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New Launch vs Resale Condo: The Investment Math
ROI, cash flow, rental yield, and the real numbers behind buying a condo as an investment in Singapore.
There are basically 2 ways to invest in a condo. Buy a new launch, wait 3-4 years for TOP, then sell for a profit. Or buy a resale, rent it out, and collect income while it appreciates.
Both work. Both have trade-offs. And both are worse than most people think once you account for all the costs.
This page covers the investment math. For the own-stay comparison framework, see the new launch vs resale guide.
The costs nobody tells you about
ABSD on your 2nd property
If you’re a Singapore Citizen buying your 2nd property, you pay 20% ABSD upfront. PR? 30%. Foreigner? 60%.
On a $2M condo, that’s $400K for a citizen. Cash. Upfront. Non-negotiable.
Yes, there’s a remission. If you sell your existing property within 6 months of buying the new one (or within 6 months of TOP if the new one is under construction), you get the ABSD refunded. But you still need to have that cash to front it. That’s a real constraint.
For most investors buying a 2nd property to hold, the 20% ABSD is a sunk cost that your returns need to overcome.
BSD (Buyer’s Stamp Duty)
Everyone pays this, first property or fifth:
| Purchase price | BSD rate |
|---|---|
| First $180K | 1% |
| Next $180K | 2% |
| Next $640K | 3% |
| Next $500K | 4% |
| Next $1.5M | 5% |
| Above $3M | 6% |
A $1.5M condo: $44,600 in BSD. A $2M condo: $64,600. A $3M condo: $114,600.
SSD (Seller’s Stamp Duty)
Sell too early, pay a penalty:
| Holding period | SSD rate |
|---|---|
| Within 1 year | 16% |
| 1-2 years | 12% |
| 2-3 years | 8% |
| 3-4 years | 4% |
| After 4 years | 0% |
The holding period starts from OTP date, not completion. For new launches, by the time you get keys at TOP (3-4 years), you’ve usually cleared SSD entirely. This is one of the hidden advantages of buying new.
LTV and TDSR: the financing squeeze
If you already have an outstanding housing loan, your 2nd property loan is capped at 45% LTV. That means a 55% downpayment, of which 25% must be cash.
On a $2M property: $1.1M downpayment, $500K in cash. Plus $400K ABSD. You need $900K in cash before the bank gives you a dollar.
TDSR (Total Debt Servicing Ratio) caps your total monthly debt payments at 55% of gross monthly income. Banks stress-test at a 4% interest rate floor regardless of actual rates. Your existing mortgage, car loan, and credit card minimums all count.
This is usually the binding constraint. Not whether you want to invest, but whether the numbers allow you to.
Strategy 1: Buy new launch, sell at TOP
The play: buy during launch at developer pricing, pay progressively during construction, sell when the project TOPs at a premium.
Progressive payment schedule
You don’t pay the full purchase price upfront. The standard BCA schedule:
| Stage | % of price | Cumulative |
|---|---|---|
| Booking (OTP) | 5% | 5% |
| Exercise of S&P | 15% | 20% |
| Foundation | 10% | 30% |
| RC framework | 10% | 40% |
| Walls | 5% | 45% |
| Ceiling/roofing | 5% | 50% |
| Electrical/plumbing | 5% | 55% |
| Car park, roads | 5% | 60% |
| TOP | 25% | 85% |
| CSC (legal completion) | 15% | 100% |
The first 20% (booking + exercise) is cash and/or CPF. The bank loan kicks in from foundation onward, disbursing progressively.
Your monthly installment (MI) ramps up gradually:
- Year 1: ~10% of full MI
- Year 2: ~30% of full MI
- Year 3: ~50% of full MI
- Year 4: ~80% of full MI
- After TOP: 100% of full MI
This is the cash flow advantage. You’re not servicing the full mortgage for 3-4 years. Your monthly outlay is low while the property (hopefully) appreciates.
The catch with progressive payments
The loan tenure starts when the bank first disburses (foundation stage), not at TOP. If you take a 30-year loan and the build takes 3.5 years, you have 26.5 years left when you actually move in. The MI after TOP is slightly higher than if you’d bought an equivalent resale with a fresh 30-year loan.
When this strategy works
The new launch sell-at-TOP play works when:
- You bought at a genuinely good price (not the last, most expensive stack)
- The project is well-located and well-designed (brand matters)
- The market cooperates (prices rise or at least hold during the build period)
- There’s organic demand for move-in-ready units at TOP (families who don’t want to wait for another new launch)
Historically, there’s a bump in transactions and prices around TOP. Buyers who need a ready unit pay a premium over launch price. But this isn’t guaranteed. Projects that disappointed on design, location, or market timing have seen flat or negative returns at TOP.
When it doesn’t
If the broader market softens during your 3-4 year build, you’re stuck. You can’t sell easily before TOP (sub-sale market is thin and you’d owe SSD if within the holding period). You’re committed to the progressive payments regardless.
And if your project doesn’t generate excitement at TOP (too many competing projects, poor reviews from early owners, a badly-timed cooling measure), you might be holding longer than planned.
Strategy 2: Buy resale, collect rent
The play: buy a completed unit, rent it out immediately, let rental income cover the mortgage while the property appreciates.
Rental yield reality
Singapore’s average gross rental yield is about 3.0-3.5%. CCR is lower (2.5-3.0%), OCR is higher (3.5-4.0%).
Sounds okay on paper. But gross yield is not what you take home.
The true cost of being a landlord
Here’s what eats into your rental income:
Property tax (non-owner-occupied rates):
| Annual Value (AV) | Tax rate |
|---|---|
| First $30K | 12% |
| Next $15K | 20% |
| Next $15K | 28% |
| Above $60K | 36% |
A condo renting for $4,000/month has an AV of roughly $48,000. Property tax: $7,200/year. That’s 15% of your gross rental income, gone.
Compare that to owner-occupied rates where the first $12K of AV is tax-free at 0%. The difference is brutal.
Income tax on rental income:
Rental income gets added to your personal income and taxed at your marginal rate. If you’re a high earner at the 22-24% bracket, your rental income is taxed at 22-24% too.
You can deduct expenses: mortgage interest, property tax, MCST fees, agent commission, repairs, insurance. IRAS also offers a simplified option: claim 15% of gross rent as deemed expenses plus mortgage interest, without tracking receipts.
But if you’re earning $200K+ in salary and collecting $48K in rent, a significant chunk goes to IRAS.
If you’re a retiree with no other income, this changes completely. Your rental income fills up the lower tax brackets first. You might pay close to zero income tax. This is why rental income strategies are disproportionately attractive for retirees.
Other expenses:
- MCST fees: $300-800/month depending on the condo
- Agent commission: typically 1 month’s rent per 2-year lease cycle
- Repairs and maintenance: budget $2,000-5,000/year
- Vacancy: expect 1 month vacant per lease cycle (between tenants)
The 75% rule
After property tax, income tax, MCST, agent fees, repairs, and vacancy, your true take-home rental income is roughly 75% of gross rent. Or about 9 months’ worth out of 12.
On $4,000/month gross rent ($48K/year), you’re actually pocketing around $36K. On a $1.8M property, that’s a net yield of 2.0%.
That 3.5% gross yield just became 2.0% net. Still positive, but barely exciting.
When resale rental works
The math works when:
- You’re in a low income tax bracket (retirees, between jobs)
- The property is in a high-yield location (OCR, near MRT, near offices/industrial parks)
- Rental income covers most or all of the mortgage
- You have a long holding horizon (10+ years) to benefit from appreciation
- You bought at a fair price (not at the top of a cycle)
Comparing the two strategies
| Â | New launch (sell at TOP) | Resale (rent and hold) |
|---|---|---|
| Cash flow during hold | Low (progressive payments) | Offset by rent |
| Monthly outlay | Ramps up over 4 years | Full MI from day 1, offset by rent |
| Income during hold | None | Rental income |
| Appreciation potential | Higher if market rises | Steadier, more predictable |
| Downside risk | Stuck if market falls | Can still collect rent |
| SSD risk | Usually cleared by TOP | Full SSD if you sell early |
| Liquidity | Low (hard to exit before TOP) | Higher (resale market is active) |
| Effort | Minimal until TOP | Landlord duties (or hire agent) |
The ROI calculation
ROI should be measured against your actual cash invested, not the full purchase price.
For a $2M investment property (SC, 2nd property):
| Cost | New launch | Resale |
|---|---|---|
| Downpayment (55% if 2nd loan) | $1,100,000 | $1,100,000 |
| ABSD (20%) | $400,000 | $400,000 |
| BSD | $64,600 | $64,600 |
| Legal fees + stamp duties | ~$5,000 | ~$5,000 |
| Total cash outlay | ~$1,570,000 | ~$1,570,000 |
If the property appreciates 15% over 5 years ($300K gain) and you net $36K/year in rent for the resale scenario (let’s say 4 years of rent after accounting for the build period difference):
- New launch ROI: $300K / $1,570K = 19.1% over 5 years (3.6% annualized)
- Resale ROI: ($300K + $144K rent) / $1,570K = 28.3% over 5 years (5.1% annualized)
The resale wins on total return if appreciation is the same. But the new launch argument is that appreciation will be higher (buy at launch price, sell at TOP premium). If the new launch appreciates 25% instead of 15%, it closes the gap.
The honest answer: both strategies boil down to appreciation. Rental income helps, but it’s not the main driver. You need to pick the property that will appreciate more. Everything else is secondary.
What I’d actually consider
Before even thinking about which strategy, ask yourself:
-
Can you afford the ABSD? $400K on a $2M property. In cash. If this makes you uncomfortable, you probably shouldn’t be buying an investment property right now.
-
Can you handle the TDSR? Run the numbers at 4% interest, not today’s rate. Include your existing mortgage. If it’s tight, don’t do it.
-
What’s your tax bracket? If you’re paying 22%+ marginal tax, rental income gets hammered. The new launch play might be cleaner (no rental income to declare, just capital gains which aren’t taxed in Singapore).
-
What’s your holding horizon? Under 5 years? Probably not worth it after stamps, taxes, and agent fees. 10+ years? The math starts working regardless of strategy.
-
Can you sleep at night? A $2M investment property with $900K mortgage is real money. Markets drop. Tenants cause problems. Interest rates move. If you’re going to check PropertyGuru prices every week and panic, maybe fixed deposits are more your speed.
The best property investments I’ve seen are from people who bought within their means, held for a decade, and didn’t overthink it. The worst are from people who stretched for “maximum leverage” and got caught when the cycle turned.