Why are some 2-room BTO flats offered by HDB priced lower than Studio Apartments?

    30 Aug 2013 |

Some have asked this question, and are puzzled because Studio Apartments (SAs) have a shorter lease – 30 years rather than 99 years – and are similar in size to 2-room flats.

While they may be similar in size, SAs and 2-room flats are not similar flat offerings. There are clear distinctions between these two flat types:

  • SAs are built specifically to offer a monetisation option for senior citizens who find their existing homes bigger than they need. SAs allow them, including those who have bought and benefitted from subsidised flats before or are living in private properties, to convert some of the value of their existing properties into cash for retirement needs. While they can achieve the same by buying 2-room or 3-room flats in the resale market, many have found the pricing of SAs more attractive and do not mind the restrictions on resale and subletting imposed on SAs.

  • As SAs are homes for seniors, facilities and furnishings are provided to create a supportive environment. SAs come with floor tiles, wardrobes, light fittings, water heaters and kitchen cabinets with gas stoves and cooker hoods. They are also equipped with elderly-friendly fixtures such as grab bars and alarm systems. This ready-to-move-in condition enables seniors to shift into their new home hassle-free, without the need for major renovation.

  • SAs are generally located in good locations and close to amenities and transport nodes, to provide greater support, convenience and accessibility to seniors.

  • Second-timers who have owned a subsidised flat before do not need to pay a resale levy if they buy an SA, but need to do so if they buy a 2-room or larger new flat.

  • Although an SA’s lease is 30 years, its selling price is not simply about one-third that of a new flat on a 99-year lease, as established professional valuation principles take into account the time-value of money and other factors.

It is not appropriate to make direct comparison of the prices of SAs with 2-room BTO flats, especially if they are in different locations and have with very different attributes. Home buyers should consider their options carefully and select a flat that best suits their budget and requirements.