Landed Homes in Singapore: Exploring Ownership and Investment Opportunities

As a Singaporean, a freehold landed house is considered the highest investment class of resident homes. It is prized because it is limited in quantity and sold only to locals (except for Sentosa Cove or with approval) in a densely populated, politically stable Singapore and safe from natural disasters.

One successful known case of landed investment is at 32G Nassim Road whereby Lee Metal Group unit LMG Realty bought a Good Class Bungalow for $23.7m in July 2018 and sold it for $38.38m in Aug 2020. For info, there are only 2,800 such homes in Singapore each occupying at least 15,000 square feet of land, good class bungalows are considered the city’s most luxurious housing, and addresses on Nassim Road are top-tier.

I am just a condo owner but I wrote this article in my research to perhaps get landed (really don't like the idea of pest management though). A helpful resource is https://www.squarefoot.com.sg/latest-transactions/sale/residential/landed. 

These landed houses offer a unique opportunity for individuals seeking both a private lifestyle and a promising investment venture. In this comprehensive guide (also for myself), we will delve into the world of landed homes in Singapore during my research, exploring their various types, legal considerations, advantages, factors to consider before investing, and much more.

Why Buy Landed Properties in Singapore

The best time to buy landed property is when you are expecting a relatively bear market where stocks and condos will not perform well and you have a huge amount of capital that you wish to deploy. The privacy and free parking are just an add-on if you choose to it for your own stay or you could just rent it out otherwise.  

In terms of investment opportunities in Singapore, landed properties are highly favored compared to other investments for the following reasons:

1. Cheap Way to Deploy Lots of Capital (You can easily leverage up with home loans to buy a property at a huge quantum. The borrowing rates are usually cheaper than commercial loans since it is mortgaged and collateralized loans. In comparison, stocks are expensive to leverage (using options or margin) and also might end up spiking the buying costs if you invest a considerable amount in a specific illiquid stock.)
2. Less Risk of Investment (Non-owner occupied properties are a risky investment if there are no general demand and the government does not manage speculative behaviors. However, there are less concentrated risks compared to the highly volatile stock market when you pick a few stocks)
3. More Control of Opportunities (Unlike condos and stocks, you have more controls to improve the area through renovation and perform improvements)
4. An asset with a Yield (You can either use the home as your own stay or rent it out for income. However, there are known issues with tenants damaging the unit during the lease. In comparison, stocks are harder to generate yield unless you sell covered calls or lend your stocks out like in IBKR to earn interest)
5. Privacy (Landed homes are really private and depending on your location, you should not expect much human traffic. Therefore, it is really quiet except for occasional car traffic)
6. Free Parking (Unlike other residential units, you can just park your car for free in your empty space. Condominiums also enjoy similar benefits although there is usually a limit of 1 free car per residential unit)

In comparison, there are many reasons not to buy landed properties too:

1. Huge Upfront Capital Required (Unless you have too much investable cash sitting idle, it is not viable to many. Some landed properties also required extensive renovation and reworks to restore, given some owners just let the home sit for decades)
2. Slow Return on Investment (While prices are usually more stable, landed homes are usually deemed as conservative investments and are usually used by the wealthy as a means to protect their wealth. 99 years leasehold condos and stocks usually perform better in a bull market.)
3. Long Investment Horizon (There are Seller Stamp Duty requirements that prevent any speculative flipping of units for at least 3 years or you need to incur 12% for units sold in the same year that are bought, 8% in the 2nd year, and 4% in the 3rd year. You also have to account for holding the property during a bear market after the 3 years or you end up trapped with a paper loss.)
4. Property taxes (There are yearly fees like property taxes in Singapore for homes, unlike stocks. Based on IRAS, the Annual Value (used to determine the property tax) of land and development sites is determined at 5% of the estimated freehold market value. This applies to both vacant land and land under construction.)
5. Required Maintenance (Unlike condos whereby the estate amenities and fees are shared, you need to handle all forms of maintenance such as pest control, landscaping, and cleaning services. An alternative is to outsource it to a management agency for a percentage fee).
6. Unexpected Guests (Depending on how well maintained your unit and your surrounding neighbors are, you might have unexpected guests like meena monkeys, cats, and even pests like rats and cockroaches)

Understanding Who Can Buy Landed Homes in Singapore

Under Singapore Land Authority (SLA) FAQ, if you are a foreigner or Singapore PR, you can only buy after you get approval from SLA by

• being a Permanent Resident for 5 years and above; and
• showing "exceptional economic contribution to Singapore" taking into consideration factors such as your employment income assessable for tax in Singapore.

Some famously known foreigners who contributed to Singapore (to note this is before the latest 60% Additional Buyer Stamp Duties imposed on 27 April 2023):-

• Prince Jefri Bolkiah, a member of the Brunei royal family
• Eduardo Saverin, Facebook co-founder
• Jin Xiao Quin, wife of Singaporean tech entrepreneur Shi Xu (the founder of Nanofilm)

List of restricted property types foreigners cannot buy (unless they have obtained approval from the Land Dealings Approval Unit (LDAU) for $1,220) under SLA :

• Vacant residential land
• Terrace house
• Semi-detached house
• Bungalow/detached house
• Strata landed house which is not within an approved condominium development under the Planning Act (eg. townhouse or cluster housing)
• Lease of restricted properties for a term exceeding 7 years (including any extension or option for renewal)
• Shophouse (for non-commercial use, i.e. residential or mixed)
• Association premises
• Place of worship
• Worker’s dormitory/service apartments/boarding house (not registered under the provisions of the Hotels Act)

Where Can You Buy Landed Property In Singapore

Looking at PropertyGuru is the best best but do not expect many to be available readily given the limited supply. Some places with some sales in the past few months include:-

1. Chip Bee Gardens
2. Medallion
3. Serangoon Garden Estate
4. Chip Hock Gardens
5. Woodlands Park
6. Frankel Estate
7. Aston Residence
8. Hillcrest Park
9. Paradise Island
10. Holland Green
11. Mera Gardens
12. Dunearn Estate
13. Opera Estate
14. Hong Kong Park
15. Orchid Village
16. Thomson Ridge
17. Braddell Heights Estate
18. Ventura Heights
19. Northshore Bungalows
20. Eden Park
21. Sentosa Cove
22. Hillview Garden Estate
23. Capitol Park
24. Clementi Park
25. Serene Park
26. Ming Teck Park
27. Coral Island
28. Yew Lian Park
29. Botanic @ Cluny Park
30. Sembawang Springs Estate
31. Green Hill Estate
32. Kim Lin Park
33. Changi Grove
34. Beauty Garden
35. Chateau La Salle
36. East Coast Hill
37. Verdure Villas
38. Countryview
39. Ponggol Park
40. Island Country Villas

There is also strata landed property like Sea Hill and also properties in Sentosa island that foreigners could buy but they are probably bad investment ideas based on past performances.

Conclusion

In conclusion, landed homes in Singapore offer a unique combination of luxury, exclusivity, and investment potential. We also took a look at the oldest HDB estates which are the most common 99-years leasehold options that Singaporean hold.