Why leasehold is becoming just as desirable as freehold

As homebuyers prioritize convenience and accessibility to essential amenities, many are willing to give up the freehold status for a leasehold property

Many of these new land parcels offer excellent connectivity, being located next to an MRT station or having unique features such as integration with a shopping mall, proximity to a popular school, or a wide range of condominium facilities to make up for the shorter leases. However, the price gap has since decreased to 4.7 per cent, with the median price of freehold condos at $1,973 psf and leasehold condos at $1,885 psf in 2023. The narrowing price gap may be attributed to the values of leasehold condos surging by 51.3 per cent over the past decade, compared with a 32 per cent increase for freehold condos.

However, the price gap between leasehold and freehold condominiums in the prime CCR has increased from 13.7 per cent in 2013 to 19.5 per cent in 2023. The findings suggest that affluent buyers were more willing to pay a premium for freehold properties in prime locations, possibly due to their belief that the limited availability of freehold condos justifies the high prices.

We conducted a profitability study and found that leasehold condos generally have a higher chance of yielding profits, at 92.6 per cent, compared with freehold properties, which stand at 69.1 per cent. This could be due to buyers paying more for freehold condos, affecting their profitability. In prime locations, leasehold condos were similarly more profitable at 73.1 per cent, compared with 57.7 per cent for freehold condos. However, freehold condos in the CCR yield higher profits in absolute dollars at $402,321 versus $290,410 for a leasehold condo.The value of leasehold properties is expected to continue rising in comparison with freehold condos, particularly as the Government releases more prime land through government land sales in the city fringes and suburbs.

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