Today’s average rental yield of 3.2% for condominiums is arguably at its all-time low. Low interest rates, falling home prices, retrenchment in the financial sector and competition from public housing are possible reasons. Nonetheless, if you are on the hunt for yield, real estate continues to be an attractive investment class considering fixed deposits are less than 1% and average dividend yield for equities is in the same range of 3-4%.
As a reference, gross rental yield for Singapore condos is about 3%. Although there are a handful (20 to be precise) of properties which yield above 5%, most of these are older, 99-year leasehold projects located in the mass market. The key in the hunt for yield is to find condos which can give you reasonable rental and at the same time preserve your capital values in the long-run.
Are there such projects? Yes, and we’ve done the homework for you.
In our analysis, we only looked at freehold or 999-year leasehold condos to ensure preservation of capital values. We excluded condos with fewer than 6 rental contracts and 6 sales transactions over the last year (it is difficult to rent out when there’s no liquidity in demand) as well as those with limited selection of properties for sale (you can’t invest in what’s not for sale). To compute rental yield, we took an average of the rental values divided by transacted prices over one year. Finally, we categorized them into the different market segments, namely central area, rest of central and outside central.
These are the top 10 results for each market segment:
Central Area
Rest of Central
Outside Central
Click HERE to see all high yielding properties