As the only developed country in Southeast Asia and the world’s fourth-largest financial center, it’s natural that Singapore has attracted numerous high-net-worth individuals from overseas to invest in real estate here.
In Singapore, land use rights and homeownership are integrated, together constituting property rights. Therefore, when you buy a property in Singapore, you are not just buying the house itself but also the land it sits on. This makes the choice of land tenure an important consideration.
Common types of private residential property tenure in Singapore can be categorized by their duration: 99-year leasehold, 999-year leasehold, and freehold. Due to its extremely long duration, a 999-year lease is practically equivalent to a freehold tenure. For convenience, this article will refer to both 999-year and freehold tenures as “freehold.”
Many people have questions and feel conflicted about the choice of tenure when investing in property in Singapore. Which is better, freehold or a 99-year lease? How should one choose? What factors need to be considered?
Today, as a seasoned local real estate professional in Singapore, I will analyze the choice of land tenure from various perspectives, including the purpose of purchase, selling cycle, return on investment, and potential for appreciation and value preservation.
Table of Contents
Singapore Freehold Properties
As the name suggests, a freehold property is one where the owner holds the title indefinitely. For freehold properties, the owner has permanent ownership of all immovable assets on the land, including the land itself, buildings, trees, and underground resources (up to a certain depth), and this can be passed down through generations.
Singapore is often playfully called “坡县” (Po County) by the Chinese community, mainly due to its very small land area. In a country as land-scarce as Singapore, freehold properties are naturally rare and valuable.
These freehold properties have been passed down since the nation’s founding, as the Singapore government announced in 2007 that it would no longer release freehold land for tender to property developers. Therefore, if you see new freehold properties for sale on the market today, they are, without exception, redeveloped from older freehold properties purchased from private owners.
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District 02 (Chinatown / Tanjong Pagar)
99-year Leasehold
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- Prime Location: Located in the heart of Singapore’s Central Business District (CBD), close to Tanjong Pagar MRT station and the future Prince Edward MRT station, providing residents with excellent transport connectivity.
- Abundant Shopping and Dining Options: Surrounded by multiple shopping centers such as 100 AM, Tanjong Pagar Plaza, and Chinatown Point, offering a wide range of retail and dining choices.
- Proximity to Schools: While there are no schools within walking distance, several renowned institutions are nearby, including Cantonment Primary School, Duke-NUS Graduate Medical School, and Global Indian International School.
- High-End Residential Design: The condominium offers various unit types from one to five bedrooms, including luxurious penthouses, catering to different lifestyle needs. It features multi-level shared facilities, including garden walkways, a yoga deck, swimming pool, and a sky gym.
- Price: Starting from S$1.548M, it offers a rare opportunity for those seeking a luxurious urban lifestyle.
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District 05 (Buona Vista / West Coast / Clementi)
99-year Leasehold
3 to 4-bedroom units from $2.410M
- Luxury Residences and Amenities: Blossoms By The Park offers a variety of unit types and layouts, from one-bedroom plus study (549 sq ft) to four-bedroom penthouses (1550 sq ft), including dual-key units and study options.
- Excellent Location: Located in Singapore’s “Silicon Valley,” one-north, Blossoms By The Park is just a 3-minute walk from Buona Vista MRT interchange, offering superb connectivity across the island.
- Rich Surrounding Facilities: Close to major shopping malls like The Star Vista and Rochester Mall, as well as Ghim Moh Market and Hawker Centre, providing plenty of dining and shopping options.
- Proximity to Top Educational Institutions: Near several prestigious schools such as Fairfield Methodist Primary School, Anglo-Chinese Junior College, and the National University of Singapore (NUS), making it an ideal choice for families.
- Comprehensive Condo Facilities: Blossoms By The Park is equipped with a 50-meter lap pool, gym, function room, children’s play area, and other facilities to meet residents’ lifestyle needs.
- Developer Background: EL Development is a well-known real estate development and investment company in Singapore, having developed over 3,000 residential units since its establishment in 2007.
Let’s first look at the advantages and characteristics of freehold properties:
Advantages of Singapore Freehold Properties
1. Freehold properties hold their value.
The ownership of a freehold property belongs entirely to the owner, free from government interference, and can be passed down to future generations, becoming a family legacy— “one shop supports three generations, one house shelters three generations.”
It’s worth noting that while the law protects the owner’s absolute property rights during the tenure, under the Land Acquisition Act, the government can compulsorily acquire any land needed for public purposes, such as building roads, MRT systems, schools, hospitals, parks, and HDB flats.
This applies to both freehold and 99-year leasehold properties. Of course, the government will provide corresponding compensation for acquisition, usually not less than the market value, so there’s no need to worry too much.
2. Freehold properties appreciate in value.
Since the Singapore government has stopped selling freehold land, the total stock of freehold properties is no longer increasing, making freehold land a finite, scarce resource.
Scarcity drives value. The more developed and prosperous Singapore’s economy becomes, the higher the value of these scarce resources. This is why the wealthy love to buy freehold properties in Singapore.
3. Freehold properties offer the chance to get rich overnight.
You may have heard of Singapore’s En Bloc collective sales, which are like winning the lottery.
En Bloc is a French term meaning “in a block.” In the Singapore property market, the sale of two or more property units in a package to a single buyer is called an En Bloc sale, or collective sale.
A collective sale is somewhat similar to collective demolition and relocation, but not entirely the same. In Singapore, when a collective sale is proposed for a property, all owners are consulted. If more than 80% of the owners agree to the sale, the property goes into an auction process, with the highest bidder winning. The buyers are usually property developers.
Since the collective sale price can often be 50% or even over 100% higher than the market price, an En Bloc sale is almost like hitting the jackpot for owners, allowing them to become rich overnight. This is especially true for older freehold properties.
Both 99-year leasehold and freehold properties can undergo a collective sale. However, it’s important to note that after a developer buys freehold land, they can develop new 99-year leasehold projects on it. Therefore, be mindful of new properties built on freehold land that only have a 99-year lease.
Characteristics of Singapore Freehold Properties
1. Freehold properties are more expensive.
For the same location, specifications, and area, a freehold property will be 15%-20% more expensive than a 99-year leasehold property.
2. Freehold properties have fewer restrictions on title transfer.
In Singapore, if the remaining lease on a property is less than 60 years, there may be restrictions on obtaining loans and using CPF. If the remaining lease is less than 40 years, selling the property can be difficult, unless it has potential for a collective sale.
In this respect, freehold property owners almost never have to worry about the remaining lease duration. Even a derelict house that has been vacant for over a decade can fetch a high price if it’s freehold, because buyers value the tenure and will often demolish the old structure to rebuild.
3. Freehold properties are located in core districts, generally not near MRT stations.
Freehold properties are mainly concentrated in core districts like Orchard Road, Bukit Timah, East Coast, and Novena. Newly developed areas by the government generally do not have freehold properties. Consequently, freehold properties are rarely close to MRT stations and are typically used for luxury residences (condominiums in prime locations), townhouses, and detached or semi-detached houses, with fewer large-scale developments.
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Singapore 99-Year Leasehold Properties
A 99-year leasehold property is a rental property (Leasehold), meaning the tenure of the property is time-limited. Most of these properties will be returned to the Housing & Development Board (HDB) after the 99-year lease expires, and the land use rights will revert to the government, similar to a 70-year land use right in other countries.
So, will the property really be taken back when the lease expires? The answer is yes. On December 31st of last year, a news report covered the first instance of a private residential lease expiring since Singapore’s independence. The lease for 191 old shophouse units in Geylang Lorong 3 expired, all residents moved out, and the land was officially returned to the government without compensation for the owners.
Of course, we don’t necessarily have to hold a property for 99 years. 99-year leasehold properties also have their own advantages and characteristics. Let’s analyze them further:
Advantages of Singapore 99-Year Leasehold Properties
1. 99-year leasehold properties are relatively cheaper with a higher investment value.
For the same location, specifications, and area, a 99-year leasehold property will be 15%-20% cheaper than a freehold property.
For investors, this means a lower total price, lower down payment, and less mortgage pressure. The rental income is no different from that of a freehold property (tenants don’t care about the tenure), and the appreciation rate for properties under 20 years old is comparable to that of freehold properties. Therefore, the investment value is higher, especially for short-term investments.
2. 99-year leasehold properties offer more convenient transportation and more options.
Since the Singapore government has not launched any new freehold projects since the nation’s founding, over 80% of the property projects on the market are 99-year leaseholds.
This means that 99-year leasehold developments are the vast majority, giving buyers a wide range of choices. Moreover, these developments usually have more convenient transportation, are closer to MRT stations and schools, and have more comprehensive amenities.
3. 99-year leasehold properties are available in more prime locations.
What’s the most important thing when buying a house? Location, location, location! Location is always the primary factor to consider when investing in property.
Freehold properties are certainly good. However, a 99-year leasehold condominium in a prime location will see better price growth than a freehold property in an average location.
Comparing the blue line, representing a 99-year leasehold condo in District 11 Novena (city fringe), with the orange line, representing a freehold condo in District 27 Sembawang (suburbs), it’s clear that the price appreciation for the 99-year leasehold condo in the more central Novena location is greater.
Since over 80% of the properties in Singapore’s real estate market are 99-year leaseholds, most prime locations are occupied by these leasehold condominiums. Therefore, if you have to choose between a 99-year leasehold condo in a better location and a freehold condo in an average location, the former is naturally the superior choice.
Characteristics of Singapore 99-Year Leasehold Properties
1. 99-year leasehold properties are larger with better facilities.
99-year leasehold developments are often larger in scale and unit size. To compensate for the lack of privacy and limited tenure, they usually come with better facilities and offer greater convenience. This makes them more suitable for children’s schooling, adults’ work, and seniors’ retirement.
2. 99-year leasehold properties have higher transaction frequency and are easier to sell.
Compared to freehold properties, 99-year leasehold properties have a broader audience, a higher turnover rate, and more potential buyers. Whether for investment or self-occupancy, sellers can liquidate the property more quickly, offering greater asset flexibility.
3. 99-year leasehold properties are located in popular new residential areas.
If you are interested in popular new residential areas like Punggol or Sengkang, you can only choose 99-year leasehold properties, as these new towns have virtually no freehold projects.
Both freehold and 99-year leasehold properties have their advantages and characteristics. So, as a buyer, how should we weigh them? Let’s continue our analysis:
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How to Choose: Freehold vs. 99-Year Leasehold Properties
When buying a property, the first thing to consider is the purpose of the purchase. Why do you want to buy property in Singapore? Is it for investment, for your children’s education, to settle down, or simply to diversify your assets and reduce risk?
Different purchasing goals require different considerations. Let’s compare and analyze properties with different tenures based on the purpose of purchase:
Short-Term Investment
- Purpose: You have spare cash, see an opportunity in Singapore’s real estate market, and want to make a short-term property investment. You plan to rent out the property for rental income while waiting for it to appreciate, then sell it in five to ten years.
- Analysis: If you are buying property in Singapore for short-term investment, a 99-year leasehold condominium with convenient transportation, a lower total price, a smaller down payment, and less mortgage pressure is more suitable for you than a freehold condominium.
In terms of rental income, since tenants don’t care about the tenure, the rent for a 99-year leasehold condo is no lower than that of a freehold one. If you choose a 99-year leasehold condo near an MRT station, a school, or in a popular new area, the rent could even be higher than that of a freehold condo in a less convenient location.
In terms of property appreciation, if you plan to sell the property within 5 to 10 years, the price increase of a 99-year leasehold condo is almost comparable to that of a freehold property. Considering that 99-year leasehold properties are 15% – 20% cheaper than freehold ones, the return on investment for a 99-year leasehold property will clearly be higher within a ten-year timeframe.
For Children’s Schooling
- Purpose: To provide a convenient place for your child to study in Singapore, whether at Hwa Chong Institution or a university, and then sell the property after graduation.
- Analysis: Singapore’s education system is world-renowned, so many parents send their children here for education and buy a condominium for them to live in. After the child graduates, they sell the property. This provides convenience for the child’s studies and also has investment value—a win-win situation.
If you are buying property in Singapore for your child’s education, a 99-year leasehold condominium near the school is the most suitable option. A property purchased for schooling should first meet the child’s daily needs. It should ideally be next to the school, have comprehensive community facilities, and offer convenient transportation.
A 99-year leasehold condominium can fully meet these needs, and there is a wide range of options to choose from.
Family Home (For Full Family Immigration)
- Purpose: More and more families are choosing to immigrate to Singapore for their children’s better education, their own career development, and better care for the elderly. They purchase property in Singapore for the whole family to live in, meeting the needs of children’s schooling, adults’ work, and seniors’ retirement.
- Analysis: If it’s for a family home, both 99-year leasehold and freehold properties are viable options, depending mainly on the budget.
If you have already immigrated to Singapore or are planning to, and have a sufficient budget, you can certainly consider buying a freehold property.
If your budget is more limited and you prioritize short-term investment, a 99-year leasehold condominium near an MRT station and schools is also an excellent choice.
Work Residence
- Purpose: You need to be based in Singapore for work reasons.
- Analysis: As one of the most international countries in the world, 38% of Singapore’s residents are permanent residents (PRs), international workers on work visas, and students on student visas. Many people live in Singapore temporarily for a few years for work and may leave to return to their home countries after their assignment ends.
Therefore, many people working in Singapore choose to buy property, partly for their own convenience and partly as an investment.
For this group, just like for short-term investors, a 99-year leasehold condominium is the most suitable option for the reasons mentioned above.
Family Legacy
- Purpose: To pass down family wealth, reduce investment risk, with a primary focus on value preservation.
- Analysis: Singapore has attracted a large number of wealthy immigrants due to its lack of inheritance tax. A well-known example is Zhang Yong, the chairman of Haidilao, who quickly immigrated to Singapore after the company’s IPO.
Besides the absence of inheritance tax, Singapore’s freehold properties also attract the wealthy from all over the world. After all, in this turbulent modern society, everyone values the preservation and security of their assets. For this group, Singapore’s freehold properties are undoubtedly the best assets for value preservation.
Conclusion
In summary, there is no one-size-fits-all answer when it comes to property investment. What works for one person may not work for another. However, one thing is certain: the property’s tenure is by no means the only factor to consider. In addition to tenure, you should also take into account your budget, purpose of purchase, holding period, family and lifestyle needs, and more. Only after comprehensive investigation, comparison, and consideration can you make the most suitable choice with a precise investment vision.
As a native Singaporean who has been in the real estate industry for many years, I specialize in private residential sales and commercial properties, providing professional home-buying and investment planning for countless overseas buyers and new immigrants. If you are interested in Singapore property investment, feel free to contact me, and I will provide you with professional, first-hand property information.
Related Articles:
- Buying a Home in Singapore? You Absolutely Need to Know These Things
- Should You Buy a New or Resale Condo in Singapore? How to Choose Between Under Construction vs. Completed?
- Singapore Property Prices
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