Is Buying a High PSF New Launch Condo Always a Bad Idea?
- Stuart Chng
- 5 days ago
- 7 min read
Property buyers often hesitate when they see a high price per square foot (PSF) on a new launch. It feels expensive, especially when resale condos nearby appear cheaper on paper.
But is a higher PSF always a poor investment decision?
The short answer: not necessarily.
Let’s break this down using real examples and current market realities.
Why We’re So Fixated on PSF
It’s natural to compare today’s prices with the past.
Many of us remember:
HDB flats selling for under $30,000
Landed homes priced below $500,000
Early 2000s launches like The Sail at Marina Bay starting at under $1,000 PSF
Fast forward to today, and even Executive Condominiums such as Piermont Grand and OLA have crossed the $1,000 PSF mark. The fear of “buying at the top” is very real.
This has sparked a long-running debate:
Is it better to buy a new launch at a higher PSF?
Or should buyers always choose a lower-PSF resale condo nearby?
To answer this properly, we need to look beyond PSF alone.
Point 1: The PSF Fallacy
One of the most common assumptions in property investing is:
High PSF = bad deal
Low PSF = good deal
This is misleading.
Why High PSF Projects Still Sell Well
Many top-selling new launches today are priced well above market averages:
Kopar at Newton: ~ $2,200 PSF
The M (Bugis): ~ $2,450 PSF, 70% sold over a launch weekend
Irwell Hill Residences: estimated ~ $2,500 PSF
Yet buyers continue to snap them up.
Why?
Quantum Matters More Than PSF
Buyers ultimately pay the total price (quantum), not PSF.
Smaller units naturally command:
Higher PSF
Lower overall quantum
For example:
One-bedroom units at The M were priced below $1 million
Parc Esta’s one-bedroom units sold at $1,700–$1,800 PSF but still started around $700,000–$800,000
For city-fringe or central locations, this is often the most affordable entry point.
Does Lower PSF Automatically Mean Better Returns?
Not at all.
Let’s compare actual performance.
New Launch vs Resale: Real Examples
Stars of Kovan vs Kovan Residences
Stars of Kovan launched ~$200 PSF higher
Despite this, it outperformed Kovan Residences by nearly 3× in price growth
Symphony Suites vs Lilydale
Symphony Suites launched ~$300 PSF higher
Prices rose 13.6%, while Lilydale declined by nearly 17%
Forest Woods vs The Minton
Forest Woods: +12.4% in 3 years
The Minton: ~0.7% growth over the same period
Both are 99 years leasehold.
Sky Vue vs Bishan 8
Sky Vue launched ~$150 PSF higher
Sky Vue owners saw ~25% appreciation
Bishan 8 owners saw under 2%
Clearly, lower PSF did not translate into better performance.
The recently TOP'd Gem Residences vs Trevista which launched in 2008 is another good example of how lower priced resale properties might not perform as well as buyers had hoped for.
In the next and final example, I will elaborate on the reasons why we see such a trend.
Why Resale Condos Were Hit Harder
1. TDSR Changed Buyer Affordability
The introduction of Total Debt Servicing Ratio (TDSR) significantly reduced affordability for larger, older resale units.
Example:
Gem Residences (new launch): 3-bedroom from ~$1.2M → ~$7,500 monthly income needed
Trevista (resale): ~$1.5M → ~$9,000 monthly income required
Which property has a larger buyer pool? The answer is obvious.
2. Older Layouts Are Less Efficient
Before 2009, developers exploited GFA exemptions for bay windows and planter boxes. This resulted in:
Larger units
Poorer space efficiency
Up to 20% “dead space”
After URA closed this loophole, newer projects became:
More compact
More functional
Easier to live in and resell
This shift pushed PSF higher, but improved usability.
Hence, many properties heralding from that era had larger areas but less efficient floor space as compared to the smaller yet better designed units today; making them less desirable to resale buyers.
One of the further consequences of plugging this loophole is that developers then had load their profit margins onto the absolute floor space they had, therefore increasing prices per square foot across the board from 2009.
3. Lease Decay Is Often Ignored
Using Trevista as an example:
Launched in 2008
By 2016, only 91 years left
If you prorate its $1,350 PSF price to a fresh 99-year lease, the effective PSF becomes ~$1,469.
Suddenly, the “cheap” resale isn’t so cheap anymore — especially after factoring in:
Renovation costs
Wear and tear
No developer warranty
Unfortunately, most laymen investors are unaware of these and continue to be attracted solely by low per square foot prices.
To be fair, there are resale properties that have done well over time (And new launches that flopped too), but with the recent media spotlight on the remaining tenures of properties, buyers are now a lot more particular and savvy than before when buying an older property.
P.S. In NAVIS, we curate a monthly updated list of the top projects in Singapore titled NAVIS Selections
Schedule an appointment with Stuart and his team of Property Wealth Planners to find out which are the top projects today within your budget that is worth making the trip down to check out.
Point 2 - The Need For Space Vs Location, Lifestyle And Affordability
If you don’t require a large home (e.g. singles, couples, investors), paying a higher PSF can unlock:
Central locations
MRT proximity
Lifestyle amenities
Strong rental demand
Many buyers today prioritise convenience over size, and the market reflects this shift.
This may come as a surprise, given that many investors are focused on getting the
best value for their dollar. But there are two reasons why even investors may not
mind paying more per square foot.
The first is that new investors are often on a leaner budget. A three-bedder unit, at a
typical price of $1,500psf, often has a quantum of about $1.6 million.
For many investors, it will take decades of disciplined scrimping and saving to afford this.
However, a small single-bedder may only have a quantum of $700,000 to $900,000.
Many developments have two-bedders that start from just $1.2 million (outside of
central regions).
This may be a more viable purchase for new investors, even if the price per square
foot is higher. After all, the affordability of the unit – as well as the maximum bank
loan– are based on the unit’s overall price, not it’s price per square foot.
Point 3: PSF Has Nothing to Do with Rental Yield
Rental yield depends on:
Annual rent
Total purchase price (quantum)
Not PSF.
Example:
$1.6M property in RCR at $1,500 PSF → ~2.5–3% yield
$1.6M property closer to CBD at $2,200 PSF → potential 4% yield
Same capital, better cash flow.
Banks also assess loans based on quantum and TDSR, not PSF.
Final Thoughts
PSF Is a Tool, Not a Verdict
In summary, it is best not to assume that a higher price per square foot is always a bad deal.
A higher PSF does not automatically mean:
Overpriced
Poor returns
Bad investment
New launch pricing reflects:
TDSR policies
Efficient layouts
Fresh 99-year tenure
Changing buyer behaviour
The key is to compare apples to apples:
New vs new
Old vs old
Similar locations and tenures
Used correctly, PSF is helpful. Used blindly, it can be misleading.
Sometimes, paying more per square foot is exactly what makes a buyer the smarter investor.
Let me know your thoughts and catch you soon!
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Stuart Chng, Executive Group District Director at Huttons, is a renowned leader and personality in the real estate industry.
He adores music and can play a few instruments decently without upsetting his neighbours. When not doing so, he enjoys pillow fighting with his son and coming up with silly puns which barely amuses his wife.
Professionally, he is a licensed real estate agent, an avid stocks, options and real estate investor, business owner, team leader, speaker and columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications.
Throughout his career, he has helped many clients grow their wealth through selecting great property investments and managing their portfolios actively. Read his clients' reviews here.
Stuart has also coached many top million dollar producing agents from different real estate agencies in Singapore. Read his agents' reviews here.
Related readings:
- Time Tested Strategies To Profit From Real Estate In A Crisis - Methods to Beat ABSD and Own Multiple Properties in 2020 - 4 Important Entry Signals That Will Greatly Improve Your Property Investment Returns
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