Property investment in Singapore real estate sector is on the rise these days with both locals and foreigners trying to generate impressive returns for themselves. How can you maximize these? It’s all about choosing a property that has value, but what contributes to the overall value of properties in Singapore?
The factors that affect property can broadly be divided into two types: fixed and variable. Fixed attributes include location, height, layout, and age, whereas variable attributes refer to staging, condition and renovation. Location matters, and matters a lot. If your property is located in the central area, it can fetch greater returns that if it were on the outskirts. But location isn’t everything. Size and the offered amenities also play their part.
Key Consideration on Property Investment in Singapore
Let’s discuss all factors that can affect a property value in more detail, starting with location.
Location is one of the most important considerations for property investment in Singapore. Neighborhoods affect prices, but so do the nearby amenities. For instance, a property in the Orchard Road area or Marina Bay would be priced higher, but it would also generate greater returns.
Similarly, any property that is close to the MRT station, supermarket, food court, sports facility or a premier school would also be in greater demand, and hence, available at a higher price. Cars are expensive so any home that is close to the MRT station is a lot more valuable in the real estate world, this is often referred to as the MRT affect. Homes that enjoyed the new downtown and circle MRT lines saw their values rise. For schools, Bukit Timah is a top district.
Sometimes, the property location is so favorable that it can even outweigh the lease tenure. Considering the recent years, infrastructure plans for different regions have also influenced prices. So check out the Urban Redevelopment Authority’s Master Plan as well for predicting the value. If any MRT station, bus terminal or mall developments are scheduled in future, the value will likely inflate. When the High Speed Rail terminus was announced in Jurong East, the profile of all properties in the area enjoyed an instant boost.
Generally, if a building is taller and comprises of a greater number of floors, prices are higher. The units on the topmost floors are the priciest, and if the offered views from those units are open and unblocked, you’d probably have to pay an even higher amount.
Considering the newly built condos, the price per floor varies by around $5000 for properties in the mass market and up to $250,000 per floor for the high -end condo. Taking Leedon Residences as an example, a 5-bedroom duplex condo with floor area of 4,704 square feet on the third floor was sold by the developer at $9.5 million and a fifth floor unit directly above was done at $10 million.
Age and Lease Tenure
Generally, older properties have a lower value until they are considered to be a part of heritage or have a potential to undergo a collective sale. Similarly, if the balance lease is less than 60 years, you can get the property at a reduced price. But bear in mind that the shorter balance lease of a 99-year leashold property would have some impact on the mortgage tenure. Compared to this, new properties are generally more costly, probably because of the perception that they would be in a better condition, requiring less maintenance. And if this is an investment property, procuring a tenant would be easier comparing to older properties.
If a property has a standard shape and regular layout, it is easier to sell because space can be maximized. But exceptions do exist and can increase or decrease the price. Layouts are a matter of personal preference as well – for the same feature, some buyers would be willing to pay more, whereas others would reject the property.
View is another factor that depends on personal preferences. For you, buying a property overlooking the waters or the expressways may be equivalent, but others may want to pay a greater price for either of these views.
Generally, if the view is unblocked, prices tend to be higher. Consider two houses that are identical and located at the same floor, with view being the only differentiating factor. The prices for both these units can vary by as much as 30%. An apartment that offers a view of the Marina Bay Sands will be priced more than a unit that doesn’t. For instance, Properties in The Sail with the bay view command approximately 30% premium in price comparing to properties in the same condo facing the office buildings.
Condition is how well a property has been maintained. If a property is in a better condition, the prices are also higher. So for instance, if a unit has newly painted walls, varnished wooden floor and polished marble floor, the asking prices would be on the higher end, with sellers less willing to negotiate.
If a unit has not been well maintained and appears shabby, the prices can drop by around 5 percent or even more.
Renovations increase the value of a property, but too many of them may not be desirable. If the fixtures are too customized, it may be difficult for you to find tenants since they might not be able to add a personal touch to the space. And they might not even be willing to pay the demanded rent.
For commercial properties, there should hardly be any renovations. This allows the tenants to customize and set up the space in a manner suitable for their intended use.
If the seller has put in effort to stage their property, their asking price will likely be higher. But it also means fewer fixtures and maintenance on your part before you rent out the property.
The time of the year can affect a property’s value to a certain extent. Generally, prices plummet in holidays when the market is less active. The busiest time of the year is between March and August, and this is when prices are less negotiable.
In each property cycle, the best time for property investment in Singapore is when the transactional volume goes but prices are still the same. But if you missed this golden opportunity, you can enter the market anytime when you can get the right property at the right price. Keep in mind that property investments in Singapore are for long terms. Unlike the stock market, you cannot enter and exit on the same day.
If you are interested in buying property in Singapore as a foreigner, reach out to real estate experts at Century 21.
At Century 21, we are one of the few Singapore estate agencies offering exceptional real estate services that are personalized and customized to meet the diverse needs of international high net-worth individuals. We provide international HNWI a one-stop service for property investment and acquiring Singapore luxury real estate. Check out our Global HNWI Services now!
Author: Nic Ee
Nic is the Executive Director and Key Executive Officer (KEO) of CENTURY 21 Property Agent Singapore Pte Ltd. Nic starts his real estate career in 1995. He focuses in providing real estate services specifically to international high net-worth individuals and corporate clients. His expertise includes luxury home finding, property investment planning & acquisition, managing buy to let property, expat home finding and tenant representation for office space.