Forget BTO, Here's Why Savvy First-Timers Are Choosing Condos! Should You?

Sure, you can renovate your BTO flat to look more chic and modern, but ultimately, it can't compete with the level of luxury and convenience of condo living. From gyms and swimming pools to golf driving ranges and even bowling alleys, condos offer amazing amenities. And considering they can replace individual memberships or entertainment costs, the condo maintenance fee is a small price to pay.

If safety is a top priority for you, then you'll be happy to find out that condos are equipped with 24/7 security, controlled access and CCTV surveillance. There are security personnels guarding the premises as well. These security measures are particularly attractive to young families and those living alone.

One of the biggest advantages of condo ownership is the flexibility it offers. Unlike BTO flats that are subject to age restrictions, citizenship criteria, income ceilings and ethnic quota, condos have much broader eligibility criteria. As long as you meet the financial requirements for a mortgage, you can become a condo owner. And since you don't have to go through the lengthy ballot application process of BTO, you can get a suitable unit much faster.

Additionally, there are no limitations on how many private properties you can own. So, you can diversify your portfolio as you see fit. You also get more freedom in choosing an exit strategy because there are no restrictions on who you can sell to or when you can sell, but more on that later.

Getting a BTO flat is a time commitment. First, you have to face uncertainty when applying on the ballot, which can take years before you succeed. Even when you have secured a flat, the wait doesn't end. Construction typically takes four years, followed by the mandatory Minimum Occupancy Period (MOP) of five years. That's about a decade before you can truly leverage your property for investment purposes. In the same period, condo owners could have upgraded twice! This is because condos offer immediate ownership with no MOP, allowing you to generate rental income right away and sell at any given point. Do note that you'd be required to pay Seller's Stamp Duty (SSD) if you sell your unit within three years.

Here's a timeline to illustrate the growth potential of owning a condo versus holding onto a BTO flat.

Private properties, including condos, have historically seen a steeper rise in value compared to HDB flats. One contributing factor to this phenomenon is how seemingly limited the supply of condos are compared to the supply of HDB flats.

Moreover, as people advance in their careers and reach financial stability, they are more likely to seek the finer things in life and provide the best for their families. So, it's only natural that people are willing to pay a premium for condos.

In fact, desirable condo projects can even sell out within the launch weekend. And the fact that more people are going for condos in recent years has only further pushed up the price and demand. This translates to a fast-growing investment that can give you high returns when you eventually sell. Let's take a look at the charts.

Source: PropNex Investment Suite

Over the past 20 years, the overall value of resale condos has risen by 218.4%, whereas the overall value of resale HDB flats has only gone up by 152.6%. Here's another chart that focuses on prime locations.

Source: PropNex Investment Suite

In the same period, in districts 9, 10, and 11, the value of resale condos has risen by 217.1%, whereas the value of resale HDB flats has only gone up by 161.1%. In all honesty, BTO is not doing bad at all. But when it comes to building long-term wealth, which one do you think offers greater capital appreciation? Condos or BTO?

While BTO flats have traditionally been the default route for first-timers, condos are emerging as a compelling alternative for those seeking for a more refined lifestyle or to build long-term wealth. Yes, the initial price tag might be higher, but the potential for significant capital appreciation (as shown in the charts above), immediate ownership and flexibility in choosing an exit strategy can be much more rewarding in the long run. However, it is important to note that achieving this outcome requires careful planning and thorough insights, such as understanding safe entry prices, market trends, and geographical demands.

If you're a first-timer who wants to make a long-term investment and have more control over your property, then a condo might be the smarter choice for you. But, if you've already bought a BTO, don't give up! I have a colleague who's on the same boat and you can read about his experience here. In any case, we're here to give you the proper guidance, so feel free to reach out to us any time.

Views expressed in this article belong to the writer(s) and do not reflect PropNex's position.