Freehold vs Leasehold Condos in Singapore: Investment Analysis
Hey friend! If you’re thinking about buying a property in Singapore, you’ve probably hit that classic roadblock: should you go for freehold or leasehold? It’s one of the biggest financial puzzles we face here. Let me share what I can to help you make sense of it all.
1. Does the Neighborhood “Expect” Freehold?
The location you’re looking at actually changes the math. In areas known as “freehold enclaves” like Bukit Timah or parts of the East Coast, where the majority of homes are freehold. In these specific spots, if you buy a 99-year leasehold property, it might actually face a much larger valuation discount because everyone around you values owning the land forever.
However, in estates where almost everything is already leasehold, a freehold property might not command as big of a premium as you’d think.
The Numbers Tell the Story:
What’s fascinating is that the price gap between leasehold and freehold has actually been narrowing over the past decade. In 2013, freehold condos cost about 20% more than leasehold condos, but by 2023, this difference had dropped to just 4.7%. This is a dramatic shift! However, there’s an important caveat: in prime areas like the Core Central Region (CCR), the freehold premium has actually widened, showing that location context matters tremendously.
From 2014 to 2024, something surprising happened in the overall market: leasehold condo prices rose 65.9% to $1,973 per square foot, outpacing freehold’s 32.6% growth to $1,903 per square foot islandwide. This means leaseholds now trade at a slight premium in many areas due to their prime locations, particularly in the Outside Central Region (OCR) where newer developments tend to be.
2. The “Short-Term Flip” vs. The “Forever Home”
Your choice really depends on how long you plan to stay.
The 5 to 10-Year Plan: If you want to sell for a profit relatively quickly, a brand-new leasehold condo might be better. Think of it like an IPO; the future price isn’t fully set yet, so there’s room for speculation and growth. Recent data strongly supports this strategy. Leasehold condos experienced their most significant gains during the post-pandemic period from 2022 to 2023, with annualized growth nearing or exceeding 10%.
The 30 to 40-Year Plan: If this is your “forever home,” the math changes because of the Bala Curve. As a leasehold property hits that 60-year mark, its value typically drops to about 80% of a freehold equivalent. For a long-term stay, freehold offers peace of mind that your asset’s value will hold up better over decades.
Understanding Your Investment Timeline:
The tenure you choose should align closely with how long you plan to hold the property, as each option performs differently depending on your investment horizon.
If you’re holding for 10 years or less, leasehold properties often deliver superior returns. Why? Because you’re starting from a lower purchase price, which means even moderate appreciation translates to impressive percentage gains. It’s easier to achieve a 50% gain on a $1.5 million property than on a $1.8 million one, even if both appreciate by similar absolute dollar amounts. Your returns are amplified by the lower capital outlay.
However, for those planning 30+ year holds, the dynamics shift in favor of freehold. While the percentage returns might be comparable in the early years, the long-term advantage of freehold becomes clear as time passes. You’re building equity on an asset that won’t face lease decay concerns, and as your property ages, you avoid the critical thresholds where leasehold properties start facing financing restrictions and reduced buyer appeal—particularly when the remaining lease drops below 60 years.
The key takeaway? Your investment timeline should drive your tenure decision just as much as your budget does. Short-term holders benefit from leasehold’s affordability and growth potential, while long-term holders gain peace of mind and sustained value from freehold tenure.
3. Don’t Sacrifice Lifestyle for a Title: The Casa Merah vs. Changi Court Story
There’s a really interesting story about a buyer who chose Changi Court (Freehold) over Casa Merah (Leasehold) because freehold felt “safer”. Ten years later, both properties had appreciated by about the same amount! The buyer actually regretted the choice because Casa Merah was in a better location (right at Tanah Merah MRT) and had much better, newer amenities.
Let me give you the full context of this cautionary tale:
Casa Merah, a 99-year leasehold development completed in 2009, is located directly beside Tanah Merah MRT station, while Changi Court, though freehold, is further from public transport. The buyer in this story prioritized the freehold title over practical daily living considerations.
Here’s what happened: Casa Merah offered residents a mere 3-minute walk to the MRT, modern facilities including lap pools, tennis courts, and a full gym, plus it was a newer development with better layouts. Changi Court, being older and freehold, commanded a higher price but offered less convenience and older amenities.
Fast forward ten years, and Casa Merah has now benefited from new nearby amenities such as Sceneca Residence, a mixed-use development that’s further boosting demand around Tanah Merah MRT. The appreciation rates? Nearly identical! But buyer’s quality of life for those ten years was compromised by a longer commute and fewer modern facilities.
The Lesson? If you’re living there, don’t ignore the daily convenience of a good location and nice facilities just to have the “freehold” label. The emotional comfort of owning a freehold title came at the cost of convenience, lifestyle, and comparable returns. Accessibility, nearby amenities, and neighborhood growth potential usually outweigh tenure for owner-occupiers.
4. Thinking Like a Landlord: Rental Yield Analysis
If you’re buying as an investment to rent out, leasehold often wins. Why? Because tenants don’t care if a property is freehold or leasehold. They only care about:
- How close it is to the MRT
- The quality of the amenities
- The floor and view
Since leasehold properties usually have a lower upfront cost (capital), you might actually get a better rental yield.
The Mathematics of Rental Returns:
Rental yield is calculated by dividing annual rental income by the total cost of the property. Here’s a practical example: If you buy a leasehold condo for $1.5 million and rent it for $4,500 per month ($54,000 annually), your gross rental yield is 3.6%. A comparable freehold property costing $1.8 million with the same rental income would yield only 3.0%.
Tenants typically care less about the tenure of the property they are renting and more about location, condition, and rent price, which means you can charge similar rental prices for a leasehold property compared to a freehold one. Your rental yield becomes higher because the leasehold property was more affordable to purchase.
Leasehold units in the OCR (Outside Central Region) were the top performers for annualized returns, reinforcing that affordability and mass market appeal perhaps matter more than tenure for driving stronger percentage returns.
5. The Reality of Old Buildings: Maintenance and En Bloc Potential
Whether freehold or leasehold, older buildings eventually face the same reality: expensive maintenance work that can’t be avoided. We’re talking about major repairs like lift replacement, facade restoration, and structural reinforcement. These costs are shared among all owners through the management fund.
Here’s what many first-time buyers don’t realize: if the sinking fund (the reserve fund for major repairs) doesn’t have enough money saved up, owners must contribute additional cash through special levies. This can amount to tens of thousands of dollars per unit for major projects.
When Maintenance Becomes Unsustainable:
As buildings age past 30-40 years, maintenance costs tend to escalate sharply. For leasehold properties with shortening leases, owners may be more willing to consider collective sales as an exit strategy rather than continuing to pour money into repairs on a depreciating asset.
Freehold owners, knowing they own the land perpetually, might be more divided on this decision. Some view continued maintenance as worthwhile since they’re preserving a permanent asset, while others see collective redevelopment as the most practical path forward.
This dynamic affects whether your aging building successfully goes en bloc or not. In some older freehold developments, disagreements over maintenance spending versus collective sale have led to stalemates, with the building continuing to age while owners debate their options.
6. Landed Property: The Legacy Factor
If you’re looking at landed houses, the gap is much wider. It’s hard to justify spending $1.6 million to completely rebuild a house if the land only has 30 or 40 years left on the lease. You likely won’t get that money back when you sell. For landed property, freehold is often seen as a legacy asset—something to pass down through generations.
The Landed Property Premium:
For landed homes, the freehold vs. leasehold consideration becomes even more critical. With condos, you’re primarily buying a unit with shared facilities, but with landed property, you’re investing significantly in the land itself. At 60 years remaining on a lease, bank loan restrictions begin, which reduces buyer demand; at 40 years, resale values start to weaken as liquidity shrinks further; and at 20 years, the property is practically unsellable on the open market unless a collective sale is in play.
For landed homes, renovation costs can be substantial. If you’re planning major renovations on a property with limited lease remaining, you’re essentially betting that you’ll either enjoy the home long enough to justify the expense or that an en bloc sale will materialize. This makes freehold landed properties the clear choice for most buyers who can afford them.
7. The Surprising Performance Data: New Numbers Challenge Old Wisdom
Let me share some eye-opening statistics that might challenge what you’ve always believed about freehold properties always being the better investment.
New Launch vs. Resale Performance:
When analyzing new launch properties, leasehold units often outperform freehold in terms of percentage returns, but when focusing solely on resale transactions where older properties come into play and price discovery has already occurred, the gap between leasehold and freehold shrinks considerably.
The pattern becomes clearer when we break down by unit size: Freehold units overtake leasehold in absolute gains for two-bedroom and three-bedroom units in the resale segment, while annualized returns between leasehold and freehold can be as slim as 0.2 to 0.3 percent.
Why Leasehold Sometimes Outperforms:
The stronger performance of leasehold isn’t necessarily about tenure itself. It’s more about lower land and sale prices allowing for more price appreciation, and the volume of leasehold transactions in the OCR where properties have lower base prices and mass-market appeal.
Many larger condo plots are leasehold and located in the OCR. A mass-market condo in these areas has the advantage of a lower initial price, which provides room for percentage-based price growth. Additionally, the freehold premium further raises the base price of freehold properties, making it harder to achieve high percentage gains.
8. Real Case Study: The District 15 Battle – Tembusu Grand vs. Grand Dunman vs. The Continuum
Let me walk you through a real-world comparison that beautifully illustrates the freehold vs. leasehold dilemma: three major developments that launched in District 15 in 2023.
The Contenders:
- The Continuum – Freehold, 816 units, launched at an average of $2,732 per square foot
- Grand Dunman – 99-year leasehold (started 2022), 1,008 units, launched at $2,500 per square foot
- Tembusu Grand – 99-year leasehold (started 2022), 638 units, launched at $2,465 per square foot
The Location Factor:
Here’s where it gets interesting. Grand Dunman is located just 220 meters (approximately a 3-minute walk) from Dakota MRT Station on the Circle Line, while Tembusu Grand is 700 meters away (about an 11-minute walk) from Tanjong Katong MRT Station on the Thomson-East Coast Line.
The Continuum, despite being freehold, is located at Thiam Siew Avenue, which is further from MRT access compared to Grand Dunman.
The Pricing Reality:
The Continuum’s freehold status carries a price premium of approximately 20% over Grand Dunman, but this premium makes mathematical sense when comparing properties properly. However, here’s the crucial question: does that 20% premium translate to better returns?
The market has spoken decisively. Grand Dunman achieved a record-breaking launch and was the most successful launch of the trio, with the market demonstrating strong majority confidence in the 99-year, MRT-adjacent value proposition.
What This Teaches Us:
Buyers are increasingly voting with their wallets for connectivity and convenience over tenure. The 20% savings from choosing leasehold allows buyers to enter prime locations that would otherwise be out of reach. For someone with a 5-15 year investment horizon, paying significantly less for comparable or better location amenities makes perfect sense.
9. Understanding Lease Decay: The Bala Curve Explained
One of the most misunderstood aspects of leasehold properties is how they depreciate over time. The Bala Curve, referenced by the Singapore Land Authority, shows how property values decline as the lease shortens.
The Critical Thresholds:
The timeline breaks down roughly as follows: at 60 years remaining, bank loan restrictions begin, reducing buyer demand; at 40 years, resale values weaken as liquidity shrinks; at 20 years, the property becomes practically unsellable unless a collective sale is in play.
However, for most leasehold properties with more than 80 years remaining, the value remains largely comparable to freehold properties in similar locations with the same attributes. This means that for the first 15-20 years after purchase, lease decay is barely noticeable in practical terms.
The Financing Impact:
When a property has 60 or fewer years on the lease, banks may reduce the maximum loan quantum from the usual 75% to 55%. This is at the discretion of individual banks, but this is certainly one area where leasehold properties face disadvantage. CPF usage for property purchase also becomes restricted based on the remaining lease and the age of the youngest buyer.
10. The Freehold Premium Gap: How Much Extra Are You Really Paying?
Let’s talk numbers. The freehold premium varies significantly by location and has been changing over time.
Current Market Premiums:
For properties in similar locations of similar size, a freehold condo might be 15% more expensive than its leasehold counterpart. However, this varies greatly by district and property type.
Freehold properties are typically sold at a 15-20% premium compared to their leasehold counterparts, and this has been consistent over the past decade. But remember the earlier statistic showing this gap has narrowed in some segments – it’s not uniform across the market.
Is the Premium Worth It?
This is where your personal circumstances matter enormously. If you’re:
- Planning to hold for 30+ years
- Buying landed property for legacy purposes
- In a prime freehold enclave where leasehold is rare
- Very concerned about financing restrictions later
Then yes, the premium may be justified.
However, if you’re:
- A first-time buyer stretching your budget
- Planning to upgrade within 10 years
- Prioritizing rental yield and cash flow
- Buying in areas where leasehold dominates
Then paying 15-20% extra for freehold might not make financial sense. That extra capital could be better deployed in higher-yielding investments or kept as cash reserves.
My Final Advice?
Go Leasehold if:
- You want a better location/amenities for a lower price
- You’re looking for rental income and higher yields
- You plan to sell within 10 years
- You’re a first-time buyer or need to manage cash flow
- The property has 80+ years remaining on the lease
- You’re buying in areas near new MRT stations or growth corridors
Go Freehold if:
- You’re buying a landed property for long-term family use
- Planning to stay for 30+ years (your “forever home”)
- You want a “scarce” asset, as most new government land sales are now 99-year leases
- You have ample budget and want estate planning flexibility
- You’re buying in a traditionally freehold enclave
- You’re concerned about financing flexibility decades from now
- En bloc potential is part of your investment thesis
Most importantly—don’t stretch yourself too thin financially, regardless of which one you choose!
The worst financial decision you can make is overextending yourself to afford a freehold property when a well-located leasehold would serve you better. Remember, in Singapore’s property market, location, connectivity, and timing often matter more than tenure. A leasehold condo beside an MRT in a thriving neighborhood will almost always outperform a freehold property in a declining area with poor accessibility.
The Bottom Line
The freehold vs. leasehold debate isn’t as clear-cut as conventional wisdom suggests. The data from the past decade shows that leasehold properties have delivered impressive returns, often outperforming their freehold counterparts in percentage terms. The narrowing price gap between the two tenure types reflects a maturing market that’s learning to price properties based on fundamental value rather than just the label on the title deed.
Your decision should be driven by your specific circumstances: your investment timeline, budget constraints, lifestyle needs, and long-term plans. There’s no universal “better” choice—only the right choice for your situation.
Good luck with the house hunting! And remember, whether freehold or leasehold, the best property investment is one that you can comfortably afford, in a location that meets your needs, and that aligns with your long-term goals.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Property investment decisions should be made after consulting with qualified financial advisors and conducting thorough personal research. Property market conditions, regulations, and financing terms can change over time.
