Freehold or new launch will be a better buy in long term?

When considering a long-term investment in the Singapore real estate market, the choice between a freehold property and a new launch condo, whether leasehold or freehold, depends on several key factors.

Freehold Properties

• Freehold properties offer perpetual ownership, which can be a significant advantage for those seeking long-term stability and security. This type of ownership is particularly appealing for families planning to pass the property down to future generations.
• Freehold properties tend to appreciate in value more steadily over time, especially in sought-after locations. Historical data suggests that freehold properties generally experience more robust capital appreciation, often outperforming leasehold properties by 5-10% over a 10-year period.
• They retain their value better and are less subject to the depreciation associated with lease decay, which can significantly impact the resale value of leasehold properties as the lease nears its end.

New Launch Condos

• New launch condos, whether freehold or leasehold, offer a fresh lease term, which can be beneficial for long-term investment. For leasehold properties, this means a full 99-year lease, reducing the immediate impact of lease decay.
• New launch condos often come with modern amenities and are located in desirable areas, which can attract higher rental yields and better resale value in the future.
• They typically eliminate the risk of Cash Over Valuation (COV), making the buying process more financially manageable and streamlining the loan approval process.

Considerations

• Financial Goals: If long-term stability and generational wealth are your priorities, a freehold property might be the better choice. However, if you are looking for a more affordable option with modern amenities, a new launch leasehold condo could be more suitable.
• Market Dynamics: The price difference between freehold and leasehold properties can be significant, typically ranging between 15% to 20%. This premium is often justified by the perpetual ownership and better long-term appreciation of freehold properties.
• Personal Preferences: Consider whether the security of perpetual ownership outweighs the benefits of a newer property with modern features and potentially higher rental yields.

In summary, for a long-term investment, a freehold property generally offers more stability and better capital appreciation, but it comes at a premium. A new launch condo, especially one with a fresh lease, can provide modern amenities and potentially higher rental yields, making it a viable alternative depending on your financial goals and personal preferences.