Investing in new 2-bedroom condo units: Is 1 bathroom or 2 better? , Money News

PUBLISHED ONFebruary 25, 2023 10:00 AMByRyan J

When it comes to a two-bedder condo layout for investment, there is one vital question: one bathroom or two?

Conventional “property wisdom” holds that two bathrooms are always the preferable choice; and like a high ceiling or sea view, it’s a feature that will pay for itself.

However, given the typically lower prices that you can buy a two bed one bath unit for, is this really true?

So this week, we looked at some two-bedders from various projects and tried to determine if purchasing a two bathroom layout or a one bathroom layout is generally more profitable from a capital appreciation standpoint.

But first, here’s a look at the average prices of two-bedders with one and two bathrooms across recent new launch projects.

Do note that the dataset here is not exhaustive due to the number of projects with such layouts.

We’ve also taken recent projects as these are the data we have readily available to us.

Price differences between one and two bathrooms

	2BR 1BA		2BR 2BA		Difference
Projects	Average Price	Average $PSF	Average Price	Average $PSF	Quantum Difference	$PSF Difference
KI RESIDENCES AT BROOKVALE	$1,436,700	$2,053	$1,374,419	$1,809	-4.3 per cent	-11.9 per cent
UPTOWN @ FARRER	$1,063,980	$2,038	$1,051,296	$1,953	-1.2 per cent	-4.2 per cent
PARC CLEMATIS	$1,176,456	$1,688	$1,175,991	$1,630	0.0 per cent	-3.5 per cent
THE FLORENCE RESIDENCES	$1,050,461	$1,636	$1,077,639	$1,550	2.6 per cent	-5.2 per cent
URBAN TREASURES	$1,294,746	$1,968	$1,348,903	$1,842	4.2 per cent	-6.4 per cent
AMBER PARK	$1,715,445	$2,530	$1,791,414	$2,464	4.4 per cent	-2.6 per cent
AVENUE SOUTH RESIDENCE	$1,428,720	$2,125	$1,516,691	$2,117	6.2 per cent	-0.4 per cent
KOPAR AT NEWTON	$1,540,275	$2,510	$1,641,167	$2,382	6.6 per cent	-5.1 per cent
THE JOVELL	$899,741	$1,366	$963,139	$1,336	7.0 per cent	-2.2 per cent
PASIR RIS 8	$1,187,114	$1,665	$1,284,721	$1,645	8.2 per cent	-1.2 per cent
BARTLEY VUE	$1,312,455	$1,999	$1,424,090	$1,946	8.5 per cent	-2.7 per cent
SKY EDEN@BEDOK	$1,420,313	$2,129	$1,546,333	$2,161	8.9 per cent	1.5 per cent
DAINTREE RESIDENCE	$1,121,262	$1,736	$1,228,456	$1,679	9.6 per cent	-3.3 per cent
LENTOR MODERN	$1,468,620	$2,166	$1,617,540	$2,210	10.1 per cent	2.0 per cent
ROYALGREEN	$1,800,287	$2,754	$1,985,569	$2,739	10.3 per cent	-0.6 per cent
IRWELL HILL RESIDENCES	$1,635,263	$2,665	$1,808,113	$2,709	10.6 per cent	1.6 per cent
MIDTOWN MODERN	$1,702,396	$2,743	$1,889,011	$2,619	11.0 per cent	-4.5 per cent
AMO RESIDENCE	$1,421,739	$2,150	$1,579,163	$2,126	11.1 per cent	-1.1 per cent
PARK COLONIAL	$1,159,711	$1,821	$1,299,675	$1,894	12.1 per cent	4.0 per cent
THE TAPESTRY	$872,915	$1,427	$980,514	$1,392	12.3 per cent	-2.4 per cent
STIRLING RESIDENCES	$1,189,134	$1,840	$1,338,703	$1,894	12.6 per cent	2.9 per cent
FOURTH AVENUE RESIDENCES	$1,507,303	$2,347	$1,707,518	$2,425	13.3 per cent	3.3 per cent
GRANGE 1866	$1,928,000	$2,714	$2,185,056	$2,771	13.3 per cent	2.1 per cent
THE WATERGARDENS AT CANBERRA	$1,001,338	$1,494	$1,136,302	$1,454	13.5 per cent	-2.7 per cent
MIDWOOD	$1,070,493	$1,686	$1,217,988	$1,689	13.8 per cent	0.2 per cent
RIVERFRONT RESIDENCES	$830,925	$1,346	$948,178	$1,300	14.1 per cent	-3.4 per cent
ONE PEARL BANK	$1,712,271	$2,447	$1,955,754	$2,377	14.2 per cent	-2.9 per cent
CLAVON	$1,107,800	$1,634	$1,269,921	$1,662	14.6 per cent	1.7 per cent
VERTICUS	$1,367,029	$2,084	$1,568,455	$2,116	14.7 per cent	1.5 per cent
DUNEARN 386	$1,398,000	$2,498	$1,607,637	$2,469	15.0 per cent	-1.2 per cent
LEEDON GREEN	$1,705,228	$2,716	$1,970,234	$2,676	15.5 per cent	-1.5 per cent
TREASURE AT TAMPINES	$824,011	$1,405	$952,556	$1,419	15.6 per cent	1.0 per cent
NYON	$1,653,417	$2,293	$1,911,766	$2,250	15.6 per cent	-1.9 per cent
THE LINQ @ BEAUTY WORLD	$1,279,767	$2,204	$1,485,133	$2,225	16.0 per cent	1.0 per cent
HYLL ON HOLLAND	$1,512,956	$2,548	$1,760,838	$2,552	16.4 per cent	0.2 per cent
AFFINITY AT SERANGOON	$993,360	$1,589	$1,157,618	$1,562	16.5 per cent	-1.7 per cent
ONE BERNAM	$1,705,514	$2,387	$1,988,718	$2,400	16.6 per cent	0.5 per cent
8 HULLET	$2,268,852	$3,427	$2,682,927	$3,368	18.3 per cent	-1.7 per cent
JUNIPER HILL	$1,687,071	$2,806	$1,995,700	$2,865	18.3 per cent	2.1 per cent
THE COMMODORE	$970,240	$1,554	$1,149,033	$1,525	18.4 per cent	-1.9 per cent
SENGKANG GRAND RESIDENCES	$1,108,605	$1,734	$1,313,995	$1,725	18.5 per cent	-0.5 per cent
PARC KOMO	$960,350	$1,511	$1,147,754	$1,558	19.5 per cent	3.1 per cent
PARC ESTA	$1,099,055	$1,741	$1,314,548	$1,699	19.6 per cent	-2.4 per cent
JADESCAPE	$1,109,794	$1,718	$1,328,882	$1,735	19.7 per cent	1.0 per cent
FYVE DERBYSHIRE	$1,444,749	$2,448	$1,733,168	$2,398	20.0 per cent	-2.0 per cent
DAIRY FARM RESIDENCES	$1,003,226	$1,587	$1,214,606	$1,678	21.1 per cent	5.7 per cent
35 GILSTEAD	$1,462,800	$2,645	$1,772,234	$2,533	21.2 per cent	-4.2 per cent
THE M	$1,514,607	$2,462	$1,840,024	$2,475	21.5 per cent	0.5 per cent
PETIT JERVOIS	$2,335,000	$2,698	$2,838,146	$2,826	21.5 per cent	4.7 per cent
LIV @ MB	$1,626,914	$2,444	$1,990,053	$2,433	22.3 per cent	-0.4 per cent
MAYFAIR MODERN	$1,309,400	$2,098	$1,606,649	$2,084	22.7 per cent	-0.6 per cent
VERDALE	$1,075,024	$1,752	$1,321,205	$1,802	22.9 per cent	2.8 per cent
KENT RIDGE HILL RESIDENCES	$1,145,697	$1,724	$1,409,880	$1,779	23.1 per cent	3.2 per cent
ONE HOLLAND VILLAGE RESIDENCES	$1,812,127	$2,624	$2,244,610	$2,664	23.9 per cent	1.5 per cent
WHISTLER GRAND	$906,475	$1,472	$1,123,949	$1,466	24.0 per cent	-0.4 per cent
RV ALTITUDE	$1,330,900	$3,016	$1,654,800	$2,707	24.3 per cent	-10.2 per cent
THE WOODLEIGH RESIDENCES	$1,086,431	$1,873	$1,361,103	$1,962	25.3 per cent	4.7 per cent
VAN HOLLAND	$2,018,639	$2,964	$2,530,702	$2,994	25.4 per cent	1.0 per cent
VIEW AT KISMIS	$902,667	$1,747	$1,135,954	$1,724	25.8 per cent	-1.3 per cent
PENROSE	$976,565	$1,512	$1,254,890	$1,701	28.5 per cent	12.5 per cent
FORETT AT BUKIT TIMAH	$1,169,574	$2,019	$1,506,380	$2,030	28.8 per cent	0.5 per cent
PHOENIX RESIDENCES	$912,598	$1,514	$1,197,910	$1,601	31.3 per cent	5.7 per cent
THE HYDE	$1,950,498	$2,822	$2,578,087	$2,993	32.2 per cent	6.0 per cent
3 CUSCADEN	$1,747,151	$4,162	$2,749,602	$3,668	57.4 per cent	-11.9 per cent
ATLASSIA	$1,305,840	$2,128	$2,408,757	$1,905	84.5 per cent	-10.5 per cent

Projects with only either a one bathroom or two bathroom layout were excluded as there is no basis for comparison.

It goes without saying that two-bedders with one bathroom cost less than those with two bathrooms.

However, projects such as Ki Residences registered, on average, lower prices for their one bathroom layout.

The reason is simply due to timing – transactions at Ki Residences for the one bathroom layout happened mostly in 2022, whereas two bathroom layouts transacted in 2020 and 2021.

Most of the one bathroom units were also situated in one stack. This happens sometimes as two bed one bath units will typically be seen as a more popular layout, and would be the first to go.

Now that we’ve seen the price difference between both types of layouts, how different are they when it comes to capital appreciation?

Is a two bathroom or one bathroom layout better for capital gains?

Based on the above projects, there were a total of 225 buy/sell transactions.

From there, we singled out projects that had fewer than 10 units changing hands.

We were then left with 184 units changing hands in the following projects:

Projects	Volume
JADESCAPE	13
THE TAPESTRY	16
PARK COLONIAL	21
WHISTLER GRAND	22
PARC ESTA	26
RIVERFRONT RESIDENCES	38
STIRLING RESIDENCES	48

Here’s a look at their performance on average:

2 Bedroom Type	Average Performance ($)	Average Performance (per cent)	Annualised Returns (per cent)
2B 1B	$170,756	17.16 per cent	4.57 per cent
2B 2B	$200,310	16.81 per cent	4.46 per cent

As you can see, the annualised performance between both types of layouts isn’t that different.

Here’s a look at the breakdown by project:

	Average Performance ($)		Average Performance (per cent)		Annualised Returns (per cent)
PROJECT	1 Ba	2 Ba	1 Ba	2 Ba	1 Ba	2 Ba
JADESCAPE	$175,633	$184,778	15.70 per cent	14.40 per cent	4.22 per cent	3.99 per cent
PARC ESTA	$212,892	$271,324	20.25 per cent	20.47 per cent	5.29 per cent	5.53 per cent
PARK COLONIAL	$201,324	$140,765	17.64 per cent	11.84 per cent	4.34 per cent	3.17 per cent
RIVERFRONT RESIDENCES	$105,696	$128,293	12.96 per cent	13.78 per cent	3.35 per cent	3.64 per cent
STIRLING RESIDENCES	$229,804	$234,544	20.50 per cent	17.91 per cent	5.41 per cent	4.65 per cent
THE TAPESTRY	$87,413	$134,743	10.01 per cent	13.82 per cent	3.57 per cent	3.49 per cent
WHISTLER GRAND	$183,527	$238,857	21.53 per cent	22.77 per cent	5.82 per cent	6.16 per cent

Similarly, a look at the average performance shows that in most cases, the performance between both types of layouts is not that much different.

However, one project does stand out: Park Colonial.

When we looked at transactions of one bathroom layouts, their average purchase price came to $1,145,667.

The average purchase price of the two bathroom layouts that sold was $1,252,444.

This translated to a difference of 9.32 per cent. However, upon selling, the difference in premium between the one and two bathrooms fell to 3.43 per cent.

This closing in the premium gap between both the one and two bathrooms could have boiled down to timing.

Out of 12 sale transactions of the one bathroom units, 11 took place in 2022.

In contrast, out of nine transactions of the two bathroom units, five took place in 2022.

While it’s a long shot to conclude anything from a handful of transactions, it’s more likely the case of good (lucky) timing versus a black-and-white rule of whether one unit type is better for appreciation over another.

What if we looked at the premium gap between one and two bathroom layouts within projects?

One train of thought could be – if the two bathroom has a larger price gap compared to the one bathroom layout, would this translate to better gains for the one bathroom, and conversely poorer returns for the two bathroom?

Also, two bathroom layouts usually (but not always) sell for a premium over single-bathroom units; this assumes we set aside other factors such as better views, premium stacks, etc.

Here’s a look at the premium gap of the same projects above at launch, and subsequently when it sold in the resale market:

	New Sale			Sub-Sale/Resale
PROJECT	1 Bathroom Avg. Price	2 Bathrooms Avg. Price	Premium Difference	1 Bathroom Avg. Price	2 Bathrooms Avg. Price	Premium Difference	Difference
RIVERFRONT RESIDENCES	$822,758	$938,352	14.0per cent	$929,033	$1,065,916	14.7 per cent	0.7 per cent
WHISTLER GRAND	$896,940	$1,108,107	23.5per cent	$1,046,789	$1,300,256	24.2 per cent	0.7 per cent
PARC ESTA	$1,087,088	$1,305,694	20.1per cent	$1,269,499	$1,616,199	27.3 per cent	7.2 per cent
JADESCAPE	$1,103,495	$1,324,816	20.1per cent	$1,304,000	$1,473,521	13.0 per cent	-7.1 per cent
PARK COLONIAL	$1,147,563	$1,293,829	12.7per cent	$1,347,626	$1,406,492	4.4 per cent	-8.4 per cent
STIRLING RESIDENCES	$1,175,613	$1,326,002	12.8per cent	$1,353,788	$1,550,830	14.6 per cent	1.8 per cent
THE TAPESTRY	$869,645	$969,645	11.5per cent	$999,361	$1,085,000	8.6 per cent	-2.9 per cent

Whistler Grand, Parc Esta, and Jadescape all saw substantially higher prices for two bathroom units, at 20 per cent above single-bathroom counterparts.

However, eventual sub-sale or resale transactions show that the premium may be justified, as it was maintained when it changed hands (in Parc Esta’s case, the premium actually widened).

Conversely, a small premium gap doesn’t necessarily mean it could widen later. Park Colonial had a premium gap of 12.7 per cent, however, this narrowed to 4.4 per cent.

Still, this could boil down to transaction timing – as such, we really cannot draw any conclusion from just looking at premium differences either.

Beyond the data, there are some qualitative factors to note

Some benefits of two-bathroom units may not be reflected in the data alone.

(Note: rentability refers to how easily and quickly you can find a tenant – it shouldn’t be mistaken for more quantitative factors like rental yield).

When you have tenants who are roommates, or who are sharing space with another stranger, the preference is almost always for two bathrooms.

If you’ve ever had to wake up early for work, and found the only bathroom occupied for too long, you’ll understand the frustration it causes.

Some tenants also feel there’s a loss of privacy when they’re forced to share a single bathroom.

It’s not uncommon, for instance, for some female tenants to insist the other unrelated tenant also be female if they’re sharing the same bathroom.

On the flip side, one realtor pointed out that tenants who are strictly single and renting out a two-bedder for themselves may see the second bathroom as a drawback.

If you’re strictly living alone, you don’t want an additional bathroom to have to maintain; and you’d probably be willing to trade it for more living space.

As a final consideration, realtors agreed that it’s generally easier to sell a two-bathroom unit

This doesn’t guarantee a higher price – but it could mean you’re able to sell the unit more quickly.

We can chalk it up to, well, the longstanding belief that two-bathroom units are better investments.

And as one realtor points out, the two-bathroom option appeals to those with foresight.

You may be satisfied with one bathroom while you’re single – but what if one day you decide to settle down with your partner, or decide to use the unit as a rental asset?

You might have some regrets about not picking two bathrooms then.

ALSO READ: 6 key things HDB upgraders should know before buying a condo in 2023

This article was first published in Stackedhomes.

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