The $2m Showdown
Two investment properties, two very different strategies. Which would you choose?
Imagine you have $2m to invest in a Singapore residential property. The purchase is purely for investment, and you have no plans to move into it.
After looking around, you have narrowed down to two options.
OPTION 1: EN BLOC POTENTIAL
- Core Central Region (CCR)
- Minutes walk to Orchard Road
- Freehold
- More than 30 years old
- 1,550sqft
- Old, original condition
- Sale with vacant possession
- $1,915,000
Buy, carry out basic repairs, rent it out & wait for en bloc to happen one day.
Sit tight & wait.
OPTION 2: BUY NEW LAUNCH & SELL
- Outside Central Region (OCR)
- Minutes walk to neighbourhood amenities
- 99 years leasehold
- Under construction
- 1,690sqft
- Brand new
- Progressive payment method
- $2,007,000
Buy and sell when it is near to or after TOP.
Repeat.
If the sale market isn’t good, rent it out and sell later.
Which will you choose?
CLICK TO VOTE
These two private properties are real.
They were among the $2m options for sale in October/November 2020.
At a time (remember COVID-19?) when many were hesitant to enter Singapore’s real estate market, two investors bought.
The 1st investor bought the en bloc potential property for $1,915,000 in October 2020.
Shortly after, the 2nd investor bought the new launch property for $2,007,000 in November 2020.
Both investors exited in 2024 shortly after clearing the 3 years seller stamp duty period.
How did they do?
EN BLOC POTENTIAL INVESTOR
The 1,550sqft unit was purchased in October 2020 for $1.915m.
And then sold in May 2024. He decided not to wait for en bloc.
The sale netted him a gross profit of $555,000 over a 3 years 7 months period.
Assuming a three-month vacancy period and an estimated average rental of $3,750 per month (based on the market rental rate back then), the gross rental income collected would total $150,000.
Now, let’s look at the expenses he would realistically be expected to incur.
Purchase stamp duty:
$61,200
Purchase + sale conveyancing fee:
$6,000
Est 3 years of property tax:
$11,250
43 months of condo maintenance fee:
$9,460
Est rental related set-up / repair / reno expenses:
$10,000
The above expenses add up to $97,910
With rental income and the above expenses factored in, the net profit is $607,090.
This investor chose to sell before any en bloc happened, securing a solid profit in just over 3.5 years. Even with moderate rental income and costs, they walked away with an 8.1% annualized return—solid in today’s context. Agree?
The annualized returns presented here are simplified calculations based on net profit after deducting major expenses. I’ve chosen this straightforward approach to provide a clear, easy-to-understand comparison.
Return on equity would paint a closer picture of the investor’s returns but that would involve factors like the loan quantum involved, fluctuating internet rates & tax implications on rental income.
Now, let’s look at the 2nd investor who took a different route.
THE NEW LAUNCH INVESTOR
The 1,690sqft unit was purchased in November 2020 for $2,007,000.
And then sold in January 2024.
The sale netted the 2nd investor a gross profit of $981,000 over a 3 years 2 months period.
This unit was likely not tenanted when it was sold.
Now, let’s look at the expenses he would realistically be expected to incur.
Purchase stamp duty:
$64,880
Purchase + sale conveyancing fee:
$6,000
Est property tax:
$3,000 (only applicable after TOP)
Est condo maintenance fee:
$1,800 (assuming Aug 2023 TOP)
Est rental related set-up / repair / reno expenses:
Not applicable
The above expenses add up to $75,680
With the above expenses factored in, the net profit is $905,320.
The new launch strategy resulted in a higher annualized gain of 12.2%, driven by the appreciation in value near completion. This option provided faster returns (achieved in slightly more than 3 years) with less hassle, as there wasn’t a need to manage tenants or repairs.
Did the results surprise you?
Do you know the impact on the return on equity if both investors took the maximum possible loan to fund the purchase?
What will a few cycles of such buying & selling do for you?
WHY AM I SHARING THIS WITH YOU?
Studying and making sense of real estate transaction data and trends isn’t just a part of my job – it’s a passion that drives me to provide the best possible guidance to my clients, whether they’re buyers or sellers.
These two units were chosen for this case study because they were in the same price bracket, transacted around the same time and illustrated different real estate investment approaches. In addition, these two condos are on my watchlist as I have clients who bought units there (though not these particular units).
All too often, I hear people say,
Oh, I didn’t know.
I wish someone had told me about this earlier.
By presenting these real-world examples, I hope to demonstrate that success in Singapore’s property market isn’t about following a single formula.
It’s about understanding the Singapore real estate market, recognizing opportunities, and being willing to explore different strategies—factors that, I believe, will,
- help reduce your risk
- help improve your decision-making
- help improve your chances of success
Having said that, what I shared is barely scratching the surface. There are many fundamental differences between these two options & the others available in the market. You also don’t need $2m to get started with real estate investment.
Past performances do not guarantee future results. That is why it is important the decisions you make are grounded on proper understanding of how the real estate market works.
Now, here’s a question to ponder as I end my post:
Over the last 36 to 48 months, have your properties seen this kind of gain?
If yes, great! If not, why?
P.S. Curious about these two condos? They are Cavenagh Gardens in District 9 & Treasure at Tampines in District 18.
Interested to explore real estate investment or review your current real estate portfolio? Please contact me. You can also signup for the next Property Wealth System Masterclass. It will supercharge your learning.
WHAT BRINGS YOU HERE TODAY?
Are you wondering what to do in today’s market?
Perhaps you already have a clear mind of what you want to do?
In my blog, I often share stories of the challenges, triumphs, and lessons learned in my work as a real estate agent in Singapore.
Regardless of your situation, you can use me as a sounding board. I’ll provide perspective and clarity from my experience.
