HomeReal EstateIncreasing Landed Property Values: 3 Most Important Drivers Behind It
Rising Landed Property Values - 3 Most Important Drivers Behind It

Increasing Landed Property Values: 3 Most Important Drivers Behind It

Intrinsic landed property values

The intrinsic value of a landed property refers to its fundamental worth, considering factors beyond just market trends or appraised value. Understanding the intrinsic value of a property involves assessing these qualitative and quantitative aspects beyond just its market price. While market value can fluctuate based on supply and demand, the intrinsic value often represents the core qualities and attributes that make a property desirable and can contribute to its enduring worth over time.

Today it is common to find newly redeveloped landed properties in popular areas such as Holland, Bukit Timah, Serangoon Gardens, and East Coast showing signs of the nouveau riche. The new generation of landed homes are rebuilt into the maximum Gross Floor Area (GFA) allowed, has a home lift, 5 bedrooms with helper’s quarters.  

With a rebuild, a new inter terrace can have a built up area of above 4,000 sq ft and similarly for semi-detached and detached houses, it can double its previous built up size as well. The number of levels in a new landed home is dependent on the zoning the property resides on and some can have up to 6 levels including a basement and mezzanine level. 

Increase in costs driving landed property values higher

The increase in construction costs after the pandemic means that new homes do not come cheap and starting prices for inter terraces from around $5m, corner terrace / semi-detached from $6m and detached from $8m.

For example, a new semi-detached house at Lorong Marican in District 14 with a land area of 3,747 sq ft and a generous built-up area of around 7,199 sq ft was sold for over S$8.6 million in July 2023. The 3-storey-and-attic property has six bedrooms, parking space for four cars and an internal lift. In comparison, a semi-detached house built in the 1981 along Lorong Marican as well with land area of 3,736 sq ft was sold in May 2023, for S$5.28 million (S$1,413 psf). At S$2,295 psf, the new semi-detached house sold in July 2023 fetched a premium of 62 per cent over the older property in the same neighbourhood.
top performing landed property districts
Top Performing Landed Property Districts By Sales Volume

What are the demand drivers behind rising landed property values?

The most common drivers of demand that we hear on the street today are a need for more space and modern configurations such as having a home lift. In short, this means that older landed properties have to be redeveloped to maximise the internal space in order to cater for the additional living space and an internal lift. 

We have also witnessed new wealth flowing into Singapore which drove property values higher as they invest in condominiums and GCBs. This in turn raises the prestige and value of freehold landed property largely due to the scarcity of this asset class. 

The mobility restrictions felt during the covid-19 pandemic played a huge part in the mindset shift of people as they felt a need for a bigger living space in order to carve out a private home office internally. 

The local buyers are more attuned to invest in a functional and larger property and some are prepared to invest time and money to redevelop older properties to their own preferences. Generally it takes about 24 months to rebuild the house and with the high land prices, buyers and developers alike have to fully maximise the built up space and modernise the configuration to cater for multi-generational living. 

Deciding whether to rebuild your own landed property involves various considerations, and it’s a significant decision that depends on your goals, budget, and preferences. Rebuilding a property can be expensive. Consider the costs involved in demolition, construction, permits, architectural design, and materials. Compare these costs to the potential value of time savings, cost savings, and benefits of having a brand new landed home from a developer.

The 3 Important Demand Drivers Behind Landed Property Values

To summarise, the demand drivers behind landed property values today are:

  1. Need For More Rooms And Space
  2. Need For Modern Configurations
  3. New Citizens and New Wealth

These are the most important factors among the many reasons cited by buyers who are after brand new landed properties with higher price tags and hence push up landed property values to a new peak in 2023.