Can Old Leasehold Condos Still Be Profitable? A Case Study Of 355 Leasehold Condos

The perspective on leasehold condos has been changing in recent years. Homebuyers are a little less hung-up on freehold status; that’s thanks to the high freehold premium and the realisation that many condos go en-bloc long before it matters. But this doesn’t change the fact that leasehold condos do depreciate over time - and many buyers still want to know what they can expect. So we took a look at the performance of older leasehold condos over the years:

Looking at older leasehold condos

For the following, we looked only at condos with 99 to 103-year leases. This covers 355 condos, with 61,766 transactions. 

First, let’s look at the average price per square foot of a leasehold condo, based on age:

Years/Age	Less Than 10 Years Old	Less Than 20 Years Old	Less Than 30 Years Old	Less Than 40 Years Old	Over 40 Years Old	Grand Total
2014	$1,356	$1,038	$900	$872	$870	$1,276
2015	$1,344	$1,033	$911	$828	$908	$1,222
2016	$1,384	$1,016	$854	$762	$816	$1,247
2017	$1,438	$1,019	$897	$805	$875	$1,272
2018	$1,408	$1,051	$959	$946	$1,007	$1,252
2019	$1,416	$1,059	$971	$976	$1,078	$1,242
2020	$1,363	$1,038	$940	$918	$944	$1,208
2021	$1,365	$1,101	$1,019	$987	$1,043	$1,251
2022	$1,462	$1,214	$1,134	$1,071	$1,124	$1,361
2023	$1,583	$1,342	$1,232	$1,175	$1,230	$1,465
2024	$1,606	$1,398	$1,279	$1,206	$1,159	$1,504
Grand Total	$1,410	$1,100	$991	$931	$997	$1,283

So those of you looking for a quantum of under $1.5 million (affordable to many HDB upgraders), do take note: you probably can get a 1,000 sq. ft. unit, if you’re okay with a resale condo in the 20+ year age range. 

Now let’s look at percentage gains or losses in price psf, based on age

Years/Age	Less Than 10 Years Old	Less Than 20 Years Old	Less Than 30 Years Old	Less Than 40 Years Old	Over 40 Years Old
2014
2015	-0.9%	-0.4%	1.3%	-5.0%	4.4%
2016	3.0%	-1.7%	-6.3%	-7.9%	-10.2%
2017	3.9%	0.2%	5.0%	5.7%	7.2%
2018	-2.1%	3.1%	7.0%	17.5%	15.1%
2019	0.6%	0.8%	1.3%	3.1%	7.0%
2020	-3.8%	-2.0%	-3.2%	-5.9%	-12.4%
2021	0.1%	6.1%	8.4%	7.6%	10.5%
2022	7.1%	10.2%	11.3%	8.5%	7.7%
2023	8.3%	10.5%	8.6%	9.6%	9.5%
2024	1.4%	4.2%	3.8%	2.7%	-5.7%
Grand Total	1.77%	3.11%	3.71%	3.58%	3.31%

For the newest ones (10 years old or under), the gain is due to the shorter holding period. But we can see that older leasehold condos do continue to show gains, even after 20, 30, or 40 years and beyond. 

Here’s a look at average profits based on age:

Years/Age	Less Than 10 Years Old	Less Than 20 Years Old	Less Than 30 Years Old	Less Than 40 Years Old	Over 40 Years Old	Grand Total
2014	14.5%	8.9%	13.0%	18.0%	-0.5%	13.6%
2015	13.1%	15.2%	18.6%	26.0%	22.0%	14.2%
2016	15.7%	18.6%	21.9%	31.5%	23.6%	16.9%
2017	13.9%	22.4%	23.8%	29.8%	17.8%	16.9%
2018	13.1%	20.1%	22.6%	18.9%	26.7%	15.8%
2019	19.1%	27.4%	27.9%	20.4%	24.5%	22.0%
2020	23.9%	34.7%	30.7%	37.5%		27.5%
2021	21.4%	30.4%	33.5%	19.9%		25.0%
2022	8.5%	37.8%		3.5%		15.6%
2023	-0.4%					-0.4%
Grand Total	14.8%	18.8%	21.4%	25.5%	18.2%	16.3%

The gains do get noticeably weaker once a project is past 40 years, and one possible reason is the financing issues:

Once a project has 60 years or less remaining, banks often lower the maximum loan quantum (e.g., buyers may only be able to borrow up to 55 per cent of the value, instead of the usual norm of 75 per cent). This means a higher cash outlay for the oldest condos, which can pull prices down. 

Another point of note is that 40+ year-old condos are quite rare - most projects tend to go en-bloc before that stage. As such, there’s also a much lower volume of transactions for these units.

Next, we take a look at how location plays a role. Here’s the performance by district:

Years/District	D1	D2	D3	D4	D5	D9	D10	D11	D14	D15	D16	D17	D18	D19	D20	D21	D22	D23	D26	D27
2014	25.0%	33.8%			16.2%	-2.6%	17.8%	-3.9%	0.0%	15.2%	12.1%	28.4%	1.4%	-9.5%	36.3%	27.9%	19.5%	9.9%	23.0%	9.0%
2015		23.7%	24.8%	26.7%	6.8%		20.1%	23.5%	4.6%	24.7%	18.0%	21.5%	12.5%	42.0%	21.8%	19.7%	27.1%	11.9%	21.8%	6.9%
2016		12.1%	24.4%		18.3%	44.1%	14.5%	39.2%	31.0%	25.4%	29.0%	15.9%	19.8%	12.6%	62.2%	30.7%	32.0%	17.7%	6.3%	17.6%
2017		4.0%	19.3%		18.9%		26.9%	28.7%	18.5%	30.0%	29.7%	33.1%	17.9%	35.6%	30.2%	29.1%	27.3%	26.0%	26.6%	12.0%
2018					19.0%		16.9%	24.2%	15.0%	18.2%	21.8%	37.8%	14.4%	18.0%	20.6%	38.9%	29.6%	18.0%	33.3%	18.6%
2019		14.4%	19.8%		24.2%	1.7%		24.1%		20.8%	24.6%	26.7%	21.2%	63.2%	17.5%	13.2%	16.6%	34.8%	46.4%	26.2%
2020	48.0%						26.4%			24.3%	44.6%	33.6%	37.7%	45.4%	29.0%		36.6%	26.1%		41.6%
2021					25.7%					24.3%	34.0%		28.3%						50.6%
2022										1.2%						5.8%
Grand Total	36.5%	14.9%	22.4%	26.7%	18.0%	10.1%	20.6%	23.1%	17.1%	23.3%	25.8%	29.6%	14.2%	29.3%	29.8%	27.2%	25.5%	18.6%	28.9%	15.1%

Unfortunately, not much is revealed as districts are not like HDB towns. They are quite wide-ranging, which makes it hard to generalise factors - and the distribution of condos across districts is much less even, with some districts having low transaction volumes.

As an example, here are the transaction volumes:

Years/District	D1	D2	D3	D4	D5	D9	D10	D11	D14	D15	D16	D17	D18	D19	D20	D21	D22	D23	D26	D27
2014	1	1			7	2	2	3	1	15	9	4	12	2	5	7	12	9	4	5
2015		2	4	1	4		6	1	1	16	15	1	7	6	4	7	5	5	6	4
2016		1	4		8	1	3	2	2	19	20	1	8	3	1	5	7	13	2	4
2017		3	5		11		4	7	10	25	37	5	14	2	5	9	11	10	5	4
2018					5		1	2	6	16	18	1	4	1	2	4	2	10	7	5
2019		2	1		5	1		6		6	11	1	4	1	1	1	2	3	4	2
2020	1						1			7	6	1	1	1	4		1	1		1
2021					1					2	1		1						1
2022										1						1
Grand Total	2	9	14	1	41	4	17	21	20	107	117	14	51	16	22	34	40	51	29	25

Nonetheless, we can see some interesting quirks. A significant portion of condos 30+ years old (224 of 635 transactions) come from Districts 15 and 16, which are the areas of Marine Parade and Bedok (including the stretch of Upper East Coast). 

There is a higher concentration of older properties here, with about a third of them being in the 30+ age range. The locations here also seem to see better performance, but it’s unclear if this is related to the age issue - it may also be down to the individual quirks of the condos here. 

We can also conclude that, even in districts with low transaction volumes, the relative performance of older leasehold condos is still decent. 

Contrary to common fears, leasehold condos don’t start plummeting in value as soon as they reach 20+ or even 40+ years old.

This could be due to us having never actually seen a condo reach the end of its lease. We’ve only seen residential properties reach the end of their lease once so far, and those were not condo developments. 

There seems to be a general assumption that an en-bloc will happen before that, thus providing an exit plan for even the oldest leasehold condos. It’s a bold assumption, but it’s one that hasn’t been proven wrong so far. 

It’s certainly an issue to think about in 2024, when new launch prices are still high, and freehold status could add a premium of over 15 per cent on top of that.