Does Buying a Higher Floor or Premium Stack Guarantee Higher Profits?
When purchasing property, many buyers in Singapore are drawn to higher-floor units or premium stacks, expecting these features to guarantee higher profits.
However, as two case studies from Forest Woods and Commonwealth Towers reveal, the true determining factor of profitability is the entry price.
In this article, we share two real-life examples that demonstrate the importance of securing the right entry price.
Case Study 1: Forest Woods – Premium Stack vs. Non-Premium Stack
At Forest Woods, two nearly identical units were sold one on Stack 35 (a pool-facing premium unit) and the other on Stack 44 (facing a basketball court and busy Upper Paya Lebar Road). Despite Stack 44’s less desirable view, it earned $200K in profit, while Stack 35 earned only $132K.
The key reason for the difference? Entry price.
Stack 44 had a significantly lower entry price, which ultimately led to a higher return, even with a less favorable view.
This highlights how entry price can outweigh factors like view and stack in determining profitability.
Case Study 2: Commonwealth Towers – Higher Floor vs. Mid-Floor
A similar trend was observed at Commonwealth Towers. Two comparable 2-bedroom units, both measuring 689 square feet, were purchased around the same time. One was located on the 28th floor, while the other was on the 42nd floor. Surprisingly, the 28th-floor unit earned $284K, while the 42nd-floor unit earned only $133K in profit.
The stark difference here, again, comes down to entry price. The price per square foot (psf) for the 42nd-floor unit was significantly higher, limiting its profit potential despite its premium height and view.
Why Entry Price is More Important Than Premium Features
These examples show that while higher-floor units and premium stacks may seem more attractive, they don’t always guarantee higher returns. Securing the right entry price is essential for maximizing both capital appreciation and rental income. Even in Singapore’s competitive real estate market, a lower entry price can often lead to higher overall profits.
Key Takeaways for Property Investors:
Entry Price Matters Most: A lower entry price can generate higher profits, even for units with less desirable views or floor levels.
Emotional vs. Data-Driven Decisions: Many buyers are drawn to higher floors and premium views, especially for their own stay, but data-driven decisions based on entry price will yield better financial results.
Consider Future Buyers in the Resale Market: Premium views or higher floors may not be as important to future buyers, who often prioritize affordability and entry price when buying property.
Conclusion: Secure the Right Entry Price for Maximum Profits
The above case study examples from Forest Woods and Commonwealth Towers clearly show that securing the right entry price is critical for achieving higher profits. Whether you’re buying a unit in a new development or in the resale market, focus on price over premium features like higher floors or better views to ensure long-term success.