Pity the residents at Shanghai One near River Valley Road. While they have long basked in the morning sun, those living on the lower floors are likely to have much less sunlight once a new seven-storey building is built just in front of their windows.

However, their quandary pales in comparison to that of residents around the corner at Mill Point, where a new building more than a dozen storeys high blocks the light, and to anyone living near the 50-storey Pinnacle@Duxton. These residents represent a small fraction of the many around the island who face a similar situation.

There is little the residents can do. While the Urban Redevelopment Authority (URA) does regulate building height, sunlight has not really been a consideration – until recently.

Only during the past year did change begin when the URA commissioned National University of Singapore Professor Heng Chye Kiang to do a three-year study on “sustainable housing typologies”.

The research will “examine the impact of the physical and sociological variables”, including sunlight, “on various aspects that affect sustainability and liveability”.

Decades ago, basic housing was the priority here and few worried about having enough sunlight. As Singapore moved “from Third World to First”, in the words of Minister Mentor Lee Kuan Yew, expectations have changed.

Now, there is vastly more research on the importance of light. The United States-based portal Healthline reports that sunlight deprivation can cause “profound negative change to portions of your brain associated with depression”, and sunlight also causes the body to produce vitamin D.

So, how much is sunshine worth? While there may be development charges for taller buildings, the answer here appears to be zero when it comes to sunlight.

But in other countries, the answer is often “a lot”. Developers have had to change building plans and residents have sued over blocked light, sometimes receiving thousands in compensation.

Legal cases involving sunshine go back to at least 1586, when in the United Kingdom, one Mr Bury sued his neighbour for blocking the light.

In modern-day UK, the Rights to Light Act, “to amend the law relating to rights of light”, was passed in 1959. Lawyer Cameron McKenna recently wrote in The In-House Lawyer that the sharp rise in commercial development “will bring back to the fore the problem of rights of light”.

The action taken to protect access to light can be quite dramatic. In Australia, the Waverly town council blocked construction of new buildings because they were too high. When the property owner sued, the Land and Environment Court in New South Wales decided that the building should “be lowered by removing four levels” to ensure adequate sunlight.

In China as well, there is a price for sunshine. In one case last year, according to the People’s Daily, a court in the city of Qingdao ruled in favour of a group of aggrieved home owners, with one reportedly receiving more than 40,000 yuan ($7,800) in compensation.

It is heartening to see that change may be under way here, with Prof Heng’s study a welcome step. Yet, its recommendations are likely to be at least two years away, and changes to protect access to light could take even longer. Meanwhile, some residents are likely to have less light as more new buildings are constructed.

To ensure continuing access to enough light, it could be worth considering measures sooner rather than later. One step could be making sure that developers ensure continuing access to light in plans for new developments. If light would be blocked, plans could be changed or owners could be compensated. A new act, similar to the UK Rights to Light Act, could even be considered.

The writer is a consultant who has lived in Singapore since 1992.

Source : Today, 8 Oct 2010

SINGAPORE should be able to handle a population of slightly more than six million, but a number beyond that would be ‘worrying’, the chairman of the Centre for Liveable Cities advisory board Liu Thai Ker said yesterday.

Speaking at the Centre for Liveable Cities lecture series yesterday, Mr Liu, a former chief executive of the Housing & Development Board and Urban Redevelopment Authority, said that since Singapore has planned for a population of 5.5 million, a 10 to 12 per cent increase from that to a population of 6.2 million ‘would not make a huge difference’.

‘The question is, beyond say 6.3 million, seven million, 7.5 million, what will happen,’ he said. ‘I think that is where we will begin to worry. But personally I feel that we need not despair too quickly in the sense that we still have Pulau Ubin, we still have Pulau Tekong.’ Using these islands, he said, is a last resort, a contingency.

He added that if Singapore’s population goes beyond 7.5 million, it will ‘need to do some rethinking’.

In 2007, National Development Minister Mah Bow Tan said the government had increased its long-term population estimate. For planning purposes, he said, URA would use a projected population of 6.5 million, up from the 2001 projection of 5.5 million.

The 6.5 million number, however, is not a target the government feels Singapore’s population should reach. Instead, Mr Mah said it is a ‘planning parameter’ – to guide future development blueprints in URA’s Concept Plan.

Source: Business Times, 9 Sep 2010

Population projection for planning purposes is an upper limit, not a target

IN 2007, National Development Minister Mah Bow Tan announced that the Government had increased its long-term population estimate. For planning purposes, he said, the Urban Redevelopment Authority (URA) would be using a projected population of 6.5 million, up from the 2001 projection of 5.5 million.

With Singapore’s total fertility rate far below replacement levels, the obvious conclusion was that much of the increase would come from foreigners.

Mr Mah’s words were greeted with sound and fury. Singaporeans were worried that it would make them feel like strangers in a strange land. Would the newcomers be able to integrate into Singapore society?

Singapore was already one of the most densely populated countries in the world. Would it get even more crowded? In 2007, Singapore’s total population had already reached 4.6 million.

In October 2007, the distinguished demographer Saw Swee Hock predicted that for the population to hit 6.5 million by 2050, we would need such a heavy influx of migrants that newcomers arriving after 2015 would make up 40.5 per cent of the total population in 2050.

A report in February last year predicted that if the population were to hit 6.5 million by 2020, ground and underground travel demand in Singapore would rise to about 14.3 million journeys a day, with four peak-hour passengers per square metre on the trains.

Three years after it first surfaced, the 6.5 million figure still sparks controversy. Singapore Democratic Party leader Chee Soon Juan gave it prime mention in his response to the Prime Minister’s National Day Rally speech, saying that ‘Mr Lee intends to increase our population to 6.5 million’, with foreigners outnumbering Singaporeans.

This assertion, however, has to be put in perspective. Mr Mah had stressed that the 6.5 million number is not a target that the Government feels Singapore’s population should reach. Instead, he characterised it as a ‘planning parameter’ – to guide future development blueprints in the URA’s Concept Plan.

In fact, 6.5 million was the ‘upper bound’ for Singapore’s population over the long term, Mr Mah said in June 2007. For URA’s purposes, the ‘long term’ is about 40 to 50 years.

Even Minister Mentor Lee Kuan Yew has expressed reservations about the 6.5 million figure. On two separate occasions, he cited a somewhat more modest population target: five million to 5.5 million.

‘I have not quite been sold on the idea that we should have 6.5 million,’ he said in February 2008.

‘I think there’s an optimum size for the land that we have, to preserve the open spaces and the sense of comfort.’

It is therefore not accurate to say that the Government has a firm policy to increase Singapore’s population to 6.5 million come what may.

Nevertheless, a look back at the 6.5 million figure and its genesis uncovers some hard facts about the Government’s population projections. These have had to be revised upwards several times, to play catch-up with immigration.

In the 1991 Concept Plan produced by the URA, the planning parameter used was a population of four million, projected to be reached after 2010. It seemed like a reasonable estimate then, given that the 1990 Census showed that Singapore’s total population was three million.

As it turned out, the estimate was overtaken by events. Singapore’s total population crossed the four million mark in 2000. More crucially, the original four million estimate had failed to take into account the burgeoning number of non-residents, those who are neither citizens nor permanent residents. This saw an average annual growth of 9.3 per cent from 1990 to 2000.

The URA had included only the resident population in its estimates for the 1991 Concept Plan, Mr Mah told reporters in September 2000. Significantly, the latest 2010 Census shows that the resident population is still below four million, at 3.8 million.

But this leads to the question: Why weren’t non-residents factored in from the start?

Only in the 2001 Concept Plan were they included, when URA used as its planning parameter a total population of 5.5 million over the long term. But even then, the 2001 estimates were moot within years.

By 2007, Singapore’s total population had hit 4.6 million. A mid-term review of the 2001 Concept Plan was commissioned to factor in economic and social changes. That was when the figure of 6.5 million was proposed – and greeted with much consternation.

There was a 15 per cent jump in the non-resident population in 2007 over 2006, and an 8 per cent increase in the number of permanent residents.

Were these happening faster than the URA and other agencies had planned for? Senior Minister Goh Chok Tong admitted on Monday that the surge in the number of immigrants had caught the Government by surprise. The National Development Ministry had not provided for the sudden surge in its housing plans, he said.

The non-resident population grew by 19 per cent in 2008. According to the 2010 Census, Singapore’s total population has already crossed the five million mark, with 1.3 million non-residents.

In April 2008, Mr Mah reassured Singaporeans that ‘if we do need to increase our population to 6.5 million in the future… it is comforting to note that our physical resources, especially land, are able to support this’.

The population figures that planners base their blueprints on have far-reaching implications for transport, housing and land use.

And as the Government would have learnt by now, they are also a political hot potato. Handling instructions: Revise with care.

Source: Straits Times, 8 Sep 2010

(SINGAPORE) Sustained, slower rates of foreigner inflows could have implications for the labour force and housing market, a Citi report yesterday said.

A slowing of immigrant inflows, particularly skilled professionals and permanent residents (PRs), raises questions over whether future housing demand can absorb the significant increase in housing supply over the next three to five years, Citi economist Kit Wei Zheng wrote.

Last week, the Advance Release of Census 2010 showed population growth of 1.8 per cent, down from a 4 per cent average growth rate over the previous four years. This was largely due to a sharp slowdown to 1.5 per cent growth in the PR population, from an average rate of 8.4 per cent for 2006 to 2009, Mr Kit said.

Assuming population growth stays at 1.5 to 2 per cent, or 80,000 to 100,000 people a year, for the next five years, Mr Kit estimates that this translates into demand for 20,000 to 25,000 homes a year.

Estimates from the Urban Redevelopment Authority and those based on Housing Development Board announcements show that some 100,000 new public and private housing units are due over the period, so supply should match overall housing demand, Mr Kit said.

But, supply will not be evenly distributed and is likely to be backloaded in 2013/2014, which suggests supply will likely be tight in the next two years, but outstrip estimated demand in 2013 and 2014, at current population growth rates, he added.

‘These back of the envelope estimates suggest that changes in immigration policy have the potential to exacerbate boom-bust cycles in the housing market,’ said Mr Kit.

Risks of this are higher if demand is weaker than expected from 2013 onwards, or if political pressure leads to a further tightened inflow of foreign skilled professionals. Higher risk could also come from further hikes in public and private housing supply in response to overly optimistic demand projections, speculative demand, or pre-election political pressure, he said.

UniSIM labour economist Randolph Tan agrees that the planned increase in housing supply could coincide with weakened housing demand if the immigration slowdown is sustained, adding that PRs have been ‘a significant factor behind the strong demand in housing markets in recent years.’

But DBS economist Irvin Seah thinks the overall impact of population growth changes on the property market ‘will be quite benign’, given the ‘slow but steady’ growth rate and the fact that government and developers can regulate the housing supply coming onstream.

Housing market aside, Mr Kit said that lower potential economic growth rates are expected, as any pick-up in productivity growth is unlikely to compensate for the implied slowdown in labour force expansion. The Economic Strategies Committee target of boosting productivity growth to 2-3 per cent while slowing labour force growth to one-2 per cent is ‘ambitious’, in his view.

Lower immigration rates – especially of PRs – is also likely to ‘accelerate the ageing of the population, with implications for labour force growth and consumption patterns,’ Mr Kit said.

Mr Tan too, thinks slowed PRs growth has a more immediate impact on labour supply than a fall in indigenous birth rates. ‘PRs tend to be adults already in their prime and are often highly mobile individuals. We will almost certainly see a slowdown in employment growth as a result of this,’ he said.

Source: Business Times, 7 Sep 2010

THE racial mix of Singapore citizens has stayed fairly constant over the last 10 years, despite the influx of new immigrants and the shift in the ethnic mix of permanent residents.

According to latest figures released by the Department of Statistics, the proportion of citizens who are Chinese dipped only slightly, from 76.9 per cent in 2000 to 76.2 per cent now.

Malays now form 15.1 per cent, compared with 14.9 per cent then.

The percentage of Indians increased slightly to 7.4 per cent, compared with 7.2 per cent 10 years ago. This is in spite of an influx of almost 68,000 new PRs of Indian ethnicity, raising their proportion among PRs to 20.4 per cent.

The racial mix figures bear out Prime Minister Lee Hsien Loong’s remarks during his National Day Rally speech on Sunday. He had said: ‘Let me assure Singaporeans, especially minority communities, that we will not allow immigration to upset the current mix of races among our population. The current mix is stable, and contributes to our racial and religious harmony.’

Source: Straits Times, 1 Sep 2010

Indians see twofold rise; Most ethnic Chinese PRs are from Malaysia

THE number of Singapore permanent residents has almost doubled in the last 10 years, from 287,500 in 2000 to 541,000 this year.

Most of the increase is accounted for by immigrants from Malaysia and the Indian subcontinent, according to census data released by the Department of Statistics yesterday.

The share of Indians in the PR ethnic mix climbed from 14.9 per cent in 2000 to 20.4 per cent this year.

In absolute numbers, they more than doubled, from 42,700 to 111,000.

The share of Chinese in the PR ethnic mix dropped from 76.1 per cent to 61.4 per cent, although the total number increased from 218,800 to 332,000.

For PRs of Malay ethnicity, the share dropped from 4.1 per cent to 3 per cent, although actual numbers went up from 11,800 to 16,000.

Most of the ethnic Chinese PRs in Singapore hail from Malaysia.

Over the 10-year period, the number of Malaysia-born Chinese in Singapore – permanent residents and Singapore citizens combined – went up by 81,000, while that of China-born Chinese went up by just 13,000.

Analysts noted that the new data may help correct a misperception on the ground.

Said political observer Eugene Tan of Singapore Management University: ‘This whole idea that we are being overwhelmed by mainland Chinese has no basis. The numbers should tell us that many from China are here only as foreign workers and, as the Prime Minister has said, we have to distinguish them from new immigrants.’

As for the large number of Malaysia-born Chinese PRs, Mr Tan said this could be due to the fact that many Chinese in Malaysia are ‘dissatisfied with the state of affairs there’, and see Singapore as a more ideal place to live.

Commenting on the surge in PRs from India, Dr Terence Chong of the Institute of Southeast Asian Studies suggested that this could have something to do with the fact that Singapore has ‘more openings in professions that see higher Indian convergence, perhaps due to language competencies or specific industry training.’

The IT industry is one which attracts a large number of Indians.

On the whole, experts agreed that the increase in the number of PRs was significant and had implications for social cohesion.

It shows that ‘the complexion of Singapore society is changing fairly rapidly’, said Mr Tan.

‘We were already seeing it in schools, in the public transport system, and in the housing market. The figures confirm it.’

Dr Chong was not optimistic about the implications for social harmony, since those qualifying as PRs, he argued, have a higher income and education level than working-class Singaporeans.

He said: ‘All this will invariably lead to higher rates of misunderstanding, resentment and suspicion in the years to come. They (citizens and PRs) will have to find ways of bridging the gulf between them.’

Source: Straits Times, 1 Sep 2010

SINGAPORE’S population has crossed the five million mark for the first time but the rate of increase of new foreigners, including permanent residents (PRs), has slowed sharply.

Between June 2009 and June 2010, the pool of PRs expanded by only 7,800.

This increase is just 1.5 per cent compared to 11.5 per cent in the previous 12-month period when there were 55,000 more PRs, according to advance estimates of the 2010 Population Census released by the Statistics Department yesterday.

Similarly, the pool of non-residents – including foreign workers and their families – also grew more slowly during this period: 4.1 per cent versus 4.8 per cent.

But the plunge is even steeper when placed against the 19 per cent jump between June 2007 and June 2008.

Analysts like research fellow Leong Chan Hoong say the foreigner slowdown is a deliberate move by the Government, prompted by the groundswell of anxiety among Singaporeans over competition for jobs, places in schools and universities, as well as rising home prices.

Said Dr Leong, of the Institute of Policy Studies: ‘These figures will be reassuring to Singaporeans…But we still need a steady and sustainable growth of immigrants to support the economy.’

As a result of the slowdown in foreigners, Singapore’s population rose only marginally to 5,076,700 in June this year.

The increase is just 1.8 per cent compared to 3.1 per cent in June 2009 when the population was 4,987,600.

About two-thirds of the 5.08 million – or 3.23 million – are citizens. The rest are foreigners and among them, 541,000 are PRs and 1.31 million non-residents.

The population, however, is below the 6.5 million figure that the Government said in 2007 it was using for planning purposes.

Minister Mentor Lee Kuan Yew subsequently said 5.5 million was enough, ‘an optimum size for the land that we have, to preserve the open spaces and the sense of comfort’.

The influx of foreigners has become an increasingly contentious topic in recent years and on Sunday, Prime Minister Lee Hsien Loong devoted a large part of his National Day Rally address to the issue.

Mr Lee urged Singaporeans to be open to foreigners, who are a source of talent, help prop up the ailing birth rate and keep the economy humming to create jobs for Singaporeans.

He also announced measures to further reinforce the Government’s policy that citizens come first.

These include a $9,000 National Service award for soldiers and a tightening of rules to cool the sizzling market for private property and Housing Board flats.

The new moves are on top of several policy changes last year to sharpen the distinction between PRs and citizens, such as giving citizens more benefits and subsidies in health care, housing and education.

These steps have, however, not deterred foreigners.

A Gallup poll released last month shows Singapore as a top destination for migrants, so much so that its population would triple if everyone who wanted to move here was allowed to.

The new census, done every 10 years, was conducted from March to August this year and the full report will be released progressively from 2011.

The figures released yesterday show Singapore is ageing.

The median age of residents, made up of citizens and PRs, went up from 34 years in 2000 to 37.4 years in 2010.

On the other hand, the number of working residents supporting an elderly person has declined.

This old-age support ratio in 2000 was 9.9 residents aged 15 to 64 for each resident aged 65 years and older.

Now, the ratio is 8.2 per elderly person. And if PRs are taken out of the equation, the ratio is 7.2 per elderly person.

Hence, the inflow of PRs has reduced the pace of ageing for the citizen population, noted sociologist and Nominated MP Paulin Straughan.

She added: ‘Caring for the elderly will be an increasing strain on the family and the state. With fewer PRs, it becomes even more critical to get more out of Singaporeans in the drive to increase productivity.’

Source: Straits Times, 1 Sep 2010

SINGAPORE – Property investors with a lower budget but with a longer term perspective towards property purchases may look at the choices available in suburban areas instead of prime locations.

Analysts reckon that prices in upcoming suburban areas are still within reach and units there have upside potential as well, making them good investment opportunities.

Among the new coming areas that potential buyers can consider include Serangoon, Jurong Lake District and Punggol Waterfront Town, market experts said.

Mr Colin Tan, Chesterton Suntec International research and consultancy director, said: “Investors should identify areas with future potential and enter early to secure a pricing more reasonable than some of the developed areas. In the long term, say about five years, the price may rise 20 to 30 per cent.”

Mr Tan noted that since the opening of the Integrated Resorts, property prices in suburban areas have also increased sharply from between $400 and $450 per square foot to about $800 psf.

Experts said some developments within the suburban areas have become popular mainly because of their proximity to the new and less heavily-used Circle Line.

In addition, they observed that more expatriates are settling away from the prime areas as well, creating more rental opportunities for unit owners. “Expatriates are increasingly moving into suburban areas to save on the housing allowances. Meanwhile, a greater proportion of foreign and permanent resident Chinese and Indian buyers are also doing so because of their preference,” said Ms Chua Chor Hoon, senior director of research at property consultancy DTZ.

Among the new upcoming areas that are expected to see a vibrant community when fully developed are Kallang Riverside and Jurong Lakeside District.

When completed, Kallang Riverside will see a new Sports Hub, an additional 400,000 square metres of commercial space, 3,000 hotel rooms and more.

Meanwhile, the Jurong Lakeside district will be developed into a major regional centre, featuring a commercial hub and leisure destinations for locals and tourists.

“The overall development in these areas can give an uplift to prices in the region, ” Ms Chua added.

But industry experts noted that to keep the selling price palatable, developers may build smaller units.

In addition, Mr Tan cautioned: “Because these new sites need at least three to four years to develop fully, investors should be careful about timing the market and be prepared to hold the units.”

Meanwhile, for those with deeper pockets, industry watchers still recommend the prime area properties.

“For investment, it is good to buy into prime areas with good resale and rental value. In these areas, prices have not climbed to its peak and there is more upside, therefore, there is less price resistance,” said Ms Chua.

Source: Today, 30 Jul 2010

When the property market is on a roll, it is easy to forget that property prices move in cycles – that is, prices can and will eventually correct. I know of no mature economy which has seen an uninterrupted and sustained upward cycle. Cycles are part and parcel of the function of the modern economy.

In the early days, the evidence suggested that the Singapore private housing market had a cycle – from boom to bust – of about six to seven years.

For a healthy and growing economy like Singapore’s, these cycles oscillate around an upward sloping long-term trend line – that is, each boom and bust is higher than the previous high and low points.

However, with the onset of globalisation and the opening up of the Singapore economy to the world, our cycles appear to be growing alarmingly shorter and more pronounced after each boom and bust.

The more pronounced and shorter the cycles, the more speculators and investors it will attract because there is big money to be made in double-quick time.

The official price index showed that our most recent down-cycle lasted only four quarters. Our current up-cycle has just completed its fourth quarter. The sharp rebound that began in the second half of last year was peppered with two sets of cooling measures, which some say, helped to extend the life of the current up-cycle.

How much longer will this extension last?

The private housing market these days behaves more and more like the stock market, given the predominance of investors over owner occupiers. Shoebox apartments are akin to penny stocks or warrants, more to speculate with than to live in.

It is quite clear that there is now a “buzz” about the Singapore economy which Prime Minister Lee Hsien Loong said was missing before. Foreign visitors tell me they feel it too, an excitement about the city which they did not experience on their previous trips.

This explains why our properties look extremely attractive to outsiders. Even foreign insiders, Permanent Residents who have lived in Singapore for more than 10 to 15 years and who have not invested in Singapore property in a big way before, are not hesitating to spend lots of cash – and I mean cash – for properties which catch their fancy.

Yes, the homes these people are looking at are all good, solid properties. But even for such properties, there is a fair price. Not one which is only fair 10 years down the road. What good is property as a hedge against inflation when you are already grossly overpaying for it?

But I cannot blame them. If not them, others are more than willing to cough up the cash.

Notwithstanding my red flags, I will also admit that the market will only correct when it is ready to do so. Before that, no amount of logical reasoning can convince the market to behave otherwise. Like a fever, it needs to run its course.

Some have commented that even if prices were to correct, they will never return to the levels five years ago. Normally, I would agree. But these are not normal times. Interest rates have been abnormally low for the longest sustained period ever. I would not be surprised even if prices were to descend to below those previous levels.

The market is surely building itself up to possibly the greatest crescendo in Singapore’s short property history. We are setting records – buying and supplying more than we have ever done before in the past twelve months.

Most investors tell me they are long-term players and they have the resources to hold onto their properties. What do they actually mean?

It was not so long ago that the Government was trying just to get every Singaporean household to own their homes.

Have we progressed so far and so fast that many households are now able to buy their second or third properties? Do these investors mean they can fully pay for all their properties to maturity?

Or do they mean they can comfortably service their loans for up to two or three years under current conditions. What happens when these conditions change? Are they taking low interest rates as a given?

The writer is head of research and consultancy at Chesterton Suntec International.

Source: Today, 30 Jul 2010

Why are freehold properties preferred to leasehold properties? Given that the current median life span in Singapore stands at 81.4 years, a 99-year leasehold property, whose ownership reverts to the State after this period, offers a more than adequate home for any one generation.

But setting aside owner-occupation, if you expect your property to be an investment for wealth preservation or a legacy for future generations, then a freehold home, which allows you to hold the property in perpetuity, makes more economic sense.

This argument holds even for 999-year leasehold properties, which effectively function like freehold properties, although technically and legally they are in effect still leasehold properties.

Against this backdrop, the preference for freehold property over leasehold property is simple economics – if supply is limited and demand increases, prices go up. We studied resale prices of freehold versus leasehold properties and found that the difference was between 10 and 15 per cent.

There are many factors that can affect resale prices over time. Location, proximity and unit types are among the variables.

Admittedly, it is quite difficult to find freehold land and leasehold developments in close proximity. Nonetheless, there are still some locations that fit our selection criteria. Also, in arriving at our 10- to 15-per-cent figure, we categorised transactions by floor area, to eliminate discounts of larger units.

But this differential between freehold and leasehold properties is also affected by market conditions. During a downturn, both freehold and leasehold properties slide in tandem with the broader market.

At times, the price differences narrow. This then becomes a window of opportunity to buy that coveted freehold property.

Interestingly, when the broader market recovers, freehold properties, in particular those with significant en-bloc potential were observed to appreciate faster than leasehold properties. In some cases, the price premium reached more than 25 per cent.

But before you splurge on that dream freehold property, there are a few points to note. The first is that despite the property being freehold – age matters. Older developments command lower prices and also have a slower rate of capital appreciation. This is because of a variety of factors. Among them: The greater cost of maintenance and a general preference among Singaporeans for newer properties with fancy fixtures and fittings.

But when it comes to buying property, whether for consumption or investment, it is important to understand your budget, needs and holding horizon. For example, when the market sees a short-term spike, the tenure of the property does not really matter especially if you’re looking for a quick gain and price momentum is all that matters. In the longer run, however, freehold properties are less risky in terms of returns and volatility.

This is not to say that leasehold properties are always poor cousins to freehold.

In fact, we noted that some new leasehold properties have seen their prices rise faster than new freehold properties. And if rental yields are what you are concerned with, leasehold properties are able to give a better return compared to their freehold counterparts, all things being equal. After all, why would a tenant care if the property was leasehold or freehold?

But again, even for leasehold properties – age is a factor. Once the tenure of a leasehold property goes below 30 years, its value declines sharply as prospective buyers will not be able to withdraw funds from their Central Provident Fund account or secure a loan for the property purchase.

Mr Png Poh Soon is senior manager and Miss Jing Tang is an analyst at Knight Frank’s consultancy and research department.

Source: Today, 30 Jul 2010