What makes a small boutique condo profitable?

What makes a small boutique condo profitable?
PHOTO: Stackedhomes

Boutique condos are something of a niche buy. Often with 100 units or less (in some cases even fewer than a dozen units), these projects are known to be typically volatile: transactions tend to be few, so even a single outlier can greatly skew prices up or down.

Plus, there's the issue of higher maintenance fees, given such a low unit count. But as some people love the exclusivity, a common question we're asked is: where can I find a profitable boutique condo? We decided to take a look at some of the more successful ones to see what we can learn:

Gains and losses of boutique condos

The following shows transactions of boutique condos, between 2014 to 2024 with at least five buy/sell transactions:

Projects District Planning Area No. of Buy/Sell Tnx Avg. Annualised (per cent)
LA SUISSE 11 Bukit Timah 5 6.8per cent
LE CONNEY PARK 15 Bedok 6 5.0per cent
CITY LOFT 8 Kallang 6 4.8per cent
MABELLE 15 Bedok 8 4.7per cent
THE PRINCETON 10 Tanglin 6 4.7per cent
THE BALE 15 Bedok 5 4.6per cent
VIENTO 14 Geylang 6 4.5per cent
THE MEDLEY 15 Bedok 5 4.4per cent
THE SPINNAKER 11 Novena 5 4.3per cent
EVELYN MANSIONS 11 Novena 5 4.1per cent
AXIS @ SIGLAP 15 Bedok 6 3.8per cent
ONE TREE HILL RESIDENCE 10 River Valley 5 3.7per cent
BLISS LOFT 12 Novena 5 3.7per cent
PRESTIGE LOFT 15 Bedok 5 3.5per cent
THE VUE 19 Serangoon 5 3.3per cent
THE GLACIER 15 Bedok 5 3.1per cent
DAISY SUITES 13 Serangoon 5 2.9per cent
MAYFAIR RESIDENCES 15 Bedok 7 2.6per cent
EDENZ SUITES 14 Geylang 5 2.4per cent
THE SILVER FIR 15 Geylang 5 2.2per cent
RESIDENCES 88 14 Bedok 5 2.1per cent
LAVERNE’S LOFT 15 Bedok 6 2.1per cent
THE SANCTUARY @ GEYLANG 14 Geylang 6 2.0per cent
PALMERA RESIDENCE 15 Bedok 6 2.0per cent
DE CENTURION 15 Kallang 5 1.9per cent
VIIO @ BALESTIER 12 Novena 9 1.9per cent
CITIGATE RESIDENCE 8 Kallang 5 1.9per cent
SUITES @ KOVAN 19 Hougang 6 1.8per cent
NATURALIS 15 Bedok 6 1.8per cent
LA FLEUR 14 Geylang 6 1.7per cent
THE NAVIAN 14 Bedok 11 1.7per cent
LOFT 33 14 Geylang 11 1.6per cent
SUITES @ EUNOS 14 Bedok 5 1.6per cent
SUITES @ SIMS 14 Geylang 6 1.5per cent
24 ONE RESIDENCES 5 Queenstown 5 1.5per cent
BERKELEY RESIDENCES 15 Bedok 9 1.5per cent
FLORAVILLE 28 Ang Mo Kio 10 1.5per cent
LEICESTER SUITES 13 Toa Payoh 6 1.5per cent
DEVONSHIRE 12 9 River Valley 5 1.4per cent
THE BENTLY RESIDENCES@KOVAN 19 Hougang 11 1.3per cent
ASCENT @ 456 12 Novena 11 1.3per cent
8 FARRER SUITES 8 Kallang 5 1.2per cent
PARK RESIDENCES KOVAN 19 Hougang 5 1.2per cent
THE COTZ 15 Bedok 9 1.1per cent
HILBRE28 19 Hougang 7 1.1per cent
183 LONGHAUS 20 Bishan 7 0.9per cent
MULBERRY TREE 11 Novena 6 0.9per cent
REZI 35 14 Geylang 5 0.9per cent
LOFT@HOLLAND 10 Bukit Timah 6 0.9per cent
PARC SOMME 8 Kallang 5 0.8per cent
TREASURES@G6 14 Geylang 11 0.7per cent
TREASURES @ G20 14 Geylang 6 0.7per cent
VETRO 12 Kallang 5 0.7per cent
R MAISON 13 Serangoon 7 0.6per cent
WILKIE 80 9 Rochor 5 0.6per cent
SUNNYVALE RESIDENCES 15 Bedok 7 -0.4per cent
THE ASANA 10 Bukit Timah 9 -0.5per cent
28 RC SUITES 8 Rochor 6 -0.6per cent

The average annualised gain for the boutique condos above is around 3.57 per cent, which is in line with most private properties; but as you can see from One Robin (over 49 per cent annualised gain) and Casero @ Dunman (- 11.1 per cent loss), "average" may not mean much for this property segment. 

One way to get a different picture is to look at boutique condos based on district:

District Breakeven Gain Loss Grand Total Total Volume
27   9.5per cent   9.5per cent 1
21   6.3per cent   6.3per cent 11
26   5.6per cent   5.6per cent 1
3   5.0per cent   5.0per cent 4
10   5.6per cent -2.9per cent 5.0per cent 147
15 0 4.6per cent -2.6per cent 4.2per cent 401
16   4.4per cent -0.6per cent 4.1per cent 22
17   4.4per cent -1.7per cent 4.0per cent 17
4   3.8per cent   3.8per cent 3
19 0 4.1per cent -1.1per cent 3.5per cent 111
11   3.9per cent -3.9per cent 3.5per cent 85
9 0 3.8per cent -2.4per cent 3.5per cent 79
23   4.8per cent -2.9per cent 3.2per cent 5
12   3.8per cent -1.7per cent 3.1per cent 81
1   2.9per cent   2.9per cent 1
13   2.8per cent -1.6per cent 2.7per cent 29
5   2.9per cent -1.3per cent 2.6per cent 28
14 0 3.0per cent -1.1per cent 2.5per cent 186
8   3.6per cent -3.8per cent 1.7per cent 75
7   1.6per cent   1.6per cent 1
20 0 1.9per cent -2.1per cent 1.5per cent 13
28   1.7per cent -0.4per cent 1.5per cent 10
6     -0.4per cent -0.4per cent 1
Grand Total 0 4.1per cent -2.2per cent 3.6per cent 1312

From the above, we can see that units 10 and 15 stand out for boutique projects:

With regard to District 15, this is probably due to the large number of boutique condos in the Katong/Joo Chiat area. This provides a much higher transaction volume, which may also explain the higher annualised returns here. 

(The exception to this would be Vibes @ East Coast and Casero @ Dunman, where the respective losses of 26.9 per cent and 11.1 per cent came from holding periods of less than a year. It's fair to say, however, that the abnormally short holding periods make these outliers, with losses probably due to the sellers' unique circumstances). 

This may also be due to the gentrification of the Joo Chiat stretch, which in previous decades had a reputation for being sleazy (it was once full of massage parlours and shady bars). The boutique condos already in this area would have seen a turnaround in value as the area was cleaned up.

The neighbouring District 14 (the Eunos to Paya Lebar stretch) also has a good amount of transaction volume, albeit a lower annualised return.

The properties in District 14 are likely to be older, and a bigger proportion may be rented out. Properties here are in a dense urban area, which some families dislike; but that also means they're well positioned to take advantage of the nearby Paya Lebar hub. 

District 10 (River Valley, Tanglin, Holland V, and the other ritzy neighbourhoods) is simply ideal for this sort of project. While there are many high-end condos in the area, affluent buyers tend to prefer a degree of exclusivity and privacy, and that's something that boutique condos do well.

Looking at results by size

Here, we look at a scatterplot showing annualised returns versus square footage:

From this, we can make out that larger units tend to fare better for boutique condos; although this isn't something that is relegated to just boutique condos.

Size Category Average Profit Average per cent Profit Average Annualised Returns (per cent)
Less Than 500 sq ft $80,619.02 12.81per cent 2.44per cent
Less Than 900 sq ft $147,930.82 15.34per cent 2.92per cent
Less Than 1,400 sq ft $272,479.32 20.69per cent 3.91per cent
More Than 1,400 sq ft $489,416.63 21.84per cent 4.27per cent
Grand Total $227,220.66 17.80per cent 3.39per cent

Do notice that, while the returns rise with unit size, the transaction volume of bigger units is much lower. This is just because huge units tend to be scarcer, and this may also be a factor contributing to better returns. 

We also speculate that larger units tend to be bought by pure owner-occupiers more often (landlords seldom want something so big, as there's a cap on the maximum number of tenants, and the high quantum will diminish rental yields). 

Owner-occupiers are also more likely than investors to pay above a unit's valuation: their family's comfort means more than resale gains to them. In addition, owner-occupiers tend to have a much longer holding period, and this can also account for their stronger gains. 

A persistent problem with boutique condos, besides price volatility, is that they tend to go under the radar

Boutique condos aren't just physically smaller and less visible, they also have a smaller market presence. Boutique condos are notoriously tough to move during property launch, for instance, as they tend to be from smaller developers, with lower budgets (they're very reliant on agents' networks and word-of-mouth).

Trust issues also play a part here, as a boutique project is more likely to carry a developer name you don't recognise. The familiar big players like CapitaLand, GuocoLand, CDL, etc. are usually seen on full-size developments; so there's a bit more uncertainty among buyers. 

ALSO READ: Here's why some new-launch condos sell better than others

This article was first published in Stackedhomes.

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