Leasehold Properties in Singapore: Are They Worth The Risk?
- Leasehold offers a lower entry price but value decays as the lease shortens.
- Well-located leasehold with strong demand can still perform.
- Have an exit plan before the lease crosses key thresholds.
The choice between leasehold and freehold sparks intense debate. Are leasehold properties — especially older 99-year types — worth your time and money?
Understanding Leasehold Properties
Leasehold properties typically come with a 99-year lease; once it expires, ownership reverts to the state unless extended at a cost set by the SLA. Values typically begin to decline significantly around the 70th year (the "Bala's curve"), and depreciation accelerates as the lease shortens — a perception that can reduce demand and make selling or refinancing harder.
Market Backdrop (as of Q1 2024)
The residential market has been stable, with the Property Sale Demand Index up 2.9% and median asking prices up 1.0% year-on-year. The rental market is cooling, though, with a 13.5% drop in demand — partly because 2023 saw the most completions since 2016 (over 21,284 new private homes), adding supply.
The Appeal of Rental Gains
Despite depreciation, many older leasehold properties still generate attractive rental yields — ideal for cash-flow-focused investors. Examples of solid performers over ~10 years:
| Development | Avg Rental Yield | Avg Price |
|---|---|---|
| Park West (1986) | ~3.41% | S$849 psf |
| Glentrees (2005) | ~5.03% | S$1,821 psf |
| Kerrisdale (2005) | ~3.8% | S$1,529 psf |
| Icon (2007) | ~4.87% | S$1,940 psf |
| The Trilinq (Clementi) | ~3.64% | S$1,743 psf |
| Reflections at Keppel Bay (2011) | ~4.07% | S$1,797 psf |
Leasehold vs Freehold
Leasehold offers lower entry costs but the risk of declining values as the lease ends; freehold offers perpetual ownership at a higher initial cost. When considering leasehold, evaluate the remaining lease, condition, and potential for capital appreciation, rental income, lease extension or en-bloc redevelopment.
En-Bloc: Opportunity and Risk
A successful en-bloc can deliver a premium above market value, offsetting a shortening lease — but it's far from guaranteed. Several developments (Pine Grove, Neptune Court, Mandarin Gardens) have struggled with owner consensus, ownership structures and cautious market conditions.
Weighing Risk and Reward
For steady rental income, well-located, well-managed older leasehold properties can suit — they often out-yield newer developments. For long-term capital appreciation, newer properties with longer leases (or freehold) usually offer better prospects. The right choice depends on your goals and risk tolerance.