Best condo size for investment in Singapore

best condo size for investment

Table of Contents

Introduction

Purchasing a condominium for investment is an exciting journey for you and your family, but it is no trivial affair putting down a couple hundred of thousand in hard earned savings to purchase a property, with hope that you will bring you prosperous returns in a couple of years.

Being equipped with the right knowledge could help you make a more informed and confident decision.

There are several considerations that you would have to consider when purchasing your investment property

Which location should I be looking at ?
Should I get a new launch or resale condo ?
Which condo development should I be considering ?

And finally what is the best condo size I should be getting ?

Should I go for the affordable 1 bedroom unit, the 2 bedroom unit or should stretch myself to go for a bigger 3 bedroom unit ?

Focus of this article

This article is all about condo sizes, we will break down all the pros and cons of a 1 bedroom, 2 bedroom, 3 bedroom unit from an investment perspective. By the end of this article, you should be walking away with a good idea of which is the best condo size you should be getting for investment.

A little bit about ourselves

You would be spending the next 5 mins of your life reading this article, it helps to know that this article is not written by chat gpt or some ghost writer sitting in another country.

We are a team of real estate investors turned full time realtors. We started off with the goal of finding the best ways to own multiple properties in Singapore. Having successfully done that, we now hope to help like minded property owners like yourself purchase your next investment property.

If reading is not your thing, whatsapp us and we will clarify your doubts over whatsapp.

Factors to consider when deciding which condo size to get for investment

It helps to realise that there is no one size fits all answer for our question, the choice of which is the best condo size for investment is highly dependent on your individual circumstances and the prevailing supply and demand condition.

To establish the basis for our discussion, let’s map out the factors that we will use to evaluate different condo sizes.

Capital Gain

In our opinion, capital gain is the most important criteria to consider when determining which condo size you should be looking at for an investment property.

From a quantum standpoint, it provides financial gain that has the most life changing impact, i.e. money that can free or loosen you from the shackles of your 9 to 5 job.

Putting your money on the right condo development with the right condo size / bedroom type and yielding capital returns of 400k to 500k over 4 to 5 years, easily beat the $1000 to $500 of rental income received monthly.

On the flip side, selecting the wrong property or condo size and making a sizable loss can easily wipe out the monthly rental income that you accumulated over the years.

Rental demand and rental yield

Rental demand and yield has its role to play in an investment property. It serves two purposes. Defraying the financial burden of supporting your investment property by having your tenant pay for your mortgage and elevating your lifestyle by providing passive cash flow monthly, if your rental income supersedes your mortgage and condo maintenance fee.

A point to note is that, it is important to focus on nett yield and nett rental income instead of simply looking at gross rental yield and income.

On paper, a 1 bedroom condo could seem to be providing an attractive income of 4.8k monthly, with rental yield exceeding 4%. But after factoring your actual interest expense, condo maintenance fee, rental income tax and non owner occupier property tax, the nett amount that you actually take back could be minute.

Affordability

Your budget is another main consideration when deciding what condo size you will be getting.

  • As an overview your budget generally comprises of the following components
  • The cash savings you have on hand
  • The CPF savings you have in your OA account
  • The potential cash and CPF proceeds that you be receiving from the sale of your property or after you decouple your property
  • The maximum bank loan you would be eligible to take

With your budget in place, you can then decide which condo size or bedroom type you can afford. If this is something that you would like to work out, drop us a text. We are happy to work out your budget for you.

Lifestyle

It’s not always about data and money, real estate investing is one part logic, two part managing wife’s expectation.

When purchasing an investment property, you would need to consider if this property is to serve the duo purpose of doubling up as your home stay property or if this property is purely meant for investment purposes.

Even if the property is purely meant for investment, It helps to select a condo size that can cater for some contingency measures or double up to provide some lifestyle benefits.

For example, selecting a 2 bedroom condo or a 3 bedroom condo. In the event that you are unable to sell the property in the near term, you will be able to move in with your family to live in it for a period of time.

Another example, if you were to purchase a condo situated within 1km of a reputable primary school, you can temporarily leverage on that address in the short term to get your child into the school.

As a sidenote, if you are interested in investing in properties within 1km of the most sought after primary school in Singapore. Check out our mini series on review of best condo near popular primary schools.

Research Method

We will be using the transactional data of the following 5 condo developments that have recently achieved its temporary occupancy status as basis for our review.

  • Treasure at Tampines – 2,203 units
  • Florence Residences – 1,410 units
  • Park Colonial – 805 units
  • Jadescape – 1,206 units
  • Stirling Residences – 1,259 units

We selected mainly mega developments with over 800 units that TOP recently to not only provide us with sufficient transactional data, but also recency in terms of transaction to reflect the latest trends in the market.

We acknowledge that the data of 5 mega developments may not be empirical but we hope to achieve an effective cross sectional view that can give us a good sense of the pros and cons of different bedroom types.

Condo sizes

We will be considering the following condo sizes in our discussion.

  • 1 Bedroom – below 600 sqft
  • 2 Bedroom – 600 to 850 sqft
  • 3 Bedroom – 850 to 1100 sqft

Capital gain – for different condo sizes

As mentioned in the earlier section, capital gain is one of the most important criteria to look at for an investment property. Let’s compare to see how the different bedroom type fare against each other.

Development1 Bedroom Profit ($)2 Bedroom Profit ($)3 Bedroom Profit ($)
Florence Residences122,252209,422317,327
Jadescape168,708292,551423,558
Park Colonial149,476187,294357,739
Stirling Residences203,868274,294520,444
Treasure at Tampines120,215162,480309,915
Average152,904225,208385,797
Development1 Bedroom annualised capital gain (%)2 Bedroom annualised capital gain (%)3 Bedroom annualised capital gain (%)
Florence Residences3.894.715.54
Jadescape4.75.56.3
Park Colonial3.63.65.1
Stirling Residences4.95.06.4
Treasure at Tampines4.44.76.2
Average4.284.705.91

The transactional data above show a distinct trend that points towards the bigger 3 bedroom units making more profit and generating a higher annualised gain.

In fact we see a significant gap in terms of capital gain matrices between the smaller 1 to 2 bedroom unit targeting investors vs the 3 and 4 bedroom units targeting homestay buyers. 

Referring to the return of equity table below, if you overlay the amount of capital required to purchase each bedroom type, you will notice that even though the 3 bedroom unit required input of more cash and CPF, it generates a higher amount of profit as well. 

Strong demand for 3 bedroom units.

The reasons for the better capital gain performance for a 3 bedroom unit is easily accounted for by the advantageous demand and supply.

With the implementation of the recent 2023 cooling measures, imposing a 60% ABSD on foreign property investors and 20% percent ABSD on local property owners purchasing their second property. Investors’ demand for 1 and 2 bedroom units have tapered significantly.

On the flip side, demand for bigger 3 bedroom units remained strong. The pointers below accounts for the drivers of demand for 3 bedroom units. 

  • Demand from families upgrading from resale HDB to private condo 
  • Demand from families cashing out from a profitable BTO sale and redeploying gains from BTO to private condo.
  • Demand from empty nesters, downsizing from a landed property or a bigger condo to a smaller 3 bedroom unit. 

The demand is also reflexively fuelled by the sales pitches of real estate agents on the ground, pushing clients and prospects to get a bigger unit.

Lower supply of 3 bedroom units competing to sell at a particular point in time

As a simple gauge of supply, simply browse through the listing on propertyguru, you would realise that the number of 1 and 2 bedroom condo listings easily outnumbered the 3 bedroom condo listing. 

This is not surprising, as 3 bedroom units are mainly owned by homestay buyers. The consideration that a 3 bedroom unit property owner needs to consider before listing his or her unit for sale goes beyond making profit. 

Owners would need to be able to make alternative arrangements to cater to family’s needs that includes proximity to the child’s school and ageing parents home, before listing the unit for sale. 

Rental Yield and rental demand

Now, let’s move on to review how the different condo sizes fare in terms of rental yield. 

Development1 Bedroom Rental Yield %2 Bedroom Rental Yield %3 Bedroom Rental Yield %
Treasure at Tampines4.33.73.2
Florence Residences43.63.2
Park Colonial3.83.63.9
Jadescape3.93.63.2
Stirling Residences3.93.9No unit up for rent
Average4.03.73.4

1 bedroom units provide better rental yield than larger 3 bedroom units. 

Referencing the table above, 1 bedroom units clearly out performed the 3 bedroom units in terms of rental yield. The lower purchase price of a 1 bedroom unit and its high rental demand accounts for its high rental yield. 

This means that if you are working with a tight budget and are looking to create a secondary source of rental income, the 1 bedroom unit would be the optimal choice. 

On the side note, the 1 bedroom unit is often the go to option for families looking to acquire a second investment property after decoupling. It’s low quantum and high rental yield provide an easy option for families to consider without overstretching their finances. 

For more insights on property types to consider after decoupling refer to article inline. 

Selecting the right development for 1 bedroom units

For investors attracted to the low purchase price and high rental yield of a 1 bedroom unit. It is important that you put in the due diligence to select the right location and development for your prospective 1 bedroom units. 

From a separate study of 1 bedroom unit performance, we see a great variance in both rental demand and capital gain for 1 bedroom units in different locations. 

As an overview, it is important to select 1 bedroom units that are close to commercial hubs with high density of white collar expats. For example, Marina bay financial district, Mapletree business city or areas with a strong white collar expat community. 

Try to avoid the allure of getting a much lowered price 1 bedroom unit in the residential outskirt of Singapore. The rental yield for this 1 bedroom unit may be high due to its low purchase price, but the ease of renting these units out could be compromised, leading to potential periods of vacancy and loss of rental income. 

For more insights on best place to buy a rental property in Singapore, check out the article inline.

Researching and shortlisting properties could be time consuming, drop us a note and we can help you with it. 

1 Bedroom units vs 2 Bedroom units 

If you noticed, the rental yield of a 1 bedroom unit did not differ much from that of 2 bedroom unit and referencing an earlier section on capital gain and annualised returns, the 2 bedroom unit tends to perform better than a 1 bedroom unit. 

So the question begets, is it better to get a 2 bedroom unit over a 1 bedroom unit ?

Without diving deeper into specific location and developments and assuming you can stretch your budget for a 2 bedroom unit. We would advise you to go for a 2 bedroom unit. 

The 2 bedroom unit provides greater ease of exit as it is applicable to a wider range of buyers ranging from families with no children to a family with 1 child. 

From a contingency standpoint, having a 2 bedroom unit as your second property also provides a backup option for your family. Assuming that timing for sale of your 2 bedroom unit is not optimal and you have the option to sell and profit from your larger homestay property and move into the 2 bedroom unit in the short term. 

Affordability

Thus far we have considered external factors such as the capital gain performance and rental yield of different condo sizes.

In an ideal scenario, assuming you have got no budget constraints. We would always advise you to prioritise potential capital gain and go for the bigger units. But in reality, budget constraints are often a challenge faced by many buyers, especially those who are purchasing their second property.

In this section, we will look into the minimal funds required to purchase each of these bedroom types.

Development1 Bedroom2 Bedroom3 Bedroom
Florence Residences900,0001,220,0001,578,000
Jadescape1,100,0001,700,0002,000,000
Park Colonial985,0001,390,0002,200,000
Stirling Residences1,158,0001,400,0002,400,000
Treasure at Tampines813,0001,100,0001,685,000
Average991,2001,362,0001,972,600

Referencing the table above, we seek to establish the average pricing of different condo sizes to give us a sense of the general price brackets for each bedroom type.

It is obvious that from a financial affordability standpoint, the 1 bedroom units are much more accessible than the 3 bedroom units. With a decent 1.1mil budget you would still be able to consider 1 bedroom units from developments in the city fringe regions, like Jadescape and Stirling residences.

For 2 bedroom units, you would need at least 1.2 to 1.4mil budget to consider units in both RCR and OCR regions. For a 3 bedroom unit, you would be venturing into the price bracket of 1.4 to 2.1mil average.

Cash, CPF and loan you will need for each bedroom type

1 Bedroom2 Bedroom3 Bedroom
Purchase Price1,100,0001,600,0002,000,000
5% cash55,00080,000100,000
Cash/CPF -15%165,000240,000300,000
Buyer Stamp Duty28,60044,60069,600
Loan825,0001,200,0001,500,000
Upfront Cash / CPF, Including stamp duty248,600364,600469,600
Loan825,0001,200,0001,500,000

We did a further breakdown of the cash cpf and loan quantum you will need to get your hands on each of these bedroom types.

For a 1 bedroom unit, assuming a price point of 1.1mil, you would need at least $248,600 in cash and CPF to cater for the purchase with buyer stamp duty included. And you will need to be eligible for a loan quantum of $825,000.

For a 1 bedroom unit, assuming a price point of 1.2mil, you would need at least $364,600 in cash and CPF to cater for the purchase with buyer stamp duty included. And you will need to be eligible for a loan quantum of $1,200,000.

For a 3 bedroom unit, assuming a price point of 2.0mil, you would need at least $469,600 in cash and CPF to cater for the purchase with buyer stamp duty included. And you will need to be eligible for a loan quantum of $1,500,000.

Ease of exit

It is way easier to place a downpayment to purchase a condo, then to sell a condo at its optimal price to rake in the profits. In the midst of all the excitement in selecting and viewing units, ease of future exit is often a factor that is overlooked.

To review the potential ease of exit for each of these condo sizes, we will be reviewing the supply and demand for different units.

A quick dipstick analysis to get a sense of the supply for the different bedroom types is to simply do a quick count of the number of listings on Property Guru for a particular point in time.

The ideal is that assuming demand stays the same, you would want to have as little competing supply as possible for your unit to stay out in the property portals.

Development1 Bedroom Listing (as of time of writing)2 Bedroom Listing (as of time of writing)3 Bedroom Listing (as of time of writing)
Florence Residences849828
Jadescape424214
Park Colonial28288
Stirling Residences28568
Treasure at Tampines4214098
Average457331

Referencing the table above, the no of 3 bedroom units is far lesser than the no of 1 and 2 bedroom units. This is accounted for by the fact that 3 bedroom units are mainly owned by homestay owners, while 1 and 2 bedrooms are mainly held by investors looking for flips.

Which condo size should I get ?

So back to the question, which condo size should I get ?

The simple answer is, if your budget can be stretched, go for the bigger 3 bedroom unit. Optimise for capital gain, ease of exit and try to select a location that can still bring you decent rental income to defray the monthly mortgage.

But if you are cash strapped, go for the 2 bedroom or 1 bedroom unit, and find a diligent realtor that can help you put in the hours on researching and finding the right unit in the best location and development.

More reads, more gains ?

Kudos on making it this far. The fact that you have invested the last 5 mins reading this article. We believe you are a like minded real estate investor looking to beat the rat race by getting more out of your real estate investment.

If so, do check out the following articles.

Author

  • Jue Wen

    Jue Wen is the content marketing lead. This means he spend his waking hours researching and writing all things real estate. He believes life is a hustle and there is no joy in grinding away daily in our little rat races. He believes making wise moves in real estate investment can be a game changer. Aside from writing all things real estate, you can find him in your nearest bouldering gym.

Looking to purchase your second property?

Just fulfilled your MOP status for your executive or BTO or Looking to decouple from your current condomium? Or simple looking to purchase your 2nd investment property? Having assisted over 50 clients on their journey towards purchasing their second property, we have got the expertise to help you avoid unnecessary ABSD, optimise legal cost and clarify your doubts.

Drop us quick Whatsapp message for non obligator questions and answers.

Drop us a text on Whatsapp for non obligatory question and answer.

Get your questions answered by experienced consultants and legal partners

error: Oops - writing original content is fun, give it a shot !

Jue Wen

Author

Jue Wen is the property analyst and content marketing lead at decoupling expertise.
He specialises in helping clients overcome the complexities involved in owning their second private property in Singapore.
He had over 10 years of experience in real estate investing and have written over 40 detail guides on decoupling and minimising ABSD. He is a licensed real estate consultant and holds a Bachelor degree in Business Management from the Nanyang Technological University.

Kenji

Co-Author

Kenji is the Group Division Director of ERA Realty Network.
He have got over 20 years of experience in real estate and have successfully helped over 50 couples purchased their second property. He specialises in helping client achieve the best approach towards acquiring their ideal investment properties while minimising ABSD.