In a city where space is scarce, landed homes have long been the ultimate dream. But who says this type of luxury is only found on the ground? Among the city skyline, penthouses redefine luxury living. These residences are exclusive, and their prices can soar as high as their location.

Funnily enough, penthouses weren't always the symbol of prestige they are today. Originally, top-floor units were considered undesirable, so they were used for storage, laundry, or even the servants' quarters. It wasn't until the early 20th century, when we started seeing more elevators and improved building designs, that top-floor spaces were transformed into exclusive residences. Now, penthouses are considered the pinnacle of luxury, especially in cities like Singapore where high-rise living dominates. The question is: Are they worth the price tag? Let's break it down.

Before we go any further, let's set some things straight. A penthouse is a property unit located on the top floor(s) of a building. There are several types of penthouses, but generally, they are classified as follows:

• Single-floor Penthouses: These are your typical top-floor units with expansive living spaces and large balconies.

• Duplex Penthouses: Spread over two floors, duplexes are more common and feature an internal staircase or sometimes even a private lift between floors.

• Triplex Penthouses: Three-story penthouses are harder to come by but they offer the ultimate exclusivity and ample living space.

That being said, the term "penthouse" can cover a wide range, which can make things a bit ambiguous. In Singapore, even modest top-floor units with upgraded features like higher ceilings or larger balconies can be called penthouses. For example, Helios Residences has a triplex four-bedroom penthouse that measures just under 4,000 sq ft. While 3,907 sq ft is very spacious compared to a typical condo unit (and even some landed homes), it's considered on the smaller side for a penthouse. However, extra features make up for its size. From a private lift lobby to a special staff zone with an additional entrance, a double floor height area in the living room, a master bedroom that opens onto a terrace with a Jacuzzi, and a spacious outdoor terrace. This too, is considered a penthouse.

What sets penthouses apart from the other units in the building is that they have more space and luxurious features, which is why they can get quite expensive. And I'm not talking about the type of money you can save from a typical corporate job. This is much bigger than that. It takes money-inherited-from-conglomerate-parents to buy a penthouse.

A few years ago, a penthouse with enough space to fit eight tennis courts at Marina Bay Residences was listed for S$111 million! That's enough to buy at least a couple of Good Class Bungalows (GCBs).

In 2019, a S$73.8 million Wallich Residence penthouse was bought by James Dyson (yes, the person who founded the famous vacuum cleaner and hair tools).

More recently, a 5-bedroom penthouse at Park Nova spanning 5,899 sq ft was sold for a record-breaking $38.888 million ($6,593 psf). Before that, the record was held by their 4,499 sq ft penthouse that sold in May 2021 for $26.026 million ($5,784 psf). I can name a few more, but you get my point.

So what makes them so expensive? Well, penthouses are known to have large spaces, great locations, amazing views, and lavish amenities. For example, the Marina Bay Residence super penthouse has a total of 28,000 sq ft. That's enough space for 24 bedrooms and even an 82-foot rooftop pool. Plus, it has the best view of Marina Bay Sands. Dyson's Wallich Residence penthouse has a private garden, a rooftop terrace, a 600-bottle wine cellar, a cabana, and a lap pool. And it has a 24/7 butler service! Other penthouses are known to have private lifts, sky lounges, and more. Not to mention that these homes come with luxurious interior designs with state-of-the-art appliances and high-end finishes. It's all about exclusivity, prestige, and lifestyle.

There are additional expenses to consider beyond the initial purchase price. In Singapore, condo owners typically pay $200 to $400 per month in maintenance fees, but for luxury condos, this can exceed $1,000. Penthouses may cost even more! On top of that, renovation and furnishing costs can add up significantly, especially if you're eyeing high-end furniture.

Obviously, the steep price of penthouse living isn't for everyone. This type of residence mainly attracts overseas buyers from Indonesia, India, US, UK, Europe, but especially China.

Singapore is an attractive destination for the wealthy as well as UHNW buyers and investors from countries such as Indonesia, China and India, as well as the US, UK and Europe. "The key considerations for most are safety, security and an attractive tax policy. The stable and resilient nature of the property scene in Singapore is a desirable feature."

Singapore's stable and resilient property market makes it a desirable destination for these international buyers. And since foreigners aren't allowed to buy landed homes, many of these Ultra High Net Worth (UHNW) individuals go for "sky landed units" instead. Seasoned investors may also be interested in buying a penthouse if they think it could make good returns, which brings me to my next point.

Although there's been notable growth and demand for luxury properties in recent years, it's hard to say whether penthouses align with this trend. Going back to the Wallich Residence example, only a year after Dyson purchased the penthouse, he sold it at a loss for S$62 million. That's S$11.8 million down the drain! If you count all the money spent on maintenance and upkeep fees, it could be a lot more than that.

More recently, a five-bedroom suite at St Regis Residences with an asking price of $15.5 million failed to attract any bids even after the price was reduced by 14%. This highlights the challenges of selling ultra-luxury properties, where the buyer pool is extremely limited (probably because only the top 1% can afford it). With fewer potential buyers, penthouses often face longer selling periods and greater market uncertainty. This lack of liquidity can pose significant risks for investors, especially since there's a lot at stake here.

That being said, there are penthouses that appreciate over time. For example, in December 2024, Jadescape's 4,230 sq ft penthouse was sold for S$10.150 million, giving the previous owner a S$4.35 million profit. That's a 75% capital gain in just 5 years.

Clearly, investing in a penthouse isn't as clear-cut as we'd like it to be. Whether or not a purchase is profitable will depend on the respective property and market condition. Whereas with condos or even landed homes, we have a better idea of the market trend and appreciation rate because there is more data available. Plus, you're more likely to generate rental income. I imagine not many renters would go for a penthouse because it's such a niche market, though it's not entirely impossible.

In general, it's not common to see penthouses on the rental market since buyers get them for personal use. Otherwise, they'd rather make profit through reselling. But like any property, penthouses that are on the market are priced based on location, size, and facilities. For example, a three-bedroom duplex penthouse at Park Infinia at Wee Nam can go for S$11,000 per month, while a five-bedroom duplex unit at Sky Everton is listed at S$14,900 per month. Of course, there are other penthouses that are more expensive to rent than these.

When it comes to investment returns, the average gross rental yield for condos in Singapore is about 3.40% as of Q4 2024. But the pricier the unit, the lower the returns. Even if the rent is high, it doesn't quite make up for the steep cost of buying the property, which explains the diminished rental yields. So don't expect much from penthouses. You're probably looking at a 2-3% yield if you're lucky. And as I've mentioned, the tenant pool for such luxury units is limited. There's simply no guarantee anyone would rent it at all, so you could be stuck holding onto an empty unit while still covering maintenance costs.

Believe it or not, Singapore's penthouses come with way less of a markup compared to other major global cities. Penthouses in Hong Kong command a 61% price premium, followed by London (43%) and New York (41%). But Singapore's penthouses come with only a 7% premium! And here's the kicker: they are also way bigger. Penthouses in Singapore are nearly three times the size of those in Hong Kong, London, and New York. So not only are they relatively cheaper (in terms of markup), but you're also getting way more space. Of course, what even counts as a penthouse can vary in different cities, so keep that in mind.

That depends on what you're after. If you're buying for the lifestyle, exclusivity, and flex factor, then sure, a penthouse might be your dream home. But if you're looking at it purely as an investment? That's where things get tricky.

Between the high upfront costs, limited buyer and tenant pools, and low rental yields, penthouses aren't exactly the safest bet, especially when the profitability varies on a case-by-case basis. Still, compared to global markets, Singapore's penthouses come with a lower markup and way more space, making them a unique option in the luxury property scene. So, if you happen to have the extra millions and don't mind the risks, why not? Otherwise, there are plenty of other ways to invest in real estate without burning through eight figures.

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