What is the premium for freehold?

In the context of Singapore real estate, the premium for freehold properties over leasehold properties can vary depending on the type of property and its location.

For landed properties, the premium is quite significant. As of 2021, the PSF price premium of freehold over leasehold landed properties increased to $514, up from $28 in 2001, representing a 1736% increase. This indicates that freehold landed properties have appreciated much faster than leasehold landed properties over the years.

For non-landed properties, the premium is less straightforward. While the average unit price for freehold non-landed properties was 35% higher than leasehold in 2001, this gap narrowed to 21% by 2021. However, the PSF price premium of freehold over leasehold still increased by 84% from $170 in 2001 to $313 in 2021. The performance of leasehold non-landed properties can sometimes outperform freehold properties, especially when the initial PSF price premium for freehold is large.

In general, freehold properties command premiums of around 4% to 10% over leasehold properties that have remaining leases of between 80 and 99 years.