What Actually Makes A Singapore Condo A Good Rental Investment?

Throughout each of our Stacked Pro articles, we’ve tried to uncover and explain the different market forces that influence how the residential property market in Singapore tends to behave. The truth is, although an abundance of real estate data is publicly available, your average homeowner would struggle to find and analyse the data points most relevant to their needs.

Although we have historically covered the capital and resale values of private homes, there is much that we can uncover by examining the rental market in closer detail.

Rather than ask ourselves: ‘How much would I have made selling this property?’ We think it’s time we help find the answer to: ‘How much would I earn renting this property?’

Unpacking the rental market in Singapore is no easy feat. Unlike resale values, rents have a relatively loose correlation to a condominium’s age, remaining lease, or launch price. There are older 99-year leasehold condos in Singapore that can fetch less than half the $psf price compared to a neighbouring new launch project, but only 15-20% less in terms of rents.

And this plays out across nearly every street in Singapore. Each district has its own version of this scenario, which makes it a challenge for aspiring property investors to home in on the best-performing projects in any given area.

The stakes are also much higher given the steep additional buyers stamp duties that make it prohibitively expensive for local investors to accumulate the portfolio size that previous generations of property investors in Singapore used to enjoy.

Our Methodology

Each of our Stacked Pro articles is grounded in a set of methodology standards that continue throughout their series. We start by trying to compile a starting list of projects that we can dig into – based on their prevailing rental yields.

We also examine the different unit types and how it might play a part in influencing the overall rental yield that most landlords can expect to reap. This also ensures that, as much as possible, an older 1,000 sq ft two-bedder doesn’t get unfairly compared to a new 700 sq ft two-bedder.

There are other criteria we include to weed out outliers. Thus, we try our best to limit our analysis to projects with 10 or more rental contracts within a 12-month period, as well as five resale transactions. The project should also have been completed for at least 18 months, in order to ensure that its rental demand and supply have broadly stabilised.

Throughout this series where we do our deep-dive into the rental market, we hope that property investors can pick up the skills necessary to do their own independent cross-examination.

Here’s what you can expect

To start, we’ve already published the first article in this rental series – computing the rental yield of various condos in Singapore. You can read that article here.

After that, we’ll examine what differences an older condo might bring compared to a newer development in the same area. We want to see if certain locational attributes positively contribute to the rental demand of a neighbourhood.

Next, we take a look at some of the best performing condos for landlords. This will cover popular and well-known districts like District 15, luxury neighbourhoods like District 9 and 10, as well as areas that have a larger-than-normal concentration of mega-sized condos (meaning condos with over 1,000 units).

We also take a look at some specific areas such as District 5, which is heavily influenced by its proximity to tertiary educational institutions like the National University of Singapore’s campus in Kent Ridge, and the rapidly developing one-north precinct.

Finally, it is worth comparing the different rental dynamics between public housing and private residential properties. We rely on existing analysis from previous Pro articles to unpack how lease decay among HDB homes could pay a part.

Could it be that the properties most affected by the negative impact of lease decay tend to be the strongest yielding properties? We’ll unpack it in that article.

Finally, we’ll try to compile everything we’ve discussed, analysed, and examined into a useful masterlist that Stacked Pro readers can refer to. There’s a lot of ground that we’re going to cover, and I hope you join us on this journey.