Best 1 Bedroom Condo below 1 million for investment in Singapore 

Introduction

This article was written specifically for two group of readers

1. Investors looking to purchase a 2nd property, working within a tight budget of between 1 million to 1.2 million
2. Singles looking to jump start their real estate investment portfolio by owning their first condo.

Having consulted numerous readers on decoupling property and Singles purchasing their first condo, we know that 1 million to 1.2 million is a sweet spot for many of you out there.

We are aware that it is easy to rely solely on your agent’s recommendation or to simply sieve through existing listings on property portal for what’s available.

But we believe that a proper top down research of the developments with optimal investment potential as a first step, would allow you to make a better investment decision. 

Focus of this article

The goal of this article is to identify condo developments with 1 bedroom units that not only fit within the budget of 1 million to 1.2 million. But also identify development that possesses healthy upside potential from both capital gain and rental income.

Quick intro – Decoupling Expertise

Quick introduction, before you decide to commit the next 5 mins reading this article.

We are decoupling expertise, a team of specialist realtors that specialise in helping Singapore property owners derive the best strategy to purchase their second investment property without ABSD.

Aside from decoupling property, we specialise in property research. Helping clients that value owning high capital return property, shortlist and identify worthy condo developments to look into.

Drop us a text if you like to shortlist prospective properties or confirm your thoughts on a current property

The success formula towards selecting a good investment property

There isn’t any special framework or secret formula out to help you select the best investment property. 

The success formula is simple, it requires you to have empathy and intimate knowledge of the stakeholders that will be paying rent to your, buying your property and convincing future buyers that your property is worth top dollars. 

Selecting your property with the following stakeholders in mind from the onset

Future Buyer – Singles and investors

Is willing to pay a premium for a property with the following attribute

• Affordable quantum – both categories of future buyers are often working with a tight budget, hence being able to price your unit at a palatable quantum is very important. I.e. You buy a unit 1 mil and pricing it at 1.3 mil in 5 years time. 

• Rentability – both will be have plans to eventually rent out the unit, hence rentability and rental rates is of priority

Future Tenant – Expats

Is looking to rent a unit with the following attribute

• Proximity to MRT
• Proximity to place of work 
• Proximity to a expat community that they are familiar with

Future Buyer’s Agent

This is an uncommon stakeholder that is not often thought of when selecting a property. But under the hood, property agents play a huge role in shortlisting, proposing and convincing future buyers to purchase your unit. 

To ensure that your property is positioned top of mind amongst agents, you will need to consider the following. 

• Agent must be familiar and confident shortlisting and marketing your condo development to his or her buyer. Agents on the ground tend to prioritise shortlisting of developments that are popular and have proven demand during its initial launch. I.e Avoid small boutique development that is not top of mind. 

• In line, with selecting a unit in a decent size and popular development. Agents would have prior experience in bringing buyers to view units in the development or have sold a unit in the development before. Hence, they tend to be confident in convincing their buyer to consider your unit. 

Criteria for searching the best 1 bedroom condo below 1 million for investment.

Specifically for a budget of 1 to 1.2 million, you would most probably be looking at a 1 bedroom unit targeting Single home owner and investors, family purchasing for home stay is out of the equation. 

So your selection criterias and the importance attached to each criteria will differ greatly from that of a 3 or 4 bedroom unit. 

Mandatory Criteria

These are the level 1 criterias that we look at when shortlisting 1 to 2 bedroom units 

• Size of development – eliminate all boutique development < 300 units
• Age of development – prioritise younger developments with less than 10 year in age
• Proximity to MRT – prioritise all developments that are walking distance from MRT

Differentiating Criteria

This is where we seek to select a unit that we can sell for a premium in the future. These are level 2 criterias that we will look out for in a unit that will help us differentiate ourselves from competing developments, in the eyes of our future buyers. 

• Affordability – Affordable entry purchase quantum 
• Liquidity – Decent sales volume for the condo development
• Rentability – Review source and quality of tenant demand and rental yield
• Catalyst – Consider potential catalyst that can further propel price of development

Level 1 Criteria – Developments that satisfy the mandatory criteria. 

These are developments that are not more than 10 years in lease life. Using the 30 year lease life mark as an indicator for risk of lease decay. Buying into a development with maximum 10 years in age, gives you a 20 year remaining runway to play with before it hits the cautionary 30 year lease decay mark. 

A 20 years lease life before hitting 30 year mark, allows for the following 

• You – hold the property for at least 5 years
• Your future buyer – to hold the property for another 5 years and still be able to resell it to another buyer with no concern of lease decay
• Your future buyer’s future buyer – to hold the property for another 5 years and still be able to resell it to another buyer before coming close to the 30 year mark. 

If you observe, flipping properties is pretty similar to the game of musical chairs. You don’t want to be the person sitting on an ageing property when the music stops. 

All developments are more than 300 units

Inline to what we have discussed above, a good size condo development will provide the required transaction volume and liquidity to create new benchmark prices for you to sell into. 

Mid to large condo developments would also tend to be on top of mind for buyer’s agents out there. 

Level 2.1 Criteria – Developments that satisfy Resellability and Liquidity

At this stage of the review, we screen for developments that are currently sold at an affordable quantum and have got decent sales volume. 

Purchase quantum of $1.0 million to $1.2 million to be a sweet spot for consideration. 

When considering purchase quantum, we think in 2 steps.

One being whether it is an affordable and value entry price for us to buy in today. Two being, whether after pricing in a 200k to 300k premium, will our target reselling price still be affordable to our future buyers in 4 to 5 years time. 

Liquidity – sufficient sales volume to build benchmark selling price

Next, we avoid developments with single digit 6 months sales volume. This is where it gets tricky buying into freehold developments where buyers tend to hold for a prolonged period of time or boutique developments that have little transaction volume. 

Level 2.2 Criteria – Developments that have high rentability characteristics

At this level we review the developments for the basic criteria of high rental yield and high rental volume. Rental transaction volume indicates demand, while rental yield provides a view of whether rental rate is decent.

Source of demand – Go for high income, white collar expat

We venture beyond metrics to review the quality of rental demand.

The rule of thumb is to purchase units that cater to high income white collar workers’ rental. A further consideration is to have some thoughts over whether this tenant industry is an uprising industry like tech, finance and pharma. 

Avoid buying into development located in the outskirts of Singapore, that cater to lower income tenants that are renting from you because of a limited budget. 

Level 2.3 Criteria – Upcoming catalyst to prop up price for development

At level 2.3, we look to plot out the different price catalysts that will drive further price appreciation for the development. 

From experience the following catalysts have had a significant impact on property price appreciation. 

• Upcoming new launches in the area to set a new benchmark price for your development. Think J’den setting new prices for J Gateway. 
• Upcoming new commercial hub development – think Paya Lebar commercial node development, Woodleigh new township development and Punggol digital district development.

Gaining a competitive edge when selecting condo below 1 million in singapore

By ploughing through this 9 page article, you would have gained significant head knowledge on what kind of condo development you should be looking at. 

But the recipe to a successful real estate purchase is often the marrying of 2 components. Head knowledge and experienced on-ground execution. 

Take the next step by getting someone to shortlist actual units that fit your budget, selection criteria and to take you through the groundwork of visiting all these units.