Arcachon
26-03-21, 09:01
IREUS study shows that freehold property here was sold 10.4% higher on average than comparable leasehold properties, yet the model ratio implies a premium of just 4%.
https://www.businesstimes.com.sg/real-estate/are-buyers-overpaying-for-freehold-properties?login=true
Strata owners of Spring Grove condominium who attempt to put up the property for en bloc sale need the approval of the US government for the topping up of the lease.
Several private residential projects of Far East Organization were built on freehold lands, but sold to buyers on shorter leases of 103 years, which include The Shore Residences, Cabana, The Scotts Tower and Greenwood Mews.
Given the scarcity of freehold lands in Singapore, we expect the demand for freehold properties to continue to increase, which in turn, could further widen the price gap between freehold properties and leasehold properties.
Therefore, it is necessary to review if the 4 per cent premiums used to compute the lease's top-up premium is still representative.
Extending the lease to 99 years not just simply grants the additional rights at the tail end of the lease, it will also push up the value of the front end of the balance lease.
In a case of a leasehold land with a balance 70 years term, for example, topping up the lease will not just give the leasehold owner an additional 29-year lease term at the end of 70 years, it will also have positive impact on the value of the portion of the existing 70-year lease.
The gross effect of the lease top up will be a positive one, which not just increases the values of the existing leasehold land. It would also create positive spillover to neighbouring lands, inducing more redevelopment activities for surrounding older properties.
Professor Sing Tien Foo is director at the Institute of Real Estate and Urban Studies (IREUS) and head of Department of Real Estate, National University of Singapore, and Sia Xin Rang Sophronia is a research assistant at the same institute. The views and opinions expressed herein are those of the authors and do not represent the views and opinions of the National University of Singapore or any of its subsidiaries or affiliates.
https://www.businesstimes.com.sg/real-estate/are-buyers-overpaying-for-freehold-properties?login=true
Strata owners of Spring Grove condominium who attempt to put up the property for en bloc sale need the approval of the US government for the topping up of the lease.
Several private residential projects of Far East Organization were built on freehold lands, but sold to buyers on shorter leases of 103 years, which include The Shore Residences, Cabana, The Scotts Tower and Greenwood Mews.
Given the scarcity of freehold lands in Singapore, we expect the demand for freehold properties to continue to increase, which in turn, could further widen the price gap between freehold properties and leasehold properties.
Therefore, it is necessary to review if the 4 per cent premiums used to compute the lease's top-up premium is still representative.
Extending the lease to 99 years not just simply grants the additional rights at the tail end of the lease, it will also push up the value of the front end of the balance lease.
In a case of a leasehold land with a balance 70 years term, for example, topping up the lease will not just give the leasehold owner an additional 29-year lease term at the end of 70 years, it will also have positive impact on the value of the portion of the existing 70-year lease.
The gross effect of the lease top up will be a positive one, which not just increases the values of the existing leasehold land. It would also create positive spillover to neighbouring lands, inducing more redevelopment activities for surrounding older properties.
Professor Sing Tien Foo is director at the Institute of Real Estate and Urban Studies (IREUS) and head of Department of Real Estate, National University of Singapore, and Sia Xin Rang Sophronia is a research assistant at the same institute. The views and opinions expressed herein are those of the authors and do not represent the views and opinions of the National University of Singapore or any of its subsidiaries or affiliates.