All freehold properties are overpriced. Really??

People are generally told to avoid freehold properties cause they are overpriced. But are they really?

Certainly, here are two common reasons why some individuals choose to avoid buying freehold properties:

1. Higher entry price: Freehold properties often come with a higher entry price compared to leasehold properties, making them less accessible to buyers with limited budgets.

2. Opportunity cost: The higher investment required for a freehold property might mean missing out on other potential investment opportunities that could offer higher returns or greater diversification.

So with this, does it mean we should avoid freehold properties entirely?

Let's find out!

In addition to a property's physical characteristics and the 4 game-changing points in spotting safe and stable assets, you should also consider the safe entry price and potential upsides of a property. Let's look at these two points in further detail.

Safe entry price & Price gap

Explore the freehold new launch, Terra Hill, as we delve into a comprehensive case study.

Examining 99-year leasehold properties, we observe that benchmark prices for properties in the OCR and CCR commence at $2,1XX psf and $2,8XX psf respectively. Similarly, RCR properties carry an average price of $2,4XX for a 99-year leasehold. Given these figures, the price point of $2,5XX for a Freehold project like Terra Hill appears to be a logically sound and safe investment choice, wouldn't you agree?

Not sure? Let’s go into more detailed figures:

As illustrated in Figure 1, the average price of a 99-year leasehold property in RCR during 4Q 2022 stands at $2,659 psf. Notably, Terra Hill, a Freehold project, is positioned below this average with a price of $2,5XX. Evidently, the price disparity strongly positions it as an exceptionally advantageous choice. It is quite easy to realise that the price gap makes it absolutely favourable.

Moreover, as depicted in Figure 2, the average pricing of recent property launches within the RCR spans from $2,526 psf to $2,882 psf. This significant range provides further evidence that the entry price of Terra Hill is solid, reinforcing its status as a safe and secure investment.

So what do I think of this freehold development, Terra Hill? It is indeed a safe buy due to those reasons above. To learn more on Terra Hill, click here.

In essence, these are 3 main green flags you should look out for when considering between freehold and leasehold.

1. Freehold Advantage at Leasehold Pricing: When you get the benefits of a Freehold property at a cost comparable to leasehold options.

2. Prime Location near MRT Station: Its strategic proximity to an MRT station ensures excellent connectivity without an additional premium.

3. Narrowed Price Gap with Attractive Entry: The highly attractive entry price if there is a minimized price difference between Freehold and 99-year leasehold properties.

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