Are buyers overpaying for freehold properties?
IREUS study shows that freehold property here were sold 10.4% higher on average than comparable leasehold properties, yet model ratio implies a premium of just 4%
PRIVATE freehold lands are scarce in Singapore, where more than 80 per cent of the lands are state-owned. The government sells state lands with a finite tenure of 99 years to private developers for residential development purposes. The lands, together with any buildings and structures built on the lands, will be returned to the state at the end of the lease.
In highly urbanised Singapore, many buildings that are still structurally sound are redeveloped before the 99-year lease tenure.
The redevelopment process is commonly known as an en bloc sale, where individual strata property owners band together to sell their development rights to developers. Subject to the approval from the planning authority, the redevelopment process involves both intensification of land use and topping up of lease term.
Copyright SPH Media. All rights reserved.
