Top Vs Ground Floor Condo Units: A Look At 6,402 Transactions To See Which Is More Profitable
- Ryan J
- July 13, 2023
- 4 min read
As condo living becomes increasingly ubiquitous (particularly with the emergence of PPVC buildings leading to standardised layouts) discerning buyers might be on the hunt for unique living experiences. Typically, this can be found on the extreme ends of a condominium block – the penthouse units at the top or the garden units on the ground floor. The top floors often offer higher ceilings and sometimes, open roof terraces (or even private pools), while the ground floor units bring the allure of higher ceilings and charming garden patios.
This prompts us to ponder – how significant is the performance difference between these two distinct choices? More importantly, does the potential return from a top-floor unit warrant the initially steeper price tag?
Property StoriesWe Live In A Top Floor Penthouse: Here Are The Pros And Cons About High Floor Livingby Ryan J
In previous articles, we’ve tackled the question of whether units on higher floors yield higher profits, but this fails to satiate the curiosity of buyers who are grappling with the decision between the highest and ground floor units. Here’s what we found, after tracking the performance of condo units from top to bottom*:
*See what I did there? 😊
A Note on the Following Data
To account for the Sellers Stamp Duty (SSD) which would impact pricing, we used only transactions that took place on or after 14th January 2011. The following is based on actual transactions from URA data. It’s also worth noting that we couldn’t provide a distinction between a regular top-floor unit and one with an open roof terrace. Likewise with a ground floor unit, and one with a big patio.
The Simplest and Most Direct Answer
Top floor units, as a collective whole, seem to be less profitable:
|Type||Average % Returns||Average Holding Period (Years)|
Note that the holding periods are almost similar, so this is not a case of one being held for longer than the other.
But this is simplistic and generalised, and we can go into more detail.
Breakdown by Type of Sale
|Ground Floor||Top Floor|
|Type of sale||Average % Returns||Volume||Average % Returns||Volume|
|New Sale to Resale||10.4%||1465||7.5%||1371|
|New Sale to Sub Sale||12.7%||206||12.7%||175|
|Resale to Resale||12.5%||1487||12.8%||1346|
|Sub Sale to Resale||6.7%||203||4.8%||148|
|Sub Sale to Sub Sale||14.3%||1|
Here, we take into consideration whether the transaction was a new sale, resale, or sub-sale (i.e., it was purchased and resold before the completion of the project).
We can see that on average, the only type of sale where top-floor units outperform ground-floor ones is resale-to-resale. Even then, it’s by a very slim margin of 0.3 percentage points.
This means that buyers who purchase a new launch ground floor unit, and then sell after the Temporary Occupancy Permit (TOP), would make about 38 percent more than top floor buyers.
The large disparity may be due to developer pricing strategies. Developers often start sales with loss leaders: during VVIP previews or phase one of a launch, for example, units are often sold at lower prices.
These “early bird” prices are more likely to be given for lower floor units, as they’re the more affordable entry prices for buyers to acquire. This might be why gains are significantly higher for these units, with new-to-resale transactions.
(You can check out more about developer pricing strategies here)
However, this still leaves the question as to why, in the case of new-to-sub sales, the performance between the top and bottom floors seems tied. There isn’t an easy explanation for this, but it could just be the project – being under construction – still only exists conceptually.
The hard realities of the project (e.g., bad neighbours, more road noise than expected, layouts that are better on paper than in reality) aren’t visible until completion, at which point these factors could make the development less attractive.
Notice that ground-floor units once again outperform top-floor units for sub-sale-to-resale transactions, which could lend some credence to this.
Differences by District
This is less useful in some respects because for some districts the volume of transactions is too low to read much into the data. We will use purely resale transactions here, for the same reason of transaction volumes:
Nonetheless, here’s what we found:
|District||Average % Returns||Volume||Average % Returns||Volume|
For the prime regions of Districts 9 and 10, ground-floor units saw better gains. We saw 70 percent greater gains for ground floor units in District 9, and 35 percent greater gains for them in District 10.
This runs contradictory to some realtor sales pitches, by the way. We’ve heard realtors claim that, in prime regions, potential buyers are wealthier and care more about luxuries like a good view; this purportedly makes top-floor units or penthouses a better deal. But as it stands, the data suggests it isn’t true even for these districts as a whole.
Ironically, the biggest gain was for a top-floor unit at 336 River Valley Road, whilst the biggest loss for a ground-floor unit was at Helios Residences. These are, however, outliers.
Differences by Size
Here’s what we see, looking purely at resale transactions:
|Size||Average % Returns||Vol.||Average % Returns||Vol.|
|<500 sq ft||4.1%||74||3.2%||49|
|501 – 1,000 sq ft||8.5%||310||8.7%||199|
|1,001 – 1,500 sq ft||13.2%||664||13.7%||446|
|>1,500 sq ft||15.6%||439||14.1%||652|
When it comes to size, there’s not much difference in whether the unit is on the top or ground floor. It does, however, show that larger units – be they ground or top floor – tend to have better returns. Perhaps this is unsurprising, as buyers of such bigger units would have deeper pockets – and would be more willing to pay for these differentiated units.
Differences by Size for New Launch Condos
This is worth doing to verify certain assumptions. We want to see, for instance, if developers will underprice bigger ground floor units, as these are harder to move.
(One and two-bedder units are the lowest hanging fruit, and are usually the first to sell out due to the lower quantum)
Here’s what we found:
|Size||Average % Returns||Vol.||Average % Returns||Vol.||Disparity|
|<500 sq ft||7.5%||239||6.1%||135||1.5%|
|501 – 1,000 sq ft||9.1%||647||6.3%||516||2.7%|
|1,001 – 1,500 sq ft||13.9%||408||8.9%||360||5.0%|
|>1,500 sq ft||11.0%||171||8.5%||360||2.6%|
Ground floor units still beat top floor counterparts in every size category. However, note that the biggest disparity occurs in units of 1,001 to 1,500 sq. ft. (generally four-bedders or premium three-bedders).
So if you’re investing in units of this size, it could make special sense to stick with ground-floor units. You may also want to stick with units of 1,000 sq. ft., or above as they appear to outperform their smaller counterparts.
For more on the Singapore private property market, as well as reviews of new and resale properties alike, follow us on Stacked. We’ll keep you up to date on the changing trends and strategies in Singapore real estate.