Sharing by xxx on handling objection on leasehold vs freehold.
I have one buyer who bought from me a freehold project 5 years ago during new launch. Today, 5 years down the road, the price of this freehold project is still about the same. In other words, there is not much appreciation. (Urban Residences)
On the other hand, I have another buyer who bought High Park which is a 99 years leasehold mega project, also at new launch. Today, 3 years down the road, even before it TOP, the value has gone up by $200k to $300k.
If you were my buyer, which one would you prefer to have bought? The freehold or the leasehold?
Many people I speak to cannot understand why leasehold properties appreciate faster than freehold properties. Let me explain using a simple illustration.
If you have a grenade
in one hand and a time-bomb
in another, which will you want to throw first? Yes, of course you would throw the time-bomb first because you don’t know when it will go off. Whereas as for the grenade, it will not go off unless you trigger it. A 99 year leasehold property is just like the time bomb, and a freehold property is like the grenade. So many people who buy 99 yr leasehold project will dispose of the property.
Would you agree with me that most people who buy freehold want to hold it forever? In fact, based on the past Comparative Market Analysis, there may only be one transaction in a freehold development in a year or even in a few years. If this is the case, how will the price go up? On the other hand, for a leasehold property, most buyers buy with the intention to sell, just depending on when they will sell. So within one year, there are multiple transactions and so the price can inch up because every seller wants to close higher than the previous deal.
Perhaps you want to buy freehold property because you hope to leave it to your next generations. Your desire to leave a legacy for your children is admirable but the truth is would the younger generation really want to live in an old house together forever and ever? So am I right to say that in the end, they would choose to sell it and split the money? By the time they sell it, the potential upside of this freehold property may most likely be lower than a leasehold property. In fact, we just had a colleague who served a pair of siblings who had inherited a property from their parents. The brothers chose to sell the old property and bought 3 units in our development.
After listening to my sharing, do you still think freehold is better than leasehold?