Profitability gap shrinks between leasehold and freehold condos

Data suggests factors like proximity to MRT stations and amenities are playing bigger role

- Joyce Lim

Leasehold condominiums are becoming nearly as profitable as freehold units, with some even outperforming the latter in certain areas, according to a study of transaction data by ERA Singapore.

The findings suggest that factors such as proximity to MRT stations and urban amenities are playing a bigger role in determining property value than tenure alone.

Leasehold condos typically come with a 99-year tenure, after which the ownership of the land reverts back to the Government or the original land owner.

The ERA Research and Market Intelligence study analysed 7,032 transactions involving condo units bought and sold between 2015 and 2024 across 765 projects within a 2km radius of nine MRT stations.

The stations were Katong Park, Great World, Marymount, Beauty World, King Albert Park, Outram Park, Potong Pasir, Serangoon and Tampines East. The condo developments shortlisted had at least 30 resale transactions in the period of study, which excluded executive condominiums.

In three locations - Katong Park, Serangoon and Potong Pasir leasehold condos achieved higher median profits than their freehold counterparts.

Near Katong Park MRT station, leasehold condos recorded a median profit of $280,000, while freehold units lagged behind at $200,000.

A similar trend was observed near Serangoon MRT station, where leasehold units saw a median profit of $240,600, compared with $171,016 for freehold units. In Potong Pasir, leasehold units posted a median profit of $175,000, surpassing the $140,000 median profit for freehold units.

The overall median profit for freehold condo units exceeded leasehold units by $118,568 in 2019.

By 2023, the gap had shrunk to just $35,350, and narrowed further to $30,000 in 2024.