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Are HDB Flat better investment than stocks and bonds?

It is probably the trend that property is a good inflation hedge, since it will definitely end up higher in value compare to stocks, which can just die off under mismanagement.

It got me thinking while I was studying for my exams.

A 5 room HDB flat that you bought in 1999 for $267k. Now can sell for $550k.

Duration = 13 years

Appreciation = 106 %

Annualized returns = (1+1.06)1/13 = 5.7 % per annum

If you are not renting it, is 5.7% a good return? I think you have to rent because if you don’t rent it doesn’t show the full potential of HDB.

If you rent at least 2 of your room for $1000 per month, your 13 year return is $156k. or 58.42% returns from rental.

Total returns = 106% + 58.42% = 164.4%

Annualized returns = (1+1.64.4)1/13 = 7.7% per annum

Man, I thought the figure will be higher! Still its not bad!

Corporate Bonds

Bonds are a bit out of reach for retail investors. You have LTA bonds yielding 4.17% for the 10 years duration. If you hold the bonds for this 10 years, unless LTA defaults, you get back your principal sum.

Dairy Farm

Lets take mom and pop store operator Dairy Farm Group. It operates your Cold Storage, Giant, Guardian I have records of it from 2002.

Duration = 10 years

Appreciation = 1523%

Dividend Returns = 311%

Total Returns = 1834%

Annualized returns = (1+ 18.34)1/10 = 34% per annum

Dividend returns = (1+3.11)1/10 = 15% per annum

SIA Engineering

Another stable maintenance house that have a sturdy economic model. I have records since 2001

Duration = 11 years

Appreciation = 200.76%

Dividend Returns = 150.76%

Total Returns = 351.52%

Annualized returns = (1+3.5152)1/1114.68% per annum

Dividend returns = (1+1.5076)1/11 = 8.7% per annum

Suntec REIT

A real estate investment trust that didn’t carry out any rights issue. We have records since 2006, which is near the height of the Great Financial Crisis

Duration = 6 years

Appreciation = 14%

Dividend Returns = 72.45%

Total Returns = 86.45%

Annualized returns = (1+0.8645)1/6 = 10.9% per annum

Dividend returns = (1+0.7245)1/6= 9.5% per annum


One of South East Asia’s biggest telco. Lousy service according to a lot of folks but still you can’t live without it. Share price have been in zombie mode.

Duration = 10 years

Appreciation = 83.83%

Capital Return (from share reduction) = 5.3%

Dividend Returns = 87.03%

Total Returns = 176.16%

Annualized returns = (1+1.7616)1/10 = 10.69% per annum

Dividend returns = (1+0.8703)1/10 = 6.4% per annum


South East Asia big property developer. If the housing boom in Asia is great they must be doing even better!

Note: Gave out 1 CapitaCommercial Trust shares for 5 Capitaland shares in 2004, one rights issue at $1.30 in 2009

Duration = 12 years

Appreciation = 35.21%

Dividend Return = 27.47%

Value of CapitaCommercial share returns = 10.6%

Total Returns = 73.28%

Annualized returns = (1+0.7328)1/12 = 4.68% per annum

Ascendas REIT

The oldest REIT around since 2002. It had a total of 4 rights issues in 2004 (twice), 2005 and 2009 during crisis times

Duration = 10 years

Appreciation = 125%

Dividend Return = 104%

Total Returns = 229%

Annualized returns = (1+2.29)1/10 = 12.6% per annum

Dividend returns = (1+1.04)1/10 = 7.3% per annum


The world strongest bank according to some metrics. We have 11 years data.

Duration = 11 years

Appreciation = 68.76%

Dividend Return = 60.09%

Total Returns = 128.85%

Annualized returns = (1+1.2885)1/11 = 7.8% per annum

Dividend returns = (1+0.6009)1/11 = 4.3% per annum


Surprising the stocks did pretty ok going through one bull market and a very bad bear market.

Note that I covered some random REITs and blue chips.

There are some that I include it will show that asset selection plays a part. The returns are worse than that of HDB flats. Then I have many if you hold for 6-8 years you get the kind of Dairy Farm returns.

When we talk about asset selection we are talking about the quality of the company, the valuation you buy it at.

I came to a conclusion that housing like stocks and bonds go through their cycles, and the investor have to be smart enough to know that and buy at the right valuation.

But the one thing that you can do with HDB that you cannot do with stocks and bonds easily: cheap leverage.

You can leverage up to 80% and that will boost your returns.

Other than that, the advantage and disadvantage are not that different. Suntec REIT and Ascendas REIT have shown you can get pretty good returns by having competent management to look after it.

The idea that your flat returns are great is perhaps people didn’t take into account how long the flat have been held. Using the formulas i have shown here you can calculate your own flat’s annualized returns.

So do show me some crazy flat returns going back to 1980s!

I run a free Singapore Dividend Stock Tracker . It  contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly  here.


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Sunday 25th of November 2012

Compare saving $30,000 for down payment(1+ years?)


$3000 for a lot of STI ETF or any dividends stock(Every few months)


Friday 23rd of November 2012

There is no best weapon but only skillful sword-men. Right?


Sunday 25th of November 2012

so if you are not a swordsmen then what do you do? don't go out?


Thursday 22nd of November 2012

I was wondering,

Have anyone calculated the profit or loss having to save for a property down payment compared to putting the money into stock earlier as stock can be bought with way much lesser money?


Thursday 22nd of November 2012

hi Vernold, sorry for my poor understanding power but could u give an example?


Tuesday 20th of November 2012

Property is unbeatable if you buy at the right price. However, if you buy at the peak before a crash, then it might be as long as 10 years before you get back to the original price. If it is a place like Japan, then you will still be at a loss even after 20 years.


Monday 19th of November 2012

You don't really pay 267k for the HDB in one shot, do you? It's paid over 10 yrs, 15 yrs, 20 yrs or 30 yrs. If you take HDB/CPF loan at 2.6% for 30 yrs, the amount payable easily doubles to 534k. But since in your example, you used 13 yrs, then likely there will be some amt left that is not paid up yet....all this just means that the returns is not what is calculated.

Imo, it's not possible to compare. The first property is bought more for the utility rather than for wealth preservation, unless you have a spare bedroom always reserved for you in your parent's home that you can always go back to. Even if you are willing, your wife/children might not, unless you're single. Then again, if you're single, you'll have restrictions to buying hdb, haha


Monday 19th of November 2012

hi LP! no lah i am just thinking out loud. the thing that wins is the leverage portion. think what will happen if you cannot leverage and invest in property. i suppose the velocity of money circulation will slow down by a lot.

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