Leasehold Condos Catching Up: Profitability Gap with Freehold Shrinks

Leasehold condominiums are proving to be just as profitable—if not more so—than freehold units in certain areas, according to a study conducted by ERA Singapore. The analysis highlights a shift in buyer priorities, with factors such as MRT accessibility and urban conveniences playing a more significant role in determining property value than land tenure alone.

Leasehold Condos Outperform Freehold in Select Areas

Traditionally, leasehold condos—typically with a 99-year tenure—were considered less desirable than their freehold counterparts. However, ERA’s Research and Market Intelligence study of 7,032 transactions across 765 projects from 2015 to 2024 reveals a surprising trend: in some locations, leasehold condos are generating higher median profits than freehold units.

The study examined properties within a 2km radius of nine MRT stations:

• Katong Park

• Great World

• Marymount

• Beauty World

• King Albert Park

• Outram Park

• Potong Pasir

• Serangoon

• Tampines East

Key Findings: Leasehold Units Leading in Three Locations

• Near Katong Park MRT, leasehold condos recorded a median profit of $280,000, surpassing freehold units at $200,000.

• In Serangoon, leasehold developments saw median profits of $240,600, compared to $171,016 for freehold condos.

• At Potong Pasir, leasehold condos also outperformed, with a median profit of $175,000, against $140,000 for freehold units.

Closing the Profitability Gap: Leasehold Catches Up

The overall profitability advantage of freehold condos is narrowing.

• In 2019, the median profit of freehold units exceeded leasehold ones by $118,568.

• By 2023, this gap had shrunk to $35,350.

• In 2024, the difference narrowed even further to just $30,000.

A key reason for this shift is higher transaction volumes in leasehold developments, which have boosted price growth. Additionally, leasehold condos near MRT stations and in mature estates command a price premium due to high demand and convenience.

Most Profitable Leasehold Developments

Some leasehold projects have recorded substantial profits, reinforcing their investment appeal:

• Treasure at Tampines: 484 transactions, median profit of $231,500.

• Jadescape (near Marymount MRT): 180 transactions, median profit of $331,944.

Freehold Still Reigns in Prime Districts

Despite leasehold gains, freehold condos remain dominant in prime locations with limited new launches.

• Outram Park MRT: Freehold condos had a median profit of $230,000, which was $136,400 higher than leasehold condos ($93,600).

• Great World MRT: Freehold condos saw a median profit of $350,000, a $243,000 lead over leasehold units ($107,000).

Price Gaps Between Freehold and Leasehold Condos Narrowing

Beyond profitability, the price gap between freehold and leasehold condos has also closed significantly over the last decade.

• In 2014, freehold condos had a 20.7% price premium over leasehold units.

  • Freehold median price: $1,435 psf

  • Leasehold median price: $1,189 psf

• By 2024, this trend had reversed.

  • Freehold median price: $1,903 psf

  • Leasehold median price: $1,973 psf (now 3.7% higher than freehold).

This shift is attributed to strong leasehold price growth, with leasehold condo values rising 65.9% over the past decade, compared to just 32.6% for freehold properties.

Changing Buyer Priorities: Convenience Over Tenure

According to OrangeTee Group’s chief researcher Christine Sun, buyers today prioritize accessibility and amenities over freehold status. Many are willing to choose leasehold properties for the sake of better location and affordability.

However, high-net-worth individuals (HNWIs) remain committed to freehold properties, particularly in prime areas like District 10.

Investment Trends: Leasehold vs. Freehold Buyers

• Mass-market buyers (Outside Central Region – OCR)

  • Favor affordability and resale potential over tenure.

  • Typically have a 5-year investment horizon.

• HNWIs (Prime Districts 9, 10, 11)

  • Seek legacy properties to pass down through generations.

  • Prefer freehold due to its perceived long-term value and exclusivity.

Future Market Trends: What’s Next?

According to ERA Singapore’s key executive officer Eugene Lim, future supply dynamics will influence market trends:

• Government Land Sales (GLS) will continue to drive leasehold price growth.

• Limited collective sales mean freehold supply remains scarce, supporting long-term value retention.

However, Mr. Lim cautions that older leasehold properties may face diminishing demand due to lease decay, making it harder for buyers to secure full bank loans.

Leasehold Condos a Strong Investment Choice

The traditional preference for freehold condos is evolving. Leasehold units in well-connected locations have demonstrated strong appreciation and profitability, sometimes outperforming freehold properties. As buyer priorities shift, leasehold condos continue to gain ground—proving that location, demand, and convenience matter more than tenure alone.