Have a question about Singapore property? Ask Mr. Propwise (AMP)!

Hi Mr. Propwise,

Would like to hear your views on a property investment matter.

I tend to prefer 99-year leasehold non-landed properties as they are more affordable for me. Getty (and some other experts like Ku Swee Yong) also commented that resale properties offer better value than new launches.

But what is your view on the capital appreciation of older 99-year leasehold properties? Is it worth considering properties older than 10-15 years? Or should we aim to look for resale properties that are still relatively new and target to sell after they have reached 10-15 years?

Thanks and regards,

C.H.

Hi C.H.

Regarding your question on older leasehold properties, I’ve observed several things:

– After about 10 years, new leasehold properties often have a sudden drop in prices. So a property with 80+ years left on its lease often sells at a significant discount to other surrounding leasehold properties that still have 90+ years.

– Very old leasehold properties (i.e. 20+ years) tend to be illiquid, i.e. very few transactions and difficult to buy or sell.

– As for capital appreciation, it all depends on the cycle – during a bull market anything can go up. For example, International Plaza (a 30+ year old 99-year leasehold property in Tanjong Pagar) used to go for $300+ psf a few years ago. Now transactions have hit over $1,100 psf! That’s a lot of capital appreciation 🙂

Of course, when you’re buying leasehold, make sure you get an appropriate discount versus other projects depending on the age of the property. All other things being equal, you should pay less for a leasehold property that has fewer years of lease left.

I think the most important thing for capital appreciation is to get a good price (discount versus other units or projects) in a good location (not necessarily the prime areas, but an area where things are happening) on the right side of the property cycle.

Hope this helps!

To wisdom and beyond,

Mr. Propwise