Many Singaporean homebuyers, especially from older generations, have traditionally favoured freehold properties. The appeal is clear: a sense of permanence, the idea that their children or grandchildren will benefit from the investment, and years of advice reinforcing that freehold trumps leasehold. However, recent experiences from homeowners reveal that paying a freehold premium doesn’t always guarantee higher returns.

A freehold property that didn’t outperform

TY and her husband purchased their first private home in the 2010s, after selling their 4-room flat in Bedok Reservoir. Seeking a unit they could move into immediately, they considered resale condos in the east. The decision-making process became complicated, with advice from multiple sources — a brother-in-law who was a landlord, a colleague who had just bought a unit, and a friend who also acted as their agent. Their long list of requirements, including proximity to work, school, and parents, added to the indecision.

Eventually, they narrowed their choices to Casa Merah in Tanah Merah, newly completed at the time, or Changi Court, an older development closer to TY’s workplace. They initially leaned towards Casa Merah, but its higher price — around $1 million for under 1,000 sq ft — made them reconsider. Instead, they opted for Changi Court, similarly sized, freehold, and priced at approximately $860,000.

The compromise came with trade-offs: older and smaller facilities, a crowded environment due to nearby SIA Training Centre and SUTD, limited amenities such as no nearby coffee shops, and slightly less convenient MRT connectivity. Despite this, the couple felt confident that the freehold status and lower initial cost would prove advantageous.

Fast forward to today, the Changi Court unit’s value is around $1.35 million — roughly a 3.3% annual return. Checking Casa Merah, they found a similar-sized unit appreciated at almost the same rate, around 3.2%. The couple realised that prioritising freehold over practicality didn’t yield the expected advantage. TY reflects, “We should have focused on convenience and lifestyle instead of freehold. Next time, practicality comes first.”

Freehold premiums and timing can affect returns

SP purchased a freehold condo near Great World City around 2010, at a time when the market was poised for future cooling measures. He wanted a convenient location and smaller unit, as a single buyer, and found freehold properties more available in prime areas. The unit, 775 sq ft at about $2,100 psf, seemed reasonable then, but later market adjustments and discounts offered by the developer limited appreciation from 2013 to 2017.

SP also discovered that his unit, though freehold, had fewer facilities and was relatively compact compared to other mass-market condos. While the opening of Great World MRT station in 2022 is expected to improve accessibility, the property’s price has only slightly increased over 15 years. SP plans to hold for now, valuing location, but notes he might downgrade to a resale flat when preparing for retirement.

Key takeaway

These experiences highlight that while freehold properties offer long-term security, they do not always guarantee superior financial returns. Factors such as location, amenities, connectivity, and market timing can significantly influence appreciation. Future buyers in Singapore are learning to weigh practical considerations alongside tenure, ensuring their next purchase balances lifestyle needs with investment goals.