"Freehold not necessarily better than leasehold going forward? "

[ccreporter]

news came out today:
http://www.propertyguru.com.sg/prope...hold-shrinking


http://www.sgproptalk.sg/2015/04/fre...tter-than.html

"


Amid the sluggish property market in recent years, prices of leasehold private homes appear to have been more resilient than those which are freehold, according to a study by consultancy Cushman & Wakefield.

Cushman & Wakefield said prices of non-landed freehold homes saw a steeper drop of over 4% since the third quarter of 2013, compared to the 1% decline for those on a 99-year leasehold. Its study was based on the price indices of freehold and leasehold condominiums compiled by the Urban Redevelopment Authority (URA).

However, analysts have said transaction volumes have been thin, and that could have affected the overall numbers.

Cushman & Wakefield said the weighted average price of leasehold properties have held up better - declining by about 1.4% since the third quarter of 2013. And when compared to the second quarter of 2009 - when the market was at a bottom - they have climbed about 57%.

The consultancy also said that the price gap between the two segments has narrowed.

Ms Christine Li, director of research at Cushman & Wakefield, noted: "If you look at Newton 18, which is a freehold property as compared to its neighbour Amaryllis Ville, (which has a) 99-year lease - if you compared the price gap in the early days, say 2002-2003, the difference is actually about 35% or so. But in recent quarters, the gap has narrowed to 15%, which means that over time, leasehold projects might outperform freehold projects.

“In terms of outlook, if everything is status quo, if the Government does not loosen the cooling measures, TDSR (Total Debt Servicing Ratio) or stringent requirement for en bloc sales, we think leasehold properties could outperform freehold properties, given that attributes of some leasehold properties are better in terms of location and amenities."

In recent years, curbs on loans, such as the Total Debt Servicing Ratio framework, have weighed on overall property demand, but Cushman & Wakefield said freehold projects are at a disadvantage because they are generally more expensive and require a higher capital outlay.

Analysts said the price performance of freehold and leasehold properties also depends on the en bloc potential. Typically, freehold properties enjoy a higher price premium when the en bloc market is active.

And according to other industry watchers, freehold properties continue to attract interest. Based on a study of caveats lodged, consultancy Knight Frank said the price gap between freehold and leasehold non-landed homes across Singapore has risen - from about 33% in 2011 to nearly 47% last year.

According to numbers from Knight Frank, the yearly prices of freehold units averaged at $1,532psf in 2014 - an increase of 9.8% year-on-year. However, those for leasehold units fell by 0.4% over the same period to $1,045psf.

Ms Alice Tan, head of consultancy and research at Knight Frank, said: "Going forward, in the next few years, as the Government gradually releases land sites which are all leasehold tenure, the availability of freehold properties is slated to remain stagnant or decline. Given that limited supply, I think buyers will still have freehold properties as their first choice."

Meanwhile, Mr Alan Cheong, senior director of research and consultancy at Savills, added: "Look at the resale and subsale market. If you look at the period in time, the gap has been consistently between 25 and 28% since the advent of TDSR. I guess if these measures are in place, the gap would be probably maintaining at the 20-plus per cent range. I do not expect it to come down."

Analysts said it is important to note that transaction volumes in the last two years have been thin and could affect the overall data analysis. They also noted that apart from land tenure, other factors like location and features of the development, also have an impact on home prices.
Source: CNA

"

[teddybear]

People should use their brains to think: If real estate professionals are going to admit that Freehold properties are better than Leasehold properties (despite the fact), then:

1) Most of them have to eat grass because >90% of new launches private properties are Leasehold.

2) Many more of them will have to eat grass because most resale private property transactions are Leasehold properties (because Leasehold private properties make up of almost 90% of all private properties in Singapore!)

3) Even many many more will have to eat grass because all HDB flats are 99 years leasehold properties!

4) Government will have difficulty selling their Leasehold land, affecting their coffers!

5) Few people would be willing to buy 99 years lease HDB flats, and insist that government give them back the freehold status of their properties! There will be chaos!

6) ???

news came out today:
http://www.propertyguru.com.sg/prope...hold-shrinking


http://www.sgproptalk.sg/2015/04/fre...tter-than.html

"


Amid the sluggish property market in recent years, prices of leasehold private homes appear to have been more resilient than those which are freehold, according to a study by consultancy Cushman & Wakefield.

Cushman & Wakefield said prices of non-landed freehold homes saw a steeper drop of over 4% since the third quarter of 2013, compared to the 1% decline for those on a 99-year leasehold. Its study was based on the price indices of freehold and leasehold condominiums compiled by the Urban Redevelopment Authority (URA).

However, analysts have said transaction volumes have been thin, and that could have affected the overall numbers.

Cushman & Wakefield said the weighted average price of leasehold properties have held up better - declining by about 1.4% since the third quarter of 2013. And when compared to the second quarter of 2009 - when the market was at a bottom - they have climbed about 57%.

The consultancy also said that the price gap between the two segments has narrowed.

Ms Christine Li, director of research at Cushman & Wakefield, noted: "If you look at Newton 18, which is a freehold property as compared to its neighbour Amaryllis Ville, (which has a) 99-year lease - if you compared the price gap in the early days, say 2002-2003, the difference is actually about 35% or so. But in recent quarters, the gap has narrowed to 15%, which means that over time, leasehold projects might outperform freehold projects.

“In terms of outlook, if everything is status quo, if the Government does not loosen the cooling measures, TDSR (Total Debt Servicing Ratio) or stringent requirement for en bloc sales, we think leasehold properties could outperform freehold properties, given that attributes of some leasehold properties are better in terms of location and amenities."

In recent years, curbs on loans, such as the Total Debt Servicing Ratio framework, have weighed on overall property demand, but Cushman & Wakefield said freehold projects are at a disadvantage because they are generally more expensive and require a higher capital outlay.

Analysts said the price performance of freehold and leasehold properties also depends on the en bloc potential. Typically, freehold properties enjoy a higher price premium when the en bloc market is active.

And according to other industry watchers, freehold properties continue to attract interest. Based on a study of caveats lodged, consultancy Knight Frank said the price gap between freehold and leasehold non-landed homes across Singapore has risen - from about 33% in 2011 to nearly 47% last year.

According to numbers from Knight Frank, the yearly prices of freehold units averaged at $1,532psf in 2014 - an increase of 9.8% year-on-year. However, those for leasehold units fell by 0.4% over the same period to $1,045psf.

Ms Alice Tan, head of consultancy and research at Knight Frank, said: "Going forward, in the next few years, as the Government gradually releases land sites which are all leasehold tenure, the availability of freehold properties is slated to remain stagnant or decline. Given that limited supply, I think buyers will still have freehold properties as their first choice."

Meanwhile, Mr Alan Cheong, senior director of research and consultancy at Savills, added: "Look at the resale and subsale market. If you look at the period in time, the gap has been consistently between 25 and 28% since the advent of TDSR. I guess if these measures are in place, the gap would be probably maintaining at the 20-plus per cent range. I do not expect it to come down."

Analysts said it is important to note that transaction volumes in the last two years have been thin and could affect the overall data analysis. They also noted that apart from land tenure, other factors like location and features of the development, also have an impact on home prices.
Source: CNA

"

[highboy]

It really depends on which project. Most freehold condominiums are built years before the property boom after 2007. Obviously, these owners are more willing to lower their prices from current market price as they are still making handsome profits.

Going 99 years forward, what is the price of your leasehold unit?

[Kelonguni]

It is not as straightforward as FH vs LH. Govt has tended to intensify the infrastructure surrounding more LH properties, which are the ones sold in recent GLS.

The perceived value of FH always has to be measured against the prices that developers obtain through GLS. Most developments do not complete lease of 99 years. I figure that some time in the 30 to 40 years of lease, developer buying interest and owners selling interest will start to match up. This gives developers the right to build after lease topping.

The money saved in the 30 to 40 years can be freed to obtain another LH, which allows your funds to work twice as hard.

It's a bit like Mahjong, 平湖and臭平湖non stop I gives you greater chance to win more than waiting for a big 大三元，大四喜。Unless you are dealt with tiles that FH equal or lower price than LH, which sometimes happens, or some other factor beyond gaming...

[teddybear]

Below should answer your doubts.................

Price gap between freehold and leasehold shrinking?
Apr 7, 2015

Prices of freehold non-landed homes have suffered a sharper drop of more than four percent since Q3 2013 versus the one percent dip for leasehold units, according to media reports citing Cushman & Wakefield’s study of URA data.

As a result, the disparity between prices of non-landed freehold homes over its leasehold counterparts has shrunk, said the consultancy’s research director Christine Li.

“If you look at Newton 18, which is a freehold property as compared to its neighbour Amaryllis Ville, (which has a) 99-year lease – if you compared the price gap in the early days, say 2002-2003, the difference is actually about 35 percent or so. But in recent quarters, the gap has narrowed to 15 percent, which means that over time, leasehold projects might outperform freehold projects,” Li shared.

“In terms of outlook, if everything is status quo, if the Government does not loosen the cooling measures, Total Debt Servicing Ratio (TDSR) or stringent requirements for en bloc sales, we think leasehold properties could outperform freehold properties, given that attributes of some leasehold properties are better in terms of location and amenities,” she added.

However, experts cautioned that the statistics may have been distorted by the low transaction volumes.

The price performance between the two segments also depends on their potential to be sold via a collective sale. Usually, freehold properties fetch a higher price premium when the en bloc market is hot.

Meanwhile, a Knight Frank study of caveats showed a different trend whereby the price gap between freehold and leasehold non-landed homes in Singapore has increased further to 44 percent in 2014 from around 33 percent in the previous year.

Last year, average prices of freehold units rose 9.8 percent to $1,532 psf on an annual basis, while for leasehold it dipped 0.4 percent to S$1,045 psf.

“Going forward, in the next few years, as the Government gradually releases land sites which are all leasehold tenure, the availability of freehold properties is slated to remain stagnant or decline,” said Alice Tan, Knight Frank’s research head.

“Given that limited supply, I think buyers will still have freehold properties as their first choice,” she added.

It is not as straightforward as FH vs LH. Govt has tended to intensify the infrastructure surrounding more LH properties, which are the ones sold in recent GLS.

The perceived value of FH always has to be measured against the prices that developers obtain through GLS. Most developments do not complete lease of 99 years. I figure that some time in the 30 to 40 years of lease, developer buying interest and owners selling interest will start to match up. This gives developers the right to build after lease topping.

The money saved in the 30 to 40 years can be freed to obtain another LH, which allows your funds to work twice as hard.

It's a bit like Mahjong, 平湖and臭平湖non stop I gives you greater chance to win more than waiting for a big 大三元，大四喜。Unless you are dealt with tiles that FH equal or lower price than LH, which sometimes happens, or some other factor beyond gaming...

[Kelonguni]

Below should answer your doubts.................

Buyers do not always make the best or the most rational decisions. How else do you explain the people supporting OCR at current prices?

When I play mahjong, it is also very shiok to build a "big one" accumulating all the "good looking" cards. But mathematically it is a losing game.

[teddybear]

That is why I am trying to educate them here.......

If they want to continue to be "iron-teeth", then don't blame people for NOT WARNING them first, blame themselves for being stupid and being "iron-teeth"!.................

If they are too stupid to learn anything, just remember this slogan:
99-years LEASEHOLD property has a VALUE of ZERO at the end of 99 years lease!

Buyers do not always make the best or the most rational decisions. How else do you explain the people supporting OCR at current prices?

When I play mahjong, it is also very shiok to build a "big one" accumulating all the "good looking" cards. But mathematically it is a losing game.

[Kelonguni]

That is why I am trying to educate them here.......

If they want to continue to be "iron-teeth", then don't blame people for NOT WARNING them first, blame themselves for being stupid and being "iron-teeth"!.................

If they are too stupid to learn anything, just remember this slogan:
99-years LEASEHOLD property has a VALUE of ZERO at the end of 99 years lease!

Some people do not recognise the effects of compounding and multiplier effect.

I think you are just brainwashing people to buy your 100year old mansion, not really educational at all.

[Yuki]

Why some land is leasehold in the first place?
Why some land is freehold in the first place?

Cannot set aside land as freehold when govt have plans to build n build since the l and more intensive use or higher demand right?

My search made me conclude this..

... is not straightforward as FH vs LH. Govt has tended to intensify the infrastructure surrounding more LH properties, which are the ones sold in recent GLS.

The perceived value of FH always has to be measured against the prices that developers obtain through GLS. Most developments do not complete lease of 99 years. I figure that some time in the 30 to 40 years of lease, developer buying interest and owners selling interest will start to match up. This gives developers the right to build after lease topping.

The money saved in the 30 to 40 years can be freed to obtain another LH, which allows your funds to work twice as hard.

It's a bit like Mahjong, 平湖and臭平湖non stop I gives you greater chance to win more than waiting for a big 大三元，大四喜。Unless you are dealt with tiles that FH equal or lower price than LH, which sometimes happens, or some other factor beyond gaming...

[Kelonguni]

Why some land is leasehold in the first place?
Why some land is freehold in the first place?

Cannot set aside land as freehold when govt have plans to build n build since the l and more intensive use or higher demand right?

My search made me conclude this..

Very true. There is also this issue of income inequality versus wealth inequality which are different things.

Teddy concluded very simply that apparently wealthy individuals (those that live in private properties) are high income earners, and that those that live in HDBs can only be at max middle income earners. This is not always true.

For example, if one inherits three properties when his parents passed on, he might not work a single day in his life and be a middle income earner collecting rents, without which he is not earning any income.

On the contrary, an up and coming high income earner whose parents did not leave him a dime will have to work extra hard, find extra income, save extra long to pay the downpayment for a private property (suppose his income is out of the HDB cap), and then many good years of his working life paying it down to a level where he can afford a second one.

Which individual should a meritocratic system support for the whole system to fluorish?

So as an individual still hoping to pass things down to children and grandchildren to give him or her an edge over peers, would FH work better? In part yes, but always have to measure against the extra costs, location etc that a property has to offer. There is a whole lot more I want to write on about comparing down to the specifics, but I think its more productive right now to focus on work. That comparison will be very detailed and comprehensive, not just 100 years.

[Jaydenlim]

Teddybear must be very upset by this article and its no surprising that she vigorously trying to defend it. poor fellow, all her prediction is falling apart. LOL

[MrTan]

she?

[icarus777]

Freehold or Leasehold is just a number.

You cannot eat, smell, touch, feel numbers, nor enjoy them.

To enjoy the property, important factors are location, environment, convenience, land area and many others.

I won't live any longer than 99 years and what more to say 999 years?

Can leave a legacy behind to your descendants if you wish, but even then it will not be perpetual.

Friend's ah gong left freehold property behind to all surviving grandchildren, but still have to be sold as the family tree diversifies. Whether the grandchildren are grateful to ahgong or not doesnt matter. Ahgong already dead.

[thomastansb]

Location is more important. FH also can't rent out after 99 years because the property already like shit. Probably enbloc also. LH also same. Probably enbloc. So to me, no difference. You sell FH property higher because you bought it higher. You buy LH property lower because you bought it lower. It is a LPPL calculation.

If you want to be safe, just sell it before it hit 20 years old. Anyway, FH also no forever. Government wan to build MRT, FH also must sell.

[Kelonguni]

Location is more important. FH also can't rent out after 99 years because the property already like shit. Probably enbloc also. LH also same. Probably enbloc. So to me, no difference. You sell FH property higher because you bought it higher. You buy LH property lower because you bought it lower. It is a LPPL calculation.

If you want to be safe, just sell it before it hit 20 years old. Anyway, FH also no forever. Government wan to build MRT, FH also must sell.

Most importantly, must sell at pre-existing market prices. So if rental value low, can only sell at max as the surrounding properties of a similar age at the valuation determined, which includes LH, plus a slight premium for land cost, which was paid by you as the buyer at the beginning.

[thomastansb]

Actually over a period of 20 years, the difference is negligible.

Most importantly, must sell at pre-existing market prices. So if rental value low, can only sell at max as the surrounding properties of a similar age at the valuation determined, which includes LH, plus a slight premium for land cost, which was paid by you as the buyer at the beginning.

[yowetan]

Can I assume a freehold landed or condo development will fetch a better value when en-bloc which is an inevitable.

[Kelonguni]

Can I assume a freehold landed or condo development will fetch a better value when en-bloc which is an inevitable.

It technically should. Because the developer does not need to top up lease to 99 years. But lease topping is relatively cheap compared to all the other costs in my opinion. So if the FH sellers ask for the moon, they will probably be stuck with their properties for a very long time. You want to enbloc, your neighbors don't want, will be a very long drawn and emotionally draining affair.

[Kelonguni]

From ST today:

Leasehold versus freehold

IN OUR recent paper, we take advantage of a familiar feature of the Singapore property market, namely the co-existence of leasehold and freehold properties, to estimate discount rates far into the future.

Leasehold and freehold properties differ in their tenure length, the number of years until a property reverts to the landowner, often the government. Under leasehold, a property reverts to the landowner at the end of either 99 years or 999 years. A freehold property remains the owner's property in perpetuity.

The premium paid for a freehold property over a 99-year or 999-year leasehold property is partly due to how people value the future, since the utility provided by a freehold property extends beyond that of a 99-year or even a 999-year leasehold property.

Using the differences in prices paid for properties of different tenure lengths, a direct measure of how people value the far-in-the-future utility of freehold properties, we are able to estimate the discount rate.

Since housing units can differ greatly in terms of characteristics that affect price, we were careful to measure people's valuation of longer tenure length and not other differences in housing features.

For example, one might reasonably think that freehold properties are bigger on average than 99-year leasehold properties. If so, looking at simple differences in average price would incorrectly attribute all of the price premium of freehold properties to the difference in tenure length instead of attributing some of it to the extra living space provided by freehold properties.

The statistical method we used, called regression analysis, addresses just such scenarios, allowing us to isolate the price differentials due to differences in tenure by accounting for other characteristics that also drive price differences.

Applying regression analysis to new condominium and apartment sales data, we estimated that a freehold property fetches about 15 to 20 per cent more than a 99-year leasehold property and about 3.5 to 5 per cent more than a 999-year leasehold property. In dollar terms, this means a $1 million freehold property would sell for about $200,000 more than a 99-year leasehold property and about $50,000 more than a 999-year leasehold property because of the differences in tenure length.

Annual discount rate

HOW do these price differentials convert into discount rates?

Assuming that the discount rate is constant over the length of tenure, the price premium of freehold properties over 99-year leasehold properties suggests an annual discount rate of 1.8 per cent. The price differential between a 999-year leasehold and a freehold property suggests a discount rate of only 0.2 per cent.

These rates are much lower than the rates typically used to evaluate public policy. For example, the US Office of Management and Budget recommends using discount rates of up to 7 per cent.

Given our findings, the use of such high discount rates over-emphasises current costs relative to future benefits, which can lead to incorrectly rejecting economically viable investments in greenhouse gas reduction strategies.

Consider, for example, a study by Imperial College London that estimated the annual cost of halving CO2 emissions by 2050 to about 1 per cent of world gross domestic product (GDP), or $2 trillion per year. For the sake of comparison, let us assume that the annual benefits of such a decrease account for 1.5 per cent of world GDP, $3 trillion, from 2050 onwards.

If we were to apply a discount rate of 4 per cent per year, which to some might seem low, the discounted value of costs over the next 25 years would amount to $31 trillion, compared to discounted benefits of $28 trillion, suggesting that the project to reduce carbon emissions should not be implemented.

By contrast, if we were to apply the discount rate of 1.8 per cent per year that we estimated, discounted costs of $40 trillion would pale in comparison to discounted benefits of $107 trillion, indicating that the payoff to worldwide reduction in carbon emissions would be massive.

We might ponder this the next time we read in the papers that governments around the world are raising petrol taxes.

- See more at: http://www.straitstimes.com/news/opi....UqLgXNkK.dpuf

[teddybear]

Questionable study, without using perpetual cashflows for FH properties and replacement costs analysis.......... Smoke screen only..............

The truth is (if People use their brains to think):

No real estate professionals NOR government officials will admit that Freehold properties are MUCH MUCH better than Leasehold properties (despite the fact) BECAUSE:

1) Most of the real estate professionals have to eat grass because >90% of new launches private properties are Leasehold.

2) Many more of the real estate professionals will have to eat grass because most resale private property transactions are Leasehold properties (because Leasehold private properties make up of almost 90% of all private properties in Singapore!)

3) Even many many more real estate professionals will have to eat grass because all HDB flats are 99 years leasehold properties!

4) Government will have difficulty selling their Leasehold land at a good price, affecting their coffers!

5) Few people would be willing to buy 99 years lease HDB flats

6) Singaporeans will be demanding the government to give them back the freehold status of their properties! There will be chaos!

7) ???

From ST today:

Leasehold versus freehold

IN OUR recent paper, we take advantage of a familiar feature of the Singapore property market, namely the co-existence of leasehold and freehold properties, to estimate discount rates far into the future.

Leasehold and freehold properties differ in their tenure length, the number of years until a property reverts to the landowner, often the government. Under leasehold, a property reverts to the landowner at the end of either 99 years or 999 years. A freehold property remains the owner's property in perpetuity.

The premium paid for a freehold property over a 99-year or 999-year leasehold property is partly due to how people value the future, since the utility provided by a freehold property extends beyond that of a 99-year or even a 999-year leasehold property.

Using the differences in prices paid for properties of different tenure lengths, a direct measure of how people value the far-in-the-future utility of freehold properties, we are able to estimate the discount rate.

Since housing units can differ greatly in terms of characteristics that affect price, we were careful to measure people's valuation of longer tenure length and not other differences in housing features.

For example, one might reasonably think that freehold properties are bigger on average than 99-year leasehold properties. If so, looking at simple differences in average price would incorrectly attribute all of the price premium of freehold properties to the difference in tenure length instead of attributing some of it to the extra living space provided by freehold properties.

The statistical method we used, called regression analysis, addresses just such scenarios, allowing us to isolate the price differentials due to differences in tenure by accounting for other characteristics that also drive price differences.

Applying regression analysis to new condominium and apartment sales data, we estimated that a freehold property fetches about 15 to 20 per cent more than a 99-year leasehold property and about 3.5 to 5 per cent more than a 999-year leasehold property. In dollar terms, this means a $1 million freehold property would sell for about $200,000 more than a 99-year leasehold property and about $50,000 more than a 999-year leasehold property because of the differences in tenure length.

Annual discount rate

HOW do these price differentials convert into discount rates?

Assuming that the discount rate is constant over the length of tenure, the price premium of freehold properties over 99-year leasehold properties suggests an annual discount rate of 1.8 per cent. The price differential between a 999-year leasehold and a freehold property suggests a discount rate of only 0.2 per cent.

These rates are much lower than the rates typically used to evaluate public policy. For example, the US Office of Management and Budget recommends using discount rates of up to 7 per cent.

Given our findings, the use of such high discount rates over-emphasises current costs relative to future benefits, which can lead to incorrectly rejecting economically viable investments in greenhouse gas reduction strategies.

Consider, for example, a study by Imperial College London that estimated the annual cost of halving CO2 emissions by 2050 to about 1 per cent of world gross domestic product (GDP), or $2 trillion per year. For the sake of comparison, let us assume that the annual benefits of such a decrease account for 1.5 per cent of world GDP, $3 trillion, from 2050 onwards.

If we were to apply a discount rate of 4 per cent per year, which to some might seem low, the discounted value of costs over the next 25 years would amount to $31 trillion, compared to discounted benefits of $28 trillion, suggesting that the project to reduce carbon emissions should not be implemented.

By contrast, if we were to apply the discount rate of 1.8 per cent per year that we estimated, discounted costs of $40 trillion would pale in comparison to discounted benefits of $107 trillion, indicating that the payoff to worldwide reduction in carbon emissions would be massive.

We might ponder this the next time we read in the papers that governments around the world are raising petrol taxes.

- See more at: http://www.straitstimes.com/news/opi....UqLgXNkK.dpuf

[thomastansb]

It is difficult to quantify which one is better financially. These studies are not accurate.

The only way to compare is that both condos are side by side. Both similar in size. Both are built around the same time. Then compare the launch price and 10 years later price. I don't know of any but this is the only way to find out.

Questionable study, without using perpetual cashflows for FH properties and replacement costs analysis.......... Smoke screen only..............

The truth is (if People use their brains to think):

No real estate professionals NOR government officials will admit that Freehold properties are MUCH MUCH better than Leasehold properties (despite the fact) BECAUSE:

1) Most of the real estate professionals have to eat grass because >90% of new launches private properties are Leasehold.

2) Many more of the real estate professionals will have to eat grass because most resale private property transactions are Leasehold properties (because Leasehold private properties make up of almost 90% of all private properties in Singapore!)

3) Even many many more real estate professionals will have to eat grass because all HDB flats are 99 years leasehold properties!

4) Government will have difficulty selling their Leasehold land at a good price, affecting their coffers!

5) Few people would be willing to buy 99 years lease HDB flats

6) Singaporeans will be demanding the government to give them back the freehold status of their properties! There will be chaos!

7) ???

[Kelonguni]

Exactly - these studies are not accurate at all. Many assumptions are not reflective of reality. The idea is to consider the issues when we try to compare.

Fantastic to have you consider replacement cost analysis. Note that typically that analysis counts annually or a few years (not even 99 years) and applies for all aspects of FH and LH property. Estate in perpetuity also does not mean perpetual cashflows though - I think that is where the smoke screen from your side comes.

Thomas, there are a few properties of that nature that can be compared even though they are not identical - Springdale I and II, Varsity Park vs The Stellar for example. But comparing absolute prices misses the big picture as it undermines what the saved difference (from the initial purchase) can do.

Questionable study, without using perpetual cashflows for FH properties and replacement costs analysis.......... Smoke screen only..............

The truth is (if People use their brains to think):

No real estate professionals NOR government officials will admit that Freehold properties are MUCH MUCH better than Leasehold properties (despite the fact) BECAUSE:

1) Most of the real estate professionals have to eat grass because >90% of new launches private properties are Leasehold.

2) Many more of the real estate professionals will have to eat grass because most resale private property transactions are Leasehold properties (because Leasehold private properties make up of almost 90% of all private properties in Singapore!)

3) Even many many more real estate professionals will have to eat grass because all HDB flats are 99 years leasehold properties!

4) Government will have difficulty selling their Leasehold land at a good price, affecting their coffers!

5) Few people would be willing to buy 99 years lease HDB flats

6) Singaporeans will be demanding the government to give them back the freehold status of their properties! There will be chaos!

7) ???

[henryhk]

Exactly - these studies are not accurate at all. Many assumptions are not reflective of reality. The idea is to consider the issues when we try to compare.

Fantastic to have you consider replacement cost analysis. Note that typically that analysis counts annually or a few years (not even 99 years) and applies for all aspects of FH and LH property. Estate in perpetuity also does not mean perpetual cashflows though - I think that is where the smoke screen from your side comes.

Thomas, there are a few properties of that nature that can be compared even though they are not identical - Springdale I and II, Varsity Park vs The Stellar for example. But comparing absolute prices misses the big picture as it undermines what the saved difference (from the initial purchase) can do.

Need to about 15 to 20 years then u see the value of freehold property, as aging affects 99 years a lot wen left fewer years

[Kelonguni]

Need to about 15 to 20 years then u see the value of freehold property, as aging affects 99 years a lot wen left fewer years

I understand also lah - have a mix of LH and FH. One problem is that LH owners are more willing to budge on price, but FH owners are more keen to hold - that itself can result in a discrepancy of price. But unwillingness to budge on price to sell or enbloc also result in pants full of ants. Very old FH can be such a hassle to maintain when the fellow owners refuse to sell. Lowered rent and very high maintenance - the only valuable thing left is the land price, which I have explained in a previous post that should be compared to the costs developers are willing to pay for 99 years.

There is also a mentality shift in the young adults - new and short is much better than old and long.

But in all honesty if the price and offering are similar, I will take FH again - just that its not always available and no way am I going to buy an old apartment just for land value. Personally I prefer new buildings, and the price I can afford tends to be LH. The savings can be used for another downpayment some years down the road or as backup funds.

[Jaydenlim]

I understand also lah - have a mix of LH and FH. One problem is that LH owners are more willing to budge on price, but FH owners are more keen to hold - that itself can result in a discrepancy of price. But unwillingness to budge on price to sell or enbloc also result in pants full of ants. Very old FH can be such a hassle to maintain when the fellow owners refuse to sell. Lowered rent and very high maintenance - the only valuable thing left is the land price, which I have explained in a previous post that should be compared to the costs developers are willing to pay for 99 years.

There is also a mentality shift in the young adults - new and short is much better than old and long.

But in all honesty if the price and offering are similar, I will take FH again - just that its not always available and no way am I going to buy an old apartment just for land value. Personally I prefer new buildings, and the price I can afford tends to be LH. The savings can be used for another downpayment some years down the road or as backup funds.

spot on.

beside FH vs LH, another aspect is government decentralizing afford and most of these decentralizing activities are focus on LH estate rather than FH. e.g international school, shopping malls, transport infrastructure, tourist attraction, offices etc.

Ultimately Singapore government is smart and they are the largest landlord in Singapore and they are running Singapore like business enterprise.

[Count]

I can see the attraction in leasehold condos, especially for investment.

But what about leasehold landed? Unlike condos, no prospect of en bloc, and may be difficult to resell when it is 30-40 years old and bank will not give a full loan and condition of property deteriorates. Notice quite a few 15-20 year old leasehold landed for sale - they are still fectching a good price but the next owner that picks it up may not find it so easy to let go for a good price 10-15 years down the road?

[teddybear]

What a joke! As far as I know, the only FH estate is mainly in Orchard Road, and Orchard properties still command the highest $PSF in Singapore!!!!!!!!!!!


Ringo33,
By the way, when do you see yourself being able to sell your 99 years Leasehold J Gateway in JURONG, the only most heavily polluted industry town in Singapore, at $1800 psf just to break even?

Don't wait too long, don't forget the valuation of 99 years leasehold properties will fall down a cliff after 20 years old!!!!!!!!!!!!

Is it any wonder there are so many Singaporeans trying to flip their 99 years Leasehold properties once they are over 10 years old (and hence tried desperately to defence the propaganda that Leasehold properties are no different from Freehold properties)?????

spot on.

beside FH vs LH, another aspect is government decentralizing afford and most of these decentralizing activities are focus on LH estate rather than FH. e.g international school, shopping malls, transport infrastructure, tourist attraction, offices etc.

Ultimately Singapore government is smart and they are the largest landlord in Singapore and they are running Singapore like business enterprise.

[teddybear]

The future for leasehold landed is BLEAK BLEAK BLEAK!

By the way, you could have a 99-year leasehold landed with say 20 years lease left for $500,000 !!!!! Cheaper than a 5-room resale HDB flat!!!!!!!!
That tells you the difference between leasehold properties and freehold properties!

I can see the attraction in leasehold condos, especially for investment.

But what about leasehold landed? Unlike condos, no prospect of en bloc, and may be difficult to resell when it is 30-40 years old and bank will not give a full loan and condition of property deteriorates. Notice quite a few 15-20 year old leasehold landed for sale - they are still fectching a good price but the next owner that picks it up may not find it so easy to let go for a good price 10-15 years down the road?

[Jaydenlim]

It is not as straightforward as FH vs LH. Govt has tended to intensify the infrastructure surrounding more LH properties, which are the ones sold in recent GLS.

..

Spot on again.

With more swanky malls popping up in LH suburban area, there is now very little reasons for Singaporeans to head down to city center to buy overpriced merchandise or patronize fancy restaurants.
With more international school moving out of central region, there will be lesser reason for expat with families to live in central area
With no chance of PR getting into popular local schools in central region, there is also no reason for PR and foreigners to buy or rent property around those area

FH condo title is only good on paper and you can never own a FH condo forever nor pass it down to future generations etc. Property investment has always been about location first before FH or LH, not the other way around. For people who try to tell you otherwise, are likely to be those who are stuck with some old FH condo in the wrong side of the street.

[Kelonguni]

I won't necessarily go for the swanky mall area LH property, especially so if they intend to charge a premium for these.

The basic NTUC groceries, good schools, and jam-free roads or roads with short jams are more important for me.

Spot on again.

With more swanky malls popping up in LH suburban area, there is now very little reasons for Singaporeans to head down to city center to buy overpriced merchandise or patronize fancy restaurants.
With more international school moving out of central region, there will be lesser reason for expat with families to live in central area
With no chance of PR getting into popular local schools in central region, there is also no reason for PR and foreigners to buy or rent property around those area

FH condo title is only good on paper and you can never own a FH condo forever nor pass it down to future generations etc. Property investment has always been about location first before FH or LH, not the other way around. For people who try to tell you otherwise, are likely to be those who are stuck with some old FH condo in the wrong side of the street.