Cracking the Condo Code 2: Why some 99-year Condos Out-Perform Freehold Condos in the same Enclave

Perhaps you may have noticed while searching for your next property, 99-year projects going at a higher PSF than freehold projects in the same area. Ever wondered why that’s the case? The 2nd episode of our Cracking the Code series, Melvin Lim talks about condominiums and specifically the behaviours of the projects in relation to disparity effect, the valuation and price appreciation in the enclave.

Using Kovan Melody and Kovan Esquire as the main 99-year vs freehold examples, tune in to find out how it is possible that one may be asking and transacting at a higher price than the other despite their tenures. Also, find out what factors drive price appreciation. All these and more in this latest episode of Nuggets On The Go!

00:00 Introduction
03:31 Why is Kovan region special?
06:11 What is mixed landed zoning?
08:03 What is boutique development?
08:23 Checking the height of a unit using Squarefoot Research
09:01 Checking the height of a unit using Google Earth
09:28 Trends
11:27 Freehold vs. 99-year Leasehold
11:42 Melvin real estate experience
12:24 All properties can be sold
13:39 Inherent Factors, Changeable Factors and Pricing Mechanism
15:20 Kovan Esquire
16:35 2011 transactions in Kovan region
19:50 PLB Landed Convention
21:21 Present day Kovan region
22:41 Desktop valuation
23:17 2011 vs 2023
24:00 Kovan Esquire appreciation rate comparing to Kovan Melody
25:14 Sellers or buyers, which is more important?
32:40 Kovan Esquire transactions
34:00 Kovan Melody transactions
34:26 Human psychology of selling a property
36:55 Pros and cons of freehold projects
38:17 Bala's curve
39:11 Conclusion
43:54 Bloopers

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[geo-publishing]

what if the freehold is 250 units? which is bigger size than kovan esquire.

[xiaolanzheng]

Like the content! But the performance difference is from facilities and size of the project. Cannot conclude it's from 99 or freehold at all. And you only compare the appreciation difference in young age period of a 99 condo. Can extend the picture to older age?

[lishr]

the latest date for Esquire was 2020, so we cannot assume that it would have transacted for only $170 more psf..

[YokNg]

i sort of disagree that sellers have no motivation to sell if there is no appreciation. If they know their house isn't appreciating, they would sell to get rid of their underperforming asset and transfer to a new 1 for better appreciation and avoid ABSD.

[dicalpplacid]

What you did is 99 year nearer to mrt compared to freehold condos. You should do another analysis that freehold condo is nearer to mrt compare to 99 years. See if the result is the same. U may totally flipped to see a different story.

[cybergod]

I think the issue lies in the valuation methodology.
Does it make sense for the freehold pty to be valued lower simply bcus there's a lack of supply? no!
It should be valued at a 300-400psf premium to neighbouring leasehold developments in spite of the lack of transaction activity. If owners are happily staying and not wanting to sell, should they get penalised for doing so?
Its a no brainer job for valuers if they only use the last transaction price to value a property, my 90yr old dementia grandma can also do that. This needs to be changed if not allow an AI system to replace them.

[cheec]

Too long winded. You can built a website with many sub sub sub pages but you do a talk like this with many sub sub sub and many coming back coming back… your audience mainly listening this on a train at a coffeeshop not in a classroom. Lost their focus.