999 versus 99 year leasehold property comparison

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999 versus 99 year leasehold property comparisons need to be done properly; especially when it will likely be the largest monetary decision made by majority of Singaporeans. This write up is an update of a previous blogpost. And besides, this experiment is an ongoing one.

Holding many variables constant (or at least near constant) except for their leasehold tenures, let us try to extract any additional insights not covered in the initial write up. Just a quick background, Southaven I (Red pin) is 99 year leasehold whereas Southaven II is 999 year leasehold (commencing from 1877).

The following extractions are from 99.co which provides amazing amounts of information on Singapore condo projects. Credits to them as well. So let us have a look at rental comparisons first.

We can see that rental rates have gone up in recent times. Interest rates have been rising and in tandem, so do mortgage rates. Owners who service mortgages will want the rent collected to cover mortgage repayments. Those who have already paid up their mortgages will tend to go with the flow of the market in rental revisions as well.

Let us now look at property price transactions next.

As at this point in time of this article, Southaven I and II are about 26 and 28 years old respectively. I think it is important to highlight that any insights gathered here in this article might not be reflective of new generations of private properties in Singapore. In other words, Southaven provided insights in a time capsule manner. Its price path as well as the path of the price differences may not represent all private properties because of considerations like the sequence of regulations experienced.

My Observations for this article:

99years lease just managed to match previous high only, so value appreciation is unlike 999years lease which has made new highs.
Volume of transactions for 999years lease is lesser than that of 99years lease, although both cases see declining transaction volumes.
The 999year leasehold premium above 99year leasehold is around 34%. (378/1113) ie Comparing to close proximity ones.

What these tell me is that the appetite for higher prices is really low right now, understandably so from the mortgage servicing standpoint as well.

The future is not cast in stone. 999 versus 99 year leasehold property conversations will continue as long this experiment is ongoing and I will update again when the time comes. Give things proper attribution, make your own play.