Singapore has about 1,110,000 HDB apartment units and over 350, 000 condominiums units. This translates to an average of three HDBs per condominium, with the exception of two extreme regions – North and Central region. In the North region, the minimum ratio for HDBs to condominium is 8:1. The ratio gets lower as we move closer to downtown as we can see from the Central region, with an average of just above one HDB to condominium.
The mechanics pushing towards this state of affair reflects the different land prices in function of distance to the Central Business District (CBD). The Central region has limited land availability, thus making it more desirable in terms of commuting time and potential office use. There is also a fixed supply and higher demand, inescapably resulting in higher land prices. However, the higher the construction cost, the lesser the importance of the land price. Thus, market equilibrium inevitably tilts towards a larger proportion of high value buildings close to the CBD.
Ultimately, regardless the proportion, both HDBs and condominiums will end up fetching a higher valuation where land is more expensive. Depending on its size, the Central region condominiums’ valuation is typically in the S$2,000,000 range, and HDBs in the S$700,000 range. In contrast to the Central region, the condominiums in the North region will typically be worth S$700,000, and HDBs will be worth S$400,000.
However, relative values should not be misunderstood for performance. The island’s ever-evolving economic geography should be understood in terms of relative rarity, and of dynamically evolving commuting costs in an era of remote working. Be it in sale or rent price, the North region has in fact largely outperformed the Central region over the past year.
