Singapore Property Investment – 8 Key Factors [Guide]

In Singapore, property investment is one of the favoured options for asset progression. As a highly developed city-state with a well-regulated property market, it offers a sound investment channel for investors to grow and preserve their wealth.

However, investing in Singapore's property market requires detailed market research and analysis, as well as careful planning, to achieve optimal results.

This Singapore property investment guide details eight key factors for prospective investors. Although the focus is on the private residential market, most also apply to HDB flats and executive condos.

Below, we will examine why Singapore’s private residential property market has remained attractive despite being ranked as one of the most expensive globally.

Singapore Property Investment: 8 Factors for Informed Decision-Making

1. Singapore’s Stable Political Climate.
2. Economic and Market Fundamentals.
3. Singapore Property Market Trends.
4. Location versus Freehold Status - Which is More Important?
5. Property Costs and Rental Yield.
6. Freehold Status Only in Name?
7. Demographic and Lifestyle Changes.
8. Obsolescence of Properties.

 

Singapore’s Stable Political Climate

Singapore has only known one government since its independence in 1965, and it is not about to change anytime soon. For foreign investors, this provides a stable political climate to ‘park’ their funds and grow their property investments and wealth.

Singapore is also recognised for its efficiency and transparency, presenting a compelling safe haven for investors. Its pro-business policies, coupled with a highly reliable legal system and minimal corruption, naturally attract significant foreign investments and the attention of ultra-high-net-worth (UHNW) individuals.

In recent years, Singapore has witnessed a rapid growth in Family Offices where foreigners transfer a significant amount of their wealth to the city-state for management.

These include those from China following its rapid economic growth in recent decades. This has propelled it to be ranked second globally with the highest number of ultra-high-net-worth (UHNW) individuals.

In a bid to safeguard their wealth,  Singapore has seen a surge of funds from China and Hong Kong since the implementation of China's new security laws in 2017. Due to the fear that Beijing could confiscate their assets under ambiguous national security pretexts, many wealthy Chinese have sought to shift their investments overseas.

Singapore is also viewed favourably for its neutrality amid the US-China political and economic rivalry.

Although the property cooling measures imposed by the Singapore government on 27 April 2023, including a hike in the ABSD (property stamp duty) from 30% to 60%, have led to a significant drop in foreign property demand, Singapore has remained an attractive investment destination.

The 60% Additional Buyer's Stamp Duty (ABSD) does not apply to citizens of Liechtenstein, Iceland, Norway, Switzerland, and the United States, as stipulated under the respective Free Trade Agreements (FTAs) with Singapore.

Also, foreigners outside these countries, including many wealthy mainland Chinese, who succeeded in gaining citizenship or permanent residency status, have largely circumvented the latest policy changes

 

Economic and Market Fundamentals

Singapore's economic strength and market dynamics are crucial factors for property investment, where its stability and long-term growth prospects significantly influence the performance of the real estate market.

Despite the ongoing headwinds such as the Russia-Ukraine war and global economic uncertainty, Singapore's GDP growth expanded by a respectable 4.4% in 2024.

So far, Singapore has been spared from much of the global real estate market malaise.

This can be attributed to Singapore's strong economic fundamentals, and a series of property cooling measures introduced in the last two decades have curbed speculation and prevented property bubbles from forming.

The property cooling measures have also ensured prudent borrowing by households to finance their properties (more on this below). This prevented an over-leveraging of finances while enabling them to overcome periods of high interest rates.

As a result, the property market has grown steadily in line with market fundamentals, a stated objective of the Singapore government.

 

Careful Calibration of New Private Property Supply

Another factor underpinning Singapore's property market is the careful calibration of new housing supply by the Singapore government.

In Chart 1 below, the number of launched and unsold units was 3,565 units as of 4Q 2024. This indicates a good balance between supply and demand, which helps support property prices and ensures market stability.

Scarcity of Land In Singapore

As a small country, Singapore faces a scarcity of land. Despite undertaking massive land reclamation, there is a limit to how much it can expand.

Singapore only has a total land area of 735.7 sq km (as of December 2024). This makes it the 188th largest country in the world out of 223. It has a population size of 6.04 million, but according to the Population White Paper (PWP), this is expected to rise to 6.9 million by 2030.

This combination of factors has also contributed to rising property prices.

Given the scarcity of land, the Singapore government has stopped offering freehold land in its Land Sales (GLS) programme. All new land plots will be sold with 99-year leases or shorter, as stated by former Prime Minister Lee Hsien Loong in his 2018 National Day Rally speech.

He said housing with 99-year leases is sufficient to be handed down to one or two more generations before being reverted to the state. He reckoned that if apartments were sold as freehold properties, the government would eventually run out of land to build new ones for future generations.

As a result, the only way for housing developers to acquire freehold land is through en bloc acquisition of existing freehold properties. However, some of the freehold land purchased by developers is being redeveloped and sold with 99-year leases. This is to ensure the land will revert to them once their leases end.

As freehold properties become increasingly rare, are they a better investment choice compared to 99-year leasehold properties?

To answer the freehold versus 99-year leasehold question, we will examine their performances over the last 10-year period later in this article.

 

Singapore Property Market Trends

Examining the 10-year average price per square foot (psf) trend of Singapore's private residential market reveals an appreciation of 67.97% (see Chart 2 below).

This demonstrates that property investment in Singapore provides strong long-term growth prospects. In comparison, banks in Singapore offer fixed deposit rates of below 3% (as of April 2025).

While economic downturns and global financial crises have occasionally led to declines, real estate values have consistently rebounded to record new all-time highs.

Hence, it is no surprise that property investment in Singapore has been viewed favourably for wealth accumulation and preservation.

Capital Appreciation Rate - New Launch Versus Resale Property

An important factor in Singapore property investment that may have been overlooked is the rate of capital appreciation of new launches versus resale private properties. A new launch private property will naturally be priced higher than a resale with the same attributes and location. Who doesn't prefer new things?

But which is the better investment? Will the lower-priced property offer a better ROI?

To answer this question, let's examine a case study of two condos situated 230m apart near the Redhill MRT station (see Chart 3). They are:

• Alex Residences: Launched in November 2013.
• Ascentia Sky: Launched in July 2009.

During the launch of Alex Residences, it achieved an average price of $1,699 psf.

At that time, Ascentia Sky was transacted at an average price of $1,540 psf in the resale, 10.32% lower than the Alex Residences.

Since then, they have appreciated by 32.08% and 25.06%, respectively, causing the price difference to widen from 10.32% to 16.51% (as of April 5, 2025).

Alex Residences was last transacted at an average price of $2,224 psf, and Ascentia Sky at $1,926 psf.

Assuming a 1 million-dollar property was bought during the launch of Alex Residences, the following profits would have been made:

• Alex Residences: $525,000.
• Ascential Sky: $386,ooo.

This showed that a new launch, although priced higher than a resale property, may offer a better investment option.

 

Singapore Property Investment - Freehold Versus 99-Year Leasehold

Chart 4 illustrates the 10-year average price (psf) trend for all private residential property types. It shows that 99-year leasehold properties outperformed freehold properties by 67.97% to 42.49%.

This shows that property investment in Singapore should not solely focus on the property's lease status. To further underscore this point, let's examine how the 99-year Clementiwoods performed against the freehold The Parc Condo below.

 

Comparison of Clementiwoods (99-year) versus The Parc (Freehold)

This case study involves two condominium developments in District 5 -  Clementiwoods (99-year) and The Parc (freehold). They were chosen due to their close proximity and are situated just 1.67 km apart. In addition, they were launched very close to each other.

Clementiwoods was launched in January 2007 and The Parc in August 2007, a difference of just seven months. Since their launch, their average price (psf) has appreciated by 118.71% and 94.08%, respectively (see Chart 4 below).

Once again, it shows that The Parc Condo (freehold) has underperformed Clementiwoods (99-year).

Although the illustration above may not be representative of Singapore's entire real estate market, it nevertheless, shows that freehold properties may not necessarily be a better investment choice compared to 99-year leasehold properties.

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Naturally, most people would prefer freehold properties for legacy planning. Although there is nothing wrong with such thinking, other important factors may have been overlooked when trying to maximise the returns on property investments.

Let us highlight some of the factors below.

 

Location More Important Than Freehold Status? 

This may sound like a cliché, but location is a very important factor when it comes to Singapore property investment.

For example, a property near the Central Business District is more desirable than one in the suburbs because of the convenience it offers. A property near an international school will also be more desirable.

The reason is simple! These properties attract high demand from expatriates working in Singapore, especially those with school-going children. As such, they will fetch higher rentals. Tenants care little whether your property is freehold or leasehold. What is important to them is convenience.

There is no difference in rental prices between a leasehold and freehold property of similar attributes. Due to the lower acquisition cost of a leasehold property, its ROI will be higher.

For a simple illustration, a 99-year leasehold property costs 2 million dollars while a freehold costs 2.2 million dollars (assuming a minimal 10% premium for the latter). If both fetch the same monthly rental of $6,000 per month, the annual rental yield of the 99-year leasehold property works out to be 3.6% compared to 3.27% for the freehold.

In addition, as highlighted earlier, the potential capital appreciation of 99-year leasehold properties may not necessarily be inferior to freehold properties. Nevertheless, one needs to be cognizant of the negative effect of lease decay affecting 99-year leasehold properties. As their leases shorten, their values will decline more rapidly, exacerbated by the reluctance of financial institutions to extend loans for properties with very short leases.

 

Other Key Considerations

Besides the tenure of a property, whether freehold or 99-year leasehold,  the following are some key considerations to maximise the ROI of your property investment:

• Amenities - Are there any shopping malls, public parks, popular local schools or international schools nearby?
• Conveniences – Is the property well-served by an MRT station, bus interchange or an expressway?
• Future Development – What is the future potential development of the area? Has it been earmarked for rejuvenation or transformation by the government? Some major transformations can be seen the Greater Southern Waterfront, Jurong Lake District, Woodlands Regional Centre, One-North, Bayshore, and Punggol Digital District.

As the saying goes, location creates desirability, desirability creates demand, and demand raises real estate values.

 

Property Cost and Rental Yield

Given Singapore's small land area, more than 80% of residential properties are on 99-year leases or shorter. Contrary to popular belief, the government is not obliged to extend their leases when they expire.

Nevertheless, many leasehold residential properties had their leases extended by paying the government a lease top-up if they went en bloc. Due to the potential for en bloc, people have become less averse to leasehold properties. Nevertheless, there is no guarantee that the government will grant a lease extension, as it will depend on the following factors:

• Land use intensification
• Mitigation of property decay
• Preservation of community

Besides the uncertainty over lease extension, another factor to consider is the cost difference between a 99-year leasehold and a freehold property.

All things being equal (location, size, amenities, etc), freehold properties cost minimally 10-20% more than similar 99-year leasehold properties. For example, if a leasehold condominium costs 1 million dollars, a similar freehold will cost at least 1.1 million dollars (assuming a minimal 10% price premium).

For landlords of freehold properties who rent out their units, this will translate to lower rental yields. The property's lease status matters little to tenants.

 

Property Stamp Duties Add to Cost of Property Purchase

Assuming the purchase of a 1 million-dollar 99-year leasehold and 1.1 million-dollar freehold property, the Buyer’s Stamp Duty (BSD) incurred works out to $24,600 and $28,600, respectively, which will raise the overall property acquisition cost.

The calculation of Buyer's Stamp Duty is based on the rates shown in the table below:

Higher of Purchase Price or Market Value of the Property	Residential Property
	Rates on or before 14 February 2023	Rates on or after 15 February 2023
First $180,000	1%	1%
Next $180,000	2%	2%
Next $640,000	3%	3%
Next $500,000	4%	4%
Next $1,500,000		5%
Amount exceeding $3,000,000		6%

Example:

If you are buying a residential property costing 1 million dollars, the calculation for BSD is as follows:

Similarly, if you are buying a freehold property for 1.1 million dollars, the BSD will amount to $28,600.

Accounting for the buyer's stamp duty, the freehold property will cost $104,000 more than its 99-year leasehold counterpart, after factoring in the difference in stamp duty and property price.

Nowadays, a million-dollar private property is likely to get you a shoe-box apartment or condominium. If you buy a bigger home, the price difference between a freehold and a leasehold property can be substantial.

If you are a Singaporean buying your second or third property, the Additional Buyer's Stamp Duty (ABSD) of 20% and 30%, respectively, will be levied. For permanent residents and foreigners, the ABSD are even higher (refer to the table below).

Additional Buyer's Stamp Duty (ABSD)	Rates before 27 April 2023	Rates from 27 April 2023
SCs buying first residential property	0%	0%
SCs buying second residential property	17%	20%
SCs buying third and subsequent residential property	25%	30%
SPRs buying first residential property	5%	5%
SPRs buying second residential property	25%	30%
SPRs buying third and subsequent residential property	30%	35%
Foreigners buying any residential property	30%	60%
Entities buying any residential property	35%	65%
Housing Developers	35% (remittable, subject to conditions) + 5% (non-remittable)	35% (remittable, subject to conditions) + 5% (non-remittable)

These stamp duties will add significantly to the price of your property purchase.

The bigger your financial outlay, the greater your financial burden. This could mean setting aside a significant portion of your monthly income to service your mortgage.

Typically, taking a 20 to 30-year bank loan is quite common, especially for young Singaporeans venturing into property investment for the first time. To service the mortgage, compromises may need to be made, like cutting back on expensive holidays.

Nevertheless, prudent property investment can help you build your retirement egg nest. Hence, it is crucial to evaluate your options by speaking to a professional real estate agent who can share with you the following information:

• Current market trends and the latest demand/supply situation.
• Properties with good investment potential.
• What are the property hotspots?
• Recommend properties that meet your budget and investment horizon.

 

Freehold Status Only In Name?

In law, the Doctrine of Tenure states that all land belongs to the State. Thus, technically speaking, what a person ‘owns’ is not the land itself but an ‘estate’ in the land. There are two types of freehold land - Estate in Fee Simple and Estate in Perpetuity (also known as Statutory Land Grant). To the layman, both are the same. However, there are some differences, as explained below:

• Estate in Fee Simple - A freehold estate where the owner can own it ‘forever’ without any conditions.
• Estate in Perpetuity or Statutory Land Grant - A freehold estate is one where the owner can own the land ‘forever’. It is, however, subject to the terms under the State Lands Act. The terms include the right of the State to have free access to the land, to take mineral oil and the duty to maintain boundary marks.

Why is freehold status only in name? This is because, under certain circumstances, you may be required to relinquish your freehold property through government land acquisition and en bloc sales.

 

Government Land Acquisition

The government may acquire private land for economic or infrastructure developments. For example, if the government wants to build a new MRT line, widen a road or construct a new highway, and your land or property stands in the way, it will be possessed under the Land Acquisition Act. It is administered by the Singapore Land Authority (SLA).

Since April 2007, landowners whose land is acquired will receive market value under the Act. The compensation will not be adjusted if there is any increase or decrease in value between the date of notice of acquisition and the date of vacant possession. In other words, the potential value of the property is not taken into account. The government will either enjoy or bear the price difference.

Hence, in Singapore property investment, nothing is 100% certain, as highlighted in this case.

 

En-Bloc Sale

An en bloc sale can happen in several ways:

• Owners of old properties facing high maintenance costs sell collectively to interested housing developers. This will help them fetch a higher price per unit than if they sell individually.
• Older low-rise properties with large open spaces and common areas that have been under-utilised, allowing for more intensive use of the land to build more housing units.
• Revision of plot ratio. This is a major factor driving en bloc sales. If the URA raises the plot ratio, the Building Control Height will be increased. This allows higher buildings to be built on the same plot of land (refer to the table below). With the increase in Gross Floor Area (GFA), more housing units can be built. The plot ratio of land is indicated in the URA’s Master Plan which is revised once every five years.

Gross Plot Ratio	Building Control Height
1.4	5
1.6	12
2.1	24
2.8	36
>2.8	>36

• Change in the zoning of land use. This is also included in the Master Plan and specifies what the land is used for. These zoning include Residential, Commercial, Commercial & Residential, Hotel, and Business Park, to name a few. For example, if a land that was formerly zoned ‘Residential’ is subsequently revised to ‘Commercial & Residential’, the value of the land will increase. This is because commercial developments usually command higher rental returns than residential properties.

For an en bloc sale of a residential property to take place, owners of 90% of the share value must agree if a development is less than 10 years old. For a development that is more than 10 years old, the threshold is lowered to 80%.

If you are one of the 10% or 20% of homeowners who are against the en bloc sale, you will be forced to sell, regardless of whether your property is freehold or leasehold.

 

Demographic And Lifestyle Changes

The multi-generational family unit in Singapore is rare nowadays. It is not a given that children will live with their parents when they grow up. Many married couples prefer to live by themselves. If your children and grandchildren will not be staying with you, is buying a freehold property a better option for growing your wealth and for legacy planning?

As illustrated above, the capital appreciation of 99-year leasehold properties can be higher than freehold, in addition to better rental yields for properties with similar attributes. Nevertheless, buying a property should come with an exit strategy to maximise your ROI as its rate of capital appreciation tends to taper off, or even fall, as the property ages. This is regardless of whether the property is freehold or 99-year leasehold.

For a first-time real estate investor, buying a leasehold property could make more sense, especially if you face a tight cash flow. With a lower outlay, you will avoid over-stretching your finances while taking the first step into the exciting world of property investment.

You can always reassess your investment or asset progression options later, including buying a second property, when your finances improve.

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Obsolescence of Properties

Whether properties are freehold or leasehold, all of them face the risk of Economic, Functional and Physical Obsolescence.

• Economic Obsolescence – When the surrounding environment near your property changes, causing the value of your property to diminish. For example, there is a change in zoning of the neighbouring land into a cemetery.
• Functional Obsolescence – The design of old freehold properties is no longer desired, resulting in a drop in demand. For example, apartments with no lifts do not meet the needs of the rapidly ageing population.
• Physical Obsolescence – When a property costs more to repair than rebuild due to gross mismanagement and physical neglect.

In addition to the above, lease decay will negatively affect the value of 99-year leasehold properties. However, this will happen 20-30 years in the future. In the meantime, freehold and leasehold properties rise and fall in tandem during property cycles without exception.

Within this time frame, ask yourself what is more important? - Clinging on to the existing property for sentimental reasons or flipping it to maximise your ROI to prepare for your future retirement?

If you choose the former, be prepared to fork out extra money to upkeep your property. As building ages, things will begin to fall apart. These may include faulty electrical wiring, leaky roofs and rusty concealed pipes, to name just a few.

If you are staying in a condominium that is 25-30 years old, do not be surprised that all the lifts will need to be replaced. This can be a very costly affair, especially in a small development where there are fewer owners to share the upgrading cost.

All ageing properties face significant issues, no matter how well they are managed or maintained. Perhaps, the money spent on upgrading can be better utilised by investing in a newer property?

Unless of course, if there is a high possibility of an en bloc sale or a major transformation taking place in your area that could substantially boost property values.

 

Conclusion

To sum up, the tenure of a property may not always be the most critical factor in property investment and asset progression. Buying a lower-priced resale property may also not be the best option when it comes to maximising your potential capital gain.

Of course, there are other important factors to consider, such as:

• Location (Eg, CCR, RCR or OCR).
• Future developments (Eg, new business park, employment hub, or lifestyle facilities).
• Potential transformation.
• Rentability and rental yield.
• Amenities (Eg, shopping malls, popular schools, nature parks).
• Conveniences (Eg, existing or potential new MRT station, bus interchange, expressway).
• En-bloc potential.

The above factors also apply to HDB resale and BTO flats.

If you have any questions about Singapore property investment, including the use of your CPF funds to finance your property, please email or WhatsApp me for an obligation-free consultation.

We will be happy to share with you our in-depth research and market-driven data to help you realise your investment objectives and build your retirement egg nest.

 

What Singapore Properties Can Foreigners Buy?

If you are a foreigner or a Singapore permanent resident interested in Singapore property investment, there are rules and regulations to be familiarised with. For example, there are restricted properties that foreigners are barred from buying.

In addition, you need to take note of the stamp duties payable as this could add substantially to the cost of your Singapore property investment. If you are in the market for a new home, we can assist you. Please WhatsApp or email me.

 

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