COMPARATIVE STUDY OF CAPITAL RETURNS OF CONDOMINIUMS IN VARIOUS REGIONS OF SINGAPORE

Abstract

In recent years, increasing affluence among Singaporeans has led to a substantial accumulation of wealth by individuals which, in turn, has translated into higher aspirations for a better life. As such, there has been a considerable change of mindset among Singaporeans in that residential property is no longer viewed purely as a basic necessity but also as an investment good. The growing number of Singaporeans buying a second or even a third property is indicative of this trend. Whilst the traditional prime residential districts have always been favoured by investors, the Eastern and Western regions have become increasingly popular in recent years. This study aims to provide the potential investor with a gauge as to which region offers the highest capital returns. The analysis is supplemented by the use of a statistical model which tests the null hypothesis that the mean capital returns of condominiums in the selected regions are similar. In this study, the sale transactions of selected condominium projects over the past three years were extracted to compute the capital returns of the various condominiums. The condominiums selected for the study are comparable in terms of tenure, the facilities available and their location in the respective regions. The postal districts included in the study were chosen on the basis of their high concentration of condominiums so as to achieve greater uniformity in comparison. The results show that the capital returns posted by the various condominiums differ widely, even amongst those in the same region. This is further supported by the statistical model used, which concluded that the mean capital returns of condominiums in the various regions are not similar. Therefore, it can be inferred that location is an important determinant of capital returns.