Investors continue to perceive Singapore’s property market as a safe haven to park wealth, especially in times of global economic headwinds or heightened geopolitical tensions. The high-end private home market is the preferred investment vehicle in these circumstances, demonstrated by the uptick in sales value of luxury homes in Q1 2024 and the outpaced price growth of properties in the CCR compared to those in other regions.
Singapore’s younger generation is no exception. More young buyers have been observed to be savvy about property investment amid growing interest in achieving financial security at an early age. Singapore millennials aged between 25 and 34 favour investing in property as a means to achieve financial security due to its stability and perception of being a strong asset class.
In this article, we’ll examine why more younger buyers still embrace property as an investment amid all-time high property prices.
Who Wants to Buy Investment Properties in Singapore?
Our recent Singapore Consumer Sentiment Study H1 2024 indicates the desire among younger respondents to own an investment property remains strong. 52% of homeowners aged 22 to 29 want to buy another property whilst keeping their current property; 44% of those aged 30 to 39 agreed to this statement.
Looking more closely, it’s clear many younger individuals in Singapore are keen to purchase high-value properties, such as those in prime districts.
When we last surveyed Singaporeans on whether they were interested in purchasing a luxury property in H1 2022, the group most interested in buying a high-end home were 22 to 29-year-olds (37%). Those aged 30 to 39 formed the second largest group (30%). Let’s find out why this group prefer to purchase a luxury property.
Convenience and Access to Prime Areas and Amenities
Properties located in prime districts offer many trendy dining options, bars, and lifestyle destinations. The lifestyle appeal does draw in younger buyers who enjoy going out to these fashionable restaurants and watering holes. However, the convenience and easy access to these neighbourhoods were not the top considerations for young buyers.
Exclusive Living and Privacy
Many premium properties offer low-density living by having limited units in each well-spaced residential block. Alternatively, a project would have a high landscaping-to-space ratio per residential unit.
Another way projects offer a more exclusive environment is through the curation of high-end facilities. However, those in their 20s and 30s surveyed said neither the privacy nor facilities offered by luxury properties were the biggest draws.
Social Status and Investment Purposes
The 22- to 29-year-old respondents who expressed interest in luxury properties said investment (57%) and social status (52%) were their main reasons. Those in the 30- to 39-year-old age range also said investment purposes (73%) and social status (32%) were the deciding factors behind their interest.
It is clear that the strong investment potential and the social status associated with these prime location properties are the main reasons why young buyers in Singapore aspire to own these assets.
Why Young Buyers Want to Invest in Property
Rental Units for Passive Income
The possibility of drawing passive incomes from rent closely resonates with young Singaporeans’ views on investing and building financial security at an early age. This sentiment is held more strongly by those in their twenties.
Our H1 2024 Consumer Sentiment Study showed that homeowners aged 22 to 29 had a stronger desire to rent out partially or entirely their property (82%) than their older counterparts (74% for those aged 30 to 39).
Capital Appreciation Opportunities: RCR vs CCR Properties
Currently, the price difference between homes in the Orchard area and the RCR is at its narrowest in 22 years. Dr Lee Nai Jia, Head of Real Estate Intelligence, Data and Software Solutions, PropertyGuru Group, says that based on the data seen in the past five years for a 700 to 1,000 sqft private home, the price differential is about $200 PSF.
“Comparing District 9 properties against properties in the RCR, we see the median PSF price for RCR properties sits at $1,733 in 2019. Meanwhile, a District 9 freehold property commanded a median PSF price of $2,615. In 2023, the median PSF price for RCR properties was $2,465; for a District 9 freehold property, it was $2,778.”
This presents an opportunity to purchase a prime property. CCR prices are likely to recover in due course, and the limited supply of such properties makes buying homes like Orchard Sophia in District 9 a worthy investment.
Sales are slowly picking up for high-end homes as foreign investors have begun accepting and factoring in the 60% ABSD tax as part of property acquisition costs. As such, getting their hands on prime properties now and selling them later is an opportunity young Singaporeans are seizing.
Orchard Sophia: District 9 Address at an Attainable Price
An examination of Orchard Sophia’s locational attributes reveals why it’s a clear choice for buyers seeking an investment home in a centrally located, prime neighbourhood.
Launched in August 2023, Orchard Sophia sold at an average price of $2,800 PSF over its launch weekend, with prices for a two-bedroom unit starting at $1.66 million. These starting prices are highly competitive for a CCR project, considering new RCR condos have a median PSF of $2,700.
The boutique property is developed by DB2 and is expected to receive its Temporary Occupation Permit (TOP) in 2027.
Exclusive Address with Sweeping City and Green Views
Orchard Sophia is a freehold condominium strategically located atop Mount Sophia. The elevated site on Sophia Road provides all residents with a sweeping view of Orchard Road and Istana Park. Dhoby Ghaut Green and the Penang Road Open Space will be combined with the existing 1.3ha Istana Park. The result is a green space three times larger.
With only 78 units spanning two five-storey blocks, the property is ideal for those seeking a low-density development. Fewer neighbours translate to more privacy in this highly exclusive address.
The units are outfitted with quality appliances and fittings. Smeg kitchen appliances, Hansgrohe accessories, Franke kitchen faucets, Duravit water closets, Gessi shower sets, a Bosch washer and dryer, and Geberit flush plates all add to the luxury living experience.
Excellent Connectivity to Public Transport Networks
Being situated in a private residential hilltop enclave near Dhoby Ghaut MRT station means unparalleled access to the MRT network. As the interchange station for the North-South- Line, North-East Line, and Circle Line, residents can easily reach the Orchard Road shopping belt and Central Business District (CBD) in under 10 minutes.
Driving becomes optional when you live this close to the heart of the city. With the facelift of the Dhoby Ghaut area set to be completed progressively from 2025, residents will deal with less traffic and have more pedestrian-friendly walkways. Going car-free will become easier than ever.
Proximity to Choice Schools and Amenities
Whether homeowners choose to live in or rent out the property, the proximity to choice educational institutions remains an enduring plus point. Parents (and parents-to-be) will have top schools such as St Margaret’s School (Primary), Anglo-Chinese School (Junior), which are both within a 1km radius of the property.
Thanks to the abundance of nearby malls, F&B and entertainment options are aplenty. Plaza Singapura, Peace Centre, The Cathay, and Parkland Shopping Mall are just some of the many, with the last three malls undergoing transformation to make them more vibrant and integrated.
Buying Orchard Sophia Condo in Singapore
Aside from considering earning passive income through rental yield and capital appreciation, there are several other things to consider when investing in property. For one, it’s imperative to calculate the costs of acquiring the property.
You’ll want to know how much Buyer’s Stamp Duty (BSD) and property tax you must pay. If this is not your first property or you are not a Singapore citizen, you must factor in Additional Buyer’s Stamp Duty (ABSD) costs.
Most importantly, work out the finances required for your condo investment purchase and ensure you can afford it comfortably. That means knowing your Loan-to-Value (LTV) limits and Total Debt Serving Ratio (TDSR) thresholds. If you need help, let our PropertyGuru Finance’s Mortgage Experts assist you. They can offer you tailored financing advice and help you land the right home loan for your financial needs – all at no cost!
Ready to check out Orchard Sophia? Visit the sales gallery today by reaching out to the developer directly.
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