What is a bala curve for condo 99 year property?

The Bala Curve is a widely recognized model in Singapore's real estate market that illustrates how the value of a 99-year leasehold property depreciates over time. Here are the key points:

- Initial Value: At the start of a fresh 99-year lease, the property's value is approximately 96% of its freehold value.
- Non-Linear Depreciation: The curve shows that the depreciation is not linear. The value of the property decreases gently in the early years but accelerates as the lease nears its end.
- Key Milestones:
- With 60 years remaining on the lease, the property's value is about 80% of its freehold value.
- With 30 years remaining, the value drops to around 60% of its freehold value.
- Accelerated Depreciation: After the 30-year mark, the depreciation rate increases significantly, similar to the reverse effect of compound interest. This means the property's value decreases more rapidly as it approaches the end of its lease.
- Real-World Implications: While new properties tend to appreciate in value due to inflation and demand, the effects of lease decay become more pronounced around the 30-40 year mark. This can impact resale prices, rental yields, and the ability to secure loans, especially for properties with less than 60 years remaining on the lease.
- Practical Applications: Bala’s Curve is used by the Singapore Land Authority (SLA) and other real estate professionals to determine the value of leasehold properties, including in scenarios like en bloc sales and the HDB Lease Buyback Scheme.

Understanding Bala’s Curve is crucial for property owners and buyers to make informed decisions about buying, selling, or extending the lease of a 99-year leasehold property in Singapore. For more detailed insights and property valuations, you can visit EdgeProp Singapore.