Highest-yielding condominiums in Singapore in 2018

The Hillford in Bukit Timah. Photo: EdgeProp.sg

By Fiona Ho

Nine out of 10 of these highest-yielding condos are located in the Central Region. 

Today’s average rental yield for non-landed private homes hover at below 3%. Low interest rates at a large supply of housing are possible reasons.

In this article, we identify the top 10 condo projects that commanded the highest rental yields in 2018. Current gross rental yields are calculated by taking the annual rental income of the development and dividing it by recent resale prices of the corresponding project.

Only properties with at least five sales and five rental transactions over the last 12 months were considered in our analysis.

Top 10 Singapore condos with the highest rental yields in 2018

Source: EdgeProp.sg *The site for The Hillford was the first 60-year leasehold private condo of its kind to be launched in Singapore, and was positioned as a retirement resort * *Spottiswoode Park has a leasehold tenure of 92 years from 1989

The Hillford tops our list of high-yield properties. The 281-unit condo was positioned as a retirement resort and was the first 60-year leasehold private project of its kind to be launched in Singapore

From the list of condos above, we can observe the following:

  1. City fringe properties dominate the listHighest-yielding condos in Singapore in 2018

Location is a clear key criterion for real estate rentals. As observed from our list, 9 out of the 10 highest yielding properties are located in the Central Region, with the exception of Melville Park, which is situated in the East. Of the list Central Region properties, the majority are located in the Rest of Central Region (RCR) or the city fringes.

Current gross rental yields are calculated by taking the annual rental income of the development and dividing it by recent resale prices of the corresponding project. What this means is that the lower the purchase price, the higher the potential for upside, and the higher the likelihood that rental yields will be favourable.

From this equation, we can deduce that city fringe properties tend to have higher rental yields compared to those located in the Core Central Region (CCR), due to the lower relative purchase price of the former.

2. Majority are leasehold projects

Leasehold properties are typically considered to be more attractive when comparing rental yields. This is due to a lower relative $ psf when buying a 99-year leasehold property compared to freehold, assuming that all other things are equal.

In general, tenants are not concerned about the tenure of a property, so leasehold properties do tend to have an advantage over their freehold counterparts when looking purely at rental yields.

3. Proximity to MRT is a pull factor

Nearly half the properties on our list are located within walking distance to a MRT station (we define walking distance as 500m, which should be roughly within five minutes walking time).

This is understandable, as tenants could be foreigners or expats who do not own a car, and who are working in vicinity of the central business district (CBD).

*This story is contributed by EdgeProp.sg

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