Which condo is good for investment in Singapore ?

Which condo is good for investment in Singapore ?

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When it comes to purchasing a condominium in Singapore, the conversation will never stray away from the topic of making money from real estate. The fact that you have landed on this article, probably means that you are hunting for a condominium that will bring you future financial returns.

While it is easy to find piecemeal advice from friends and property agents touting the latest best buy condo based on their own opinions. It is rare to come across a structured evaluation process of what makes a good condo for investment.

In this article, we will seek to tackle this question with a systematic framework that details the different factors to consider when selecting a condo for investment. To further substantiate our point, we will provide a non-exhaustive list of condominiums that fits these criterias.

Preliminary considerations

Before diving into the qualities that make a good investment condo. It helps to first think through some of these preliminary considerations which will help streamline our selection later on.

Consideration #1 – Freehold or Leasehold property

At a high level, it will be useful to consider whether you have got a preference for a freehold or leasehold property ?

At launch, a freehold property is typically priced 10-15% higher on a psf basis compared to a 99 year leasehold property. For that premium you get to own the property indefinitely, making it a suitable asset for succession planning.

In addition to that, the indefinite lease life also helps avoid the common challenges of decreasing value that comes with owning an older leasehold property with shorter lease.

But if your priority is rental yield, then a leasehold property priced at a lower price tag will make more sense. As prospective tenants are indifferent to the tenure status of the property. They will pay the same rental rate for a freehold property, despite its premium price tag.

For buyers that are prioritising rental yield, you may be interested to check out the following article in which we deep dive into best places to buy a rental property in Singapore.

Consideration #2 – New Launch or Resale

If your priority is to have a place to live in while waiting for its value to appreciate, or to own a property that could be rented out from day one to derive rental income. Then a resale condominium would be a more appropriate option.

But if you have the privilege of time to wait for three years for the condo to be constructed, then you could consider a new launch condominium.

A new launch condominium brings with it several benefits.

From a financing perspective, you will get to enjoy the benefits of financing the property under a progressive payment plan. This meant that after paying for the first 25% of the property price, the remaining 75% will be paid via a bank loan that will be disbursed in tandem with the stages of construction for the property.

This results in significantly less interest expenses incurred in the first three years for a new launch as compared to a resale condo or buying a resale ec.

From a capital appreciation standpoint. A new launch generally provides its first round of price appreciation upon its TOP. Compared to a resale condo, you would have to hold it over a longer time frame to enjoy substantial capital appreciation.

Consideration #3 – What is your exit strategy

While it is a common understanding that you generate investment return from your condo by eventually selling it. It is important to consider who will be the eventual buyer for your property, as different classes of exit buyer bring about different criteria in your property selection.

If you favour a less volatile investment, then making the decision to target families as your future buyer would be optimal. With that in mind, you would have to skew your property selection towards bigger properties with proximity to good schools and family related amenities.

But if you are game for a more volatile investment, then you could be looking towards both local and foreign property investors as your future buyers. In this case, you would be prioritising rentability, palatable price points and proximity to commercial hubs as your main criterias.

What makes a good condo for investment – location specific qualities

Districts undergoing URA transformation

When making decisions to select a condo for investment, it helps to understand the URA master plan that is year marked for the district that it is located in.

The URA master plan serves as a blueprint for development for a particular district. What’s more interesting is identifying condos that will benefit from a URA transformation project.

URA transformation projects are key initiatives undertaken to transform a district. It usually entails substantial development in transportation lines, commercial districts and amenities within the area.

Example Of A Noteworthy Transformation Projects Would Be The Great Southern Waterfront

The project seeks to transform the southern region of Singapore into a new major gateway for urban living.

It will involve the construction of 9000 HDBs under the prime location housing scheme, forming a ready pool of future demand from HDB upgraders, looking to upgrade to condos within the same vicinity.

In addition to that, more grade A office space will be constructed to further add on to the already populous Mapletree Business City situated in the area, adding on the rentability of condos within the district.

Condos Benefiting From The Greater Southern Waterfront Transformation

DevelopmentTOPAverage PSFTenureNo of units
Reef at king dock2024$260699 yrs from 2021429
Avenue South Residences2023$243199 yrs from 20181074
Reflection at Keppel Bay2011$186199 yrs from 20061129
Corals at Keppel Bay2016$252399 yrs from 2007366

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Proximity to reputable primary school

One major motivation that triggers a family to look for a new home is the drive to get their beloved child into a reputable school. Contrary to what our Ministry of Education advocates, all schools are not equal, selected primary schools are more sought after than others.

Positioning your condo selection within 1km radius of these popular primary schools like Nan Chiau Primary School, Rosyth Primary School and Rulang Primary School adds a strong selling point to your investment property.

List Of Sought After Primary School And Condos That Falls Within Its 1km Radius

SchoolOversubscription (2023 Phase 2C)Condo within 1km radius
Nan Hua403%Parc Clematis, Whistler Grand
Rosyth302%Affinity at Serangoon, The Garden Residences, Parkwood Residences
Nan Chiau254%Seng Kang Grand Residences, Bellewaters, The Vales
CHIJ St. Nicholas Girls’198%Lentor Hill, Lentor Modern, The Panorama, The Calrose
Henry Park155%Pinetree Hill, Park Suites
Maris Stella High124%Botanique at Bartley, Bartley Ridge, Bartley Residences
Catholic High123%Clover by the Park, Sky Vue, Sky Habitat

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While it is valuable to look for a school within 1km radius of 1 good school, it is even more valuable to find a school that is within 1km radius of multiple good schools.

Some examples include Kopar in Newton, which fall within 1km radius of both SJI primary and ACS primary. Park Colonial in Woodleigh which falls within 1km radius of both Maris stella primary, st Andrews Junior and Cedar Girls Primary.

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.

Proximity to MRT Station

On average, a property commands a higher price of 10% to 15% when it is near an MRT station. The nearer it is to the MRT station, the pricier it gets. The gold standard is to be located within 500m or closer to a MRT station.

In addition to that, plus points is given to condos being located near a MRT interchange that provides access to multiple MRT lines. Some examples include Serangoon, Punggol, Jurong East, Bishan, Harbourfront MRT stations.

When it comes to the rentability of a property, proximity to MRT is a major consideration factor amongst tenants. Hence should be a factor that you prioritise, if your eventual exit strategy is to sell the property to another investor.

Proximity to commercial hubs

Rental demand for condos in Singapore comes predominantly from affluent white collar expats working within the different commercial hubs in the country.

Hence, to ensure that your condo enjoys high rentability, it makes sense to select condo developments that are proximate to key commercial hubs. The common unit of measure is the number of MRT stops away from the specific commercial hubs.

Specific to these commercial centres, you will be looking out for those that have a high concentration of MNCs in growing industries such as tech, biotech, pharmaceutical and finance.

Examples Of Commercial Hubs And Condos Situated Near It
Commercial HubIndustryCondo near commercial hub
One North Business ParkTech, ResearchBlossoms by the Park, One North Eden
Marina Bay Financial CentreFinanceMarina One Residences, Marina Bay Residences
MapleTree business CityTech, PharmaceuticalAvenue South Residences

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Factors to consider – development specific

In the earlier sections, we ran through the list of criteria to consider when it comes to shortlisting a district to focus on when selecting an investment condo. In the latter sections, we will touch on the factors considered when comparing one condo development to the other, within the same district.

No of units in the development

When it comes to evaluating different condo developments for investments, size of the development matters. A larger project brings with it several benefits.

Larger developments are built on bigger land space equipped with more facilities within its compound. Aside from that, you will also enjoy a lower maintenance fee as the overall fee is shared among more units.

Recall the eye catching marketing campaigns and advertisements that the developer invested in during the launch of a mega development versus that of a small boutique development. This create trickle down effect in terms of buyer’s awareness for your development when you are looking to sell the property in the resale market

Lastly, a large condo development is normally associated with higher transaction volume. A high transaction volume facilitates the setting of a higher selling price for your property, when your neighbours owning units with the same characteristics as your property is setting new highs in their transacted price.

Age of development

It is always wise to consider a newer development, older condo developments bring with it several disadvantages.

One being the reduced property value due to its short lease remaining. As the condo’s lease runs down, the property value will eventually fall to zero, hence the resale value is often dampened when you purchase an ageing property.

As a rule of thumb, you will typically start seeing a leasehold condo’s value tapers as it crosses its 30- 40 year mark.

Another disadvantage that comes with an older condo is the difficulty for your buyer to secure financing. For private properties, most banks will not grant a full loan for properties with 30 years or less on the lease. Even with 40 to 50 years on the lease, banks may still grant a loan with lower loan to valuation ratio.

Entry Price

While it is optimal to select a condo that has all the positive qualities stated above, it is crucial to ensure that you are purchasing at a reasonable price point. When it comes to evaluating the entry price of a property, you want to reference the price disparity between your property and surrounding property.

For example, if you are purchasing a property that is situated next to a MRT station with newer and better facilities than a neighbouring development. You would want to ensure that the price gap between your unit and the neighbouring unit is minimised to build margin of safety for your purchase.

Factors to consider when selecting specific units with the development

Final words – condos that are good for investment in Singapore

As we complete the full cycle of shortlisting prospective districts to consider, narrowing down to the specific development to look into for our investment condo. Let’s touch on the factors to consider when selecting units within the development.

At high level, you should considering the following factors when evaluating units for consideration within the development

Unit Facing

You would be looking to avoid the east and west facing, avoiding the warm morning and afternoon sun. The optimal facing would be a north south facing unit, followed by a north east or south east facing units that limit exposure only to the morning sun,

Floor

From an investment perspective, it would be prudent to consider units that are mid levelled. Ideally above 6th floor, these are the units that are not priced at a premium compared to its top floor counterpart, but clear potential buyer’s concern over noise and privacy.

Distance away from bin centres, transformer rooms and car park ventilation ducts

These are often where the cheapest units in the development are located. But it is ideal to stay away from these units despite the cheap price points, as the undesirable noise, sight or scent coming from these locations may bring about objections from future buyers that will hinder your resale price.

In an ideal situation, a condo that is good for investment in Singapore is a condo that ticks most of the boxes for all the qualities listed above. But in reality there are often trade offs to be made. Hence, it is important to put yourself in the shoes of your future buyer and ensure that the condo that you select satisfies the most important qualities that your future exit buyer is looking for.

As a parting note. Below is a list featuring examples of condo development that satisfy multiple qualities of a good investment condo. By no means this list is exhaustive, but we hope it serves the purpose to drive the point home.

Condos Fulfilling Multiple Criteria Of A Good Investment Property
DevelopmentSize of developmentProximity to MRTProximity to Reputable Primary SchoolLease
Kopar at Newton378370m from Newton MRTMaris stella primary school, St Andrew primary schoo, Cedar primary school99 yrs from 2019
Woodleigh Residences66780m from Woodleigh MRTACS junior, ACS primary, St Joseph Instituition Junior99 yrs from 2017
Affinity1012550m from Serangoon North MRTRosyth School, Zhonghua primary school99 yrs from 2018

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If you are looking to purchase this condo as a 2nd property, you could be interested in checking out the following articles on decoupling and methods to avoid ABSD.

To calculate the stamp duties that you will need to pay for your second property head over to the 2nd property stamp duty calculator.

Need some help with your investment property research ?

Looking to purchase a property with investment upsides ?

At Decoupling Expertise, we specialise helping Singaporean property owner purchase the optimal investment property that suits your budget and lifestyle needs.

Drop us a text for a tailored shortlist of property development that suits your budget and selection criteria.

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.

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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.