For the first time ever, the research team at SRX was able to calculate the most precise figures for Rental Yields in Singapore by using X-Value. The difficult part about calculating rental yields is the lack of good data. By definition, Gross Rental Yield of a unit = Gross Annual Rent / Sale Value. Most units are not bought and rented out at the same time. Therefore, it is very difficult to calculate the rental yields at any particular moment in time for a unit. There is just a lack of sale and rental transaction data for the SAME UNIT at the SAME TIME.
Most research firms get around this problem by estimating the rental yield from using average rental and sale data over a certain period. This can be inaccurate in situations where a higher floor sale value is compared against a lower floor rental value. Or a bigger sized rental unit is compared with a smaller sized sale unit.
The problem goes away when we use SRX’s rental and sale X-Value for the same unit to do the calculation. X-Value is an instant computer valuation for a unit at any moment in time based on Comparative Market Analysis. By taking a unit’s (Monthly Rental X-Value multiply by 12) and dividing by its Sale X-Value, we get a very accurate calculation on the gross rental yield for the unit, as if it were bought today and rented out immediately.
Using this method, we calculated the individual rental yields for all completed private flats in Singapore.
As of May 2015, the median rental yield for Leasehold private flats in Singapore is 3.5%. For Freehold properties, the median rental yield is 3.0%. This means that Leasehold private flats have a 17% premium in rental yield compared to their Freehold counterparts. You don't know this, do you?
Check out the two heat maps below if you want to know how your rental yield compare with other units in your area.
