Is there capital gain from 99-year leasehold landed properties?

In Singapore, 99-year leasehold landed properties can indeed generate capital gains, despite the depreciating nature of the lease over time. Here are some key points to consider:

Initial Growth

Leasehold properties, including landed homes, often see significant capital appreciation in the early years of the lease. The first 10 to 20 years of a 99-year lease are typically when the property experiences the most substantial growth in value.

Market Dynamics

The scarcity of landed properties in Singapore, which make up less than 5% of all housing, contributes to their exclusivity and desirability. This scarcity can drive up demand and, consequently, the value of these properties, even those on 99-year leases.

Strategic Buying and Location

Properties located in areas undergoing government-led rejuvenation projects or those near desirable amenities such as schools can see significant appreciation in value. Proximity to schools, for example, can maintain demand and drive up prices.

Long-Term Perspective

While the value of a 99-year leasehold property does depreciate as the lease term shortens, especially after the 40-year mark, strategic long-term planning can help maximize returns. Investors who buy early in the lease or look for properties with potential for renewal or redevelopment can benefit from significant capital gains.

Rental Income

Leasehold landed properties can also generate substantial rental income, which can help offset the depreciating value of the lease. Tenants are often more concerned with the property's location, size, and amenities rather than the tenure of the lease.

In summary, while the value of a 99-year leasehold landed property will eventually decline as the lease nears its end, there are opportunities for significant capital gains, especially in the early years of the lease and in strategically chosen locations.