Overall gross rental yields in Singapore for non-landed private homes are around 3.2%, the lowest in a decade. Low interest rates, a tightening labour market and a large housing supply are possible reasons. However, there were projects that managed to command attractive rental yields of 4% and above in 2017.

In our analysis, we have identified apartments and condominiums with the highest gross rental yields in the Core Central Region (CCR), Rest of Central Region (RCR) and Outside Central Region (OCR).

Current gross rental yields are calculated by taking the annual rental income of the development and dividing it by recent resale prices of the corresponding project. To mitigate the effects of outliers which may skew rental yields, we only considered major projects with 100 units and above, and projects with at least five sales and five rental transactions in 2H2017.

However, it is important to note that these are gross rental yields, and do not include other costs such as vacancy costs and maintenance fees, etc.

These are the top 10 results for each market segment in 2017:

 

1) Prime district properties (CCR)

Suites at Orchard is among the highest-yielding properties in the prime districts.

 

Project Name

District

Planning Area

Within

500m from MRT station

Completion Date

Tenure

No. of units

Avg. Rental $PSF

Avg. Sale Price $PSF

Est. Gross Rental Yield

Suites at Orchard

9

Museum

Yes

2014

99 yr

118

6.27

1,426

5.28%

76 Shenton

2

Downtown Core

Yes

2014

99 yr

202

5.60

1,777

3.78%

Icon

2

Downtown Core

Yes

2007

FH

646

5.26

1,681

3.75%

The Clift

1

Downtown Core

Yes

2011

99 yr

312

5.81

1,880

3.71%

Skysuites@Anson

2

Downtown Core

Yes

     2014     

 

99 yr

360

6.97

2,284

3.66%

One Shenton

1

Downtown Core

Yes

2011

99 yr

341

4.95

1,652

3.60%

RV Residences

10

Tanglin

No

2015

999 yr

248

5.73

1,966

3.50%

Soleil@Sinaran

11

Novena

Yes

2011

99 yr

417

5.17

1,779

3.49%

Hillcrest Arcadia

11

Bukit Timah

No

1980

99 yr

272

2.38

831

3.44%

Espada

9

River Valley

Yes

2013

FH

232

6.60

2,307

3.43%

 

 

2) City fringe properties (RCR)

The Interlace tops the list as the highest-yielding project in the city-fringes.

 

Project Name

District

Planning Area

Within

500m from MRT station

Completion Date

Tenure

No. of units

Avg. Rental $PSF

Avg. Sale Price $PSF

Est. Gross Rental Yield

The Interlace

4

Bukit Merah

No

2013

99 yr

1,040

3.30

954

4.15%

Prestige Heights

12

Novena

No

2011

FH

154

4.65

1,406

3.97%

Sims Green

14

Geylang

Yes

2003

99 yr

108

2.40

739

3.89%

Heritage View

5

Queenstown

No

2000

99 yr

618

3.66

1,144

3.84%

Riverbay

12

Kallang

No

2014

999 yr

147

3.77

1,209

3.74%

Dover Parkview

5

Queenstown

No

1997

99 yr

686

3.07

989

3.72%

Simsville

14

Geylang

Yes

1998

99 yr

522

2.77

895

3.72%

One-North Residences

5

Queenstown

Yes

2009

99 yr

405

4.26

1,407

3.63%

Queens

3

Queenstown

Yes

2002

99 yr

722

3.47

1,157

3.60%

Citylights

8

Kallang

Yes

2007

99 yr

600

4.50

1,509

3.58%

 

 

3) Suburb properties (OCR)

Melville Park has an estimated gross rental yield of 4.29%, the highest in the Outside Central Region.

 

Project Name

District

Planning Area

Within

500m from MRT station

Completion Date

Tenure

No. of units

Avg. Rental $PSF

Avg. Sale Price $PSF

Est. Gross Rental Yield

Melville Park

18

Tampines

No

1996

99 yr

1,232

2.30

643

4.29%

Clementiwoods Condominium

5

Clementi

No

2010

99 yr

240

3.25

1,013

3.85%

Astoria Park

14

Bedok

Yes

1995

99 yr

354

2.90

907

3.83%

Northvale

23

Choa Chu Kang

Yes

1998

99 yr

762

2.16

679

3.82%

Regentville

19

Hougang

No

1999

99 yr

580

2.25

709

3.81%

The Mayfair

22

Jurong East

Yes

2000

99 yr

452

2.78

875

3.81%

Orchid Park Condominium

27

Yishun

No

1994

99 yr

615

2.11

672

3.77%

Eastpoint Green

18

Tampines

No

1999

99 yr

646

2.42

772

3.76%

Euphony Gardens

27

Mandai

No

2001

99 yr

304

1.95

623

3.76%

The Santorini

18

Tampines

No

2017

99 yr

597

3.22

1,033

3.75%

 

Observations

High-yielding properties are mostly 99-year leasehold projects

Leasehold properties are typically considered to be more attractive when comparing rental yields. This is due to a lower relative $ psf when buying a 99-year leasehold property compared to freehold, assuming that all other things are equal.

In general, tenants are not concerned about the tenure of a property, so leasehold properties do tend to have an advantage over their freehold counterparts when looking purely at rental yields.

 

Distance from MRT matters more for prime district rental properties

Notably, prime district properties located within walking distance to a MRT station commanded higher rental yields (we define walking distance as 500m, which should be roughly within five minutes walking time). This is understandable, as tenants could be foreigners or expats who do not own a car, and who are working in vicinity of the central business district (CBD).

At the end of the day, it is important to note that rental yield is just one part of the total return of investment equation. When considering real estate investment, it pays also to look at capital growth potential. For instance, the lower the purchase price, the higher the potential for upside, and the higher the likelihood that rental yields will be favourable - such as this list of winning developments that took home the EdgeProp Value Creation Award based on capital appreciation and rental returns. Read on for more!

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