A common question we get asked often by clients is if older 99-leasehold condominiums should be considered and what is the opportunity to exit in the future? We analyzed various developments across Singapore, which were at least 20-years old (mixture of proximity to MRT) and these are the results we have found.
District 12
District 16
District 19
District 20
District 23
In general, we do notice appreciation cycles and price retention and this phenomenon is supported by various reasons such as increasing land costs from government land sales (GLS), lack of supply and mindset of residents.
Higher GLS costs
With increasing GLS costs, we now see per square foot prices of new launches to be 3x – 4x compared to the resale market and hence, the resale market prices are therefore supported by these increments and move in tandem.
Lack of Supply
Based on the above scenario, developers are forced to develop smaller units to keep the quantum affordable and this trend will only continue based on the recent land sales by the government. Thus, families which prioritize space and are more price conscious will turn to the resale market, further supporting the price.
Mindset of Residents & Holding Power
In older condominiums, especially those with larger units, it is expected that majority of the residents will be married families with children and the holding period of these residents could be anywhere between 10-20 years mainly for the management of school arrangements for the children. Coupled with the fact that the first movers are sitting on 2x – 3x profits, they will be in no hurry to offload their units when the time comes, therefore, leading to price retention.
With above points in mind, do note that general trends should not be applied across the entire real estate market, performances between regions and districts will vary. Most importantly, you will need clarity on your priorities for the selection of a resale leasehold private development over other products. Speak to a trusted professional for advice or reach out to us!
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