy but have you ever question why it is so cheap in the first place? Does it also mean there was hardly any appreciation previously? Location and the low $psf does sounds very attractive on paper, but from the above research we have clearly understand that only prime areas that has demand commands a better appreciation.
In conclusion, we can see that not all freehold performs the same mainly due to supply and demand of the area. We also learn that not all freehold are as profitable as most freehold are already price with a premium. Most freehold performs similarly to leasehold as it enjoys the T.O.P effect as well before slowing down and the performing ones continues to appreciate. Cheap does not mean its good, its is more important to identify value. Ultimately as i always advise my clients, regardless it is for legacy planning or buying for own stay, it is more important to understand your objective and goals before deciding if you really need to buy a freehold.
IF you are a first time buyer, being young and lower amount of capital for downpayment, i would suggest your go for new launches with better appreciation to grow your wealth first and take advantage of the longer loan tenure
For investors looking for resale freehold, though you can rent out immediately to enjoy rental yield, do take note of the slower capital appreciation, higher maintenance fee, maybe also additional slight renovation cost as when first bought over as there is no warrenty for resale properties.
For resale buyers or upgraders looking for homestay , do take note it is always more tricky when buying a resale property. Being an older development, there is no warranty given unlike new launches and “caveat emptor” applies which means you will buy it as it is. You would need an experience agent who knows what to lookout for, things like structural issue, waterworks , leakage, are usually conceal and you can’t tell easily. You may also have to factor in renovation cost , higher maintenance fee, and slower appreciation.