Purchasing a leasehold property in Singapore

[Nihility]

I'm looking at entering the property market here. I've done a ton of research - likely not enough - but am looking at getting various perspectives, i.e. locals, expats etc on the purchase of a particular type of property.

The Tiong Bahru leasehold, pre-war flats of blocks 55-82 are nearing a solid 40+ years into their 99 years. Prices have held quite well, increasing significantly during the last boom but have come back a bit in recent years. Basically, the gahmen owns them and can take them back at the end of their lease. However, due to heritage overlay of the area some 15 years ago, they are protected from being en-bloc, but what will happen when they're down to 30 or so years?

With the understanding that a home is typically an appreciating asset, should these blocks be seen more like a car, decreasing in value to the point where they become worthless; or will the gahmen put plans in place to fix this potential problem? I dunno...

Anyway, to the point, would you consider buying one of these as an entry level into the housing market?

p.s. I'm not pushing these, merely trying to make sense of the insane property prices of Singapore

[sundaymorningstaple]

Once a home has only 40 years left on a 99 year lease, you will have an almost impossible task of selling it. For a profit or otherwise as everybody knows that unless the Government or the owner ponies up the clams to get a new leasehold Strata Title, (very few have done so successfully) the unit will revert back to the government. I know I sure would not. But I'm not a gambler either.

[PNGMK]

You might find that the banks won't mortgage with less than X years left (I can't remember what it is; it used to be quite high 60 years but of course as the HDB's have aged the banks have had to relax). Personally I see this whole thing as a GIANT clusterphuck waiting to happen. If there's one thing that might cause Sinkies to sink the PAP this will be it. The PAP loves to claim "80 percent own their own homes" but that's balderdash; they have a lease for a house that's owned by state. There are some short lease holds left in the Geylang Bahru area now; (like 10 or less years) - the price is simply a multiple of the monthly rent... (i.e. 10 years x 12 x rent). This is where your price target should be. Do not assume any lease extension; the government has not explicitly stated they will NOT renew leases but 'no one knows' with these particular blocks (Jln Bahagia area is in a similar sticky situation).

To answer your question; you might buy it but can you sell it in a decade?

[taxico]

HDB will likely put those old flats under SERS and it goes back to the state at some point after everyone's moved out.

they'll give you a replacement flat, but you're still allowed to sell the old flat after SERS announcement... up until a certain given date (about 1 year).

the new project typically is near the old one, but this isn't guaranteed (eg. no suitable land available).

if the replacement project is a attractive, the selling price (during the grace period) is typically about 10-30k above compensation value. more if it's a really well situated site.

i wouldn't touch those flats if i were you... primarily because they're old, not because i'm an expat investor.

imo, the state will likely tender some buildings out and pull down others. you may want to check the masterplan.

[Nihility]

Thanks for the feedback, all. I'm more looking for a place to buy and live to avoid dead rent money.

It's really hard to know what the gahmen want to do with leaseholds, as there's no discussion whatsoever from the opposition or community groups. The lack of transparency on such matters leaves many with a lot of doubt.

[PNGMK]

Thanks for the feedback, all. I'm more looking for a place to buy and live to avoid dead rent money.

It's really hard to know what the gahmen want to do with leaseholds, as there's no discussion whatsoever from the opposition or community groups. The lack of transparency on such matters leaves many with a lot of doubt.

It doesn't serve the interests of the PAP to disclose their plans (if any) at this point. Rent dead money only exists if you absolutely expect capital growth which is doubtful right now.

[taxico]

Thanks for the feedback, all. I'm more looking for a place to buy and live to avoid dead rent money.

It's really hard to know what the gahmen want to do with leaseholds, as there's no discussion whatsoever from the opposition or community groups. The lack of transparency on such matters leaves many with a lot of doubt.

there's no real protection from freehold property either (even if you own a plot of land). the government can and have and will continue to "buyback" land they want/need at a price they believe is "fair."

if you check out the masterplan map (and its various "overlays") you can figure more out (but not everything).

[PNGMK]

You can fight the pricing for resumed land... I know a condo committee that lost of corner to some sewerage plant; they managed to fight the initial pittance and ended up with some crazy payout ($1MM or something?).