True Story: New Condo Vs Resale Review | Freehold Vs Leasehold

📌New Condo vs Resale

I bought a new condo in 2008 as well as a resale condo in 2011. It has been more than 10 years, so I think it’s quite interesting to do a review on this real case which is basically comparing New Condo Versus Resale (or Freehold vs Leasehold)

📌Tell me more about Casa Meya, the new condo you bought in in 2008

Dennis Lim: This is the first condo I bought, Casa Meya, in potong pasir. I bought it in 2008. The price was $800k, slightly less than $1,000 per square foot.

It might look cheap @$1,000 psf in today’s market, but during the time when I first bought this new condo, it was quite a “scary” price to many. $1,000 psf in 2008 turns a lot people off. Looking back, $1,000 psf cannot even get you a new EC now.

casa meya

In today’s term (2022), the SRX valuation is about $1.14 million i.e., paper profit is about $340K. It’s quite impressive relative to my resale condo (Eastpoint green-near Simei MRT) which I bought in 2011. The purchase price was about $995k

According to SRX valuation, it is worth about $942k today. I have hold both units for more than 10 years. In Summary, the new condo brought me more paper profit than resale condo.

📌What made you choose to buy Eastpoint green in 2011?

Dennis Lim: When buyers asked if they should buy a new launch or resale, this is what I will share or ask them: What is your buying objective?

new condo vs resale

When you buy a house, you might want to make good profit and at the same time, stay in the condo. This is a hybrid objective. But there should be a dominating component: is it more for investment, or more for own-stay?

Personally, I felt that new launch is more for investment (i.e., buying with a bigger intent to make money). As Manuel mentioned earlier, for new launch- there’s a lot more historical data of profit making. For resale, I think it’s more for for own use.

When I bought Eastpoint green condo in 2011, it is more for personal reasons. For my case, I just relocated from China back to Singapore with my Chinese wife, mom and family. We stayed together in Singapore but unfortunately there was much family conflict because of lifestyle differences, not easy to stay together, a lot of conflict.

eastpoint green

So, I thought maybe why not I just buy somewhere nearby for my parents to stay. We can see each other easily but avoid the conflict. In short, it is more for own use.

When I bought Eastpoint green in 2011 for this reason, I did not expect to make money at all. When you asked me: is it correct? I will say in terms economic sense, It’s not correct. But in terms of family reason, this cannot be quantified in money value.

If you need the place to stay, even knowing that you might not make as much money as a new launch, you’ll still buy to make your family happy. Give them a better life, a condo with a swimming pool. Is that wrong? Not wrong, because there is family value? How do you quantify family value?

You can see from this chart, I bought a three bedroom at Eastpoint green. For similar sizes, the first owner prices are between $646k to $872k. These are the buying prices for the first batch owners. on average, for this size, is $764k.

new condo vs resale

What I am saying is: for someone buying a resale condo like my case, we are buying second hand from the first owner. Assume they bought at $1 and I bought from them @$1.4.

When I want to sell to the next guy, at $1.4 entry price, I will be fighting against those lower priced competitors at $1. All these are simplified example to make things easier. For resale, bear in mind that you are facing a lot of first batch owners who bought at lower prices. It will hard for you to ask for Sky-high prices next time.

Everyone knows that new launch is better, but they always deterred by the new record breaking prices. being new. The land prices cost is higher, the construction costs will be higher

Manuel Wong: The reason why most people are deterred by new launches is because they don’t have the benefit of hindsight. At that point in time, people always feel “oh, I’m pricey and most expensive in this aera. No way this can make money”.

But it has been proven time and time again, The Sails is a very good example and not just The Sails but also many other iconic launches, like Interlace for example and D’Leedon. They all have made money, you know, people always say the architectural looks weird, mega development, too many units over there, will not sell, like a village etc… They have all made money, you know.

Generally, I think these buyers have this rational or irrational fear that: If I come in at such a high price, I may be making a loss.

Dennis Lim: This is a common phenomenon because property is a big ticket item, easily the biggest single item in our life time.

Augustine mentioned that this could be a case of New launch versus Resale condo. It could also be a case of Freehold vs 99yrs. So Augustine, I think your preference will be for a freehold condo, is that right?

Augustine Tan: Freehold and new

Manuel Wong: Best of both World, freehold and new. But budget may be a constraint

Dennis Lim : Beside budget constraint, the other constraint will be lack of choices. if you only want or a freehold condo, assuming budget is a non-issue, you might face another issue. The lack of choices

Dennis Lim: Singapore government land sales are all 99yrs. If you really want a freehold and in good location, especially near MRT, it will be quite tough. So, I think there’s no perfect choices, just prioritise what’s important to you.

If budget is the biggest constraint, then likely you’ll have to settle for a resale condo. For own-stay, it is unlikely you can wait for three years unless you’re OK to rent during the construction of the new condo.

Eastpoint green is a old condo. It is a three bedroom. Tenure starts from 1996 and I am betting on en bloc i.e., plan long-term. five years cannot, wait for ten years, a long term game. The fact is that, if you check out the records, There are very few condos in Singapore that’s >40 years old

However, en bloc is not guaranteed, you have to play a long waiting game.

📌When Eastpoint green value dropped below your purchase price. Do you feel upset?

Dennis Lim: the key is you must recognize what is the objective of buying in the first place?

Honestly, I didn’t feel that big a pain because I know from day one that, I bought this to keep my family harmony. Is family harmony worth $1, $1,000 or $1 million? Seriously, this cannot be quantified

📌Have you considered selling the one that have made money?

Dennis Lim: It’s a very good question. So then let me ask you back the same question. If you were to sell the property. Do you know what to do with this money?

Manuel Wong: For me, if I know that I want to do property investment, I need to make sure that I have a property in mind in the first place. Otherwise, I will not be touching Casa Meya- the one they have made money.

Dennis Lim: If you are the owner for Casa Meya, before you sell, ask yourself this question: What is your next move? What will the money be used for?

If it just involves selling away and putting the money in the bank? I will not suggest because the interest rate is low. When your sell your property with the intention of buying stocks, cryptocurrency or even buying another property, you must have a plan.

Bear in mind, before you buy another property, do you have the “Name Quota”? Otherwise, you will have to pay the ABSD if you own more than 1 property. Also, for investment property, you should have an exit plan. That’s very important.

Manuel Wong: I think this applies not just to you, but to all our audience who’s watching this video.

Dennis Lim : We can go non-stop. This is really a case of “new condo versus old condo”, “freehold versus leasehold”. very common FAQ on everyone mind

Augustine Tan: Casa Meya enjoyed 42% incremental value, from the day you bought. Truly inspiring!

Dennis Lim: This is a real or true story from myself. If you have any questions, feel free to text or WhatsApp us and we’ll do our best to answer your question.

However, there’s no fool-proof investment.

Using Eastpoint Green case as example, my first owner bought in 1997, at $834k. He sold to me in 2011 at $995k. His profit is $100k+

But if you look at the number of years he held the property, it is not fantastic. Why? Because he bought it in 1997. That’s when the Asian financial crisis hit and the price index was quite high.

What I’m trying to say is that even if all your theory or strategy is correct, there is no guarantee of profit, even for new launch. You may have done all your homework, but when a crisis comes and prices fall, and you cannot hold, then you will likely be making losses

Manuel Wong: Looking at this property index. Where do you think the market will be headed?

Dennis Lim: I think it’s quite obvious, Singapore government will not allow the price to rise too much. So, all the price increase will be moderated. This government does not want speculation

Augustine Tan: It has been quite a ride. Property prices have been robust, even with COVID. You see the prices have been going up. Yes. Amazing actually,

Dennis Lim: let’s look at the way our government structure the whole thing. If there’s a big crisis that affect us, there’re a lot of things they can do. U-Turn, bring down or remove ABSD,  tweak TDSR so we can loan more, make it easy for people to buy second property. So, there are a lot of things they can tweak. We have a lot of buffers.

Manuel Wong: the irony is that during COVID, the government actually enhanced the cooling measures actually. So, which goes to show how attractive our local property market scene is, you know,

Dennis Lim: Singapore property market or Singapore as a country, became very attractive to a lot of people in our neighboring countries who are facing a lot of management crisis from COVID. Singapore shined in that aspect.

With free vaccine, fast vaccinations and fast execution of measures, we can say our government responded well and our economy is quite resilient.

Whether is a new condo better for you or Resale condo? or are you comparing freehold versus 99 years… If you have any questions, feel free to text or Whatsapp us and we will do our best to help you

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Dennis Lim

Dennis has more than a decade of experience investing in real estate. Like many fellow Singaporeans, he grew up in a HDB flat with dreams to live in a condominium. Through careful financial planning & hardwork, this became a reality when he was 30. He now owns 3 private properties in Singapore and has helped hundreds of Singaporeans to achieve their goal of upgrading their homes in land-scarce Singapore.

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