Understanding how to calculate rental yield in Singapore is essential for any property buyer or investor. Rental yield tells you how much income your property generates relative to its cost, helping you compare different investments and decide whether a property is truly worth buying. In this FAQ-style guide, we’ll break down everything you need to know about rental yield, net return, and property ROI in Singapore, so you can make confident, informed decisions with Homejourney.
What is rental yield in Singapore?
Rental yield is the annual rental income from a property expressed as a percentage of its purchase price or market value. It’s a key metric used by investors to assess the income-generating potential of a property.
In Singapore, rental yield is especially important because property prices are high, and returns can vary significantly between HDB flats, private condos, and different locations. A higher rental yield generally means better cash flow, but it must be weighed against capital appreciation, location, and holding costs.
How do you calculate gross rental yield?
Gross rental yield gives you a quick snapshot of your returns before accounting for any costs. It’s the simplest way to compare properties at a glance.
Gross Rental Yield Formula:
(Annual Rental Income ÷ Property Purchase Price) × 100
Example:
- Monthly rent: $3,000
- Annual rent: $36,000
- Property price: $900,000
- Gross Yield = ($36,000 ÷ $900,000) × 100 = 4.0%
This 4% is your gross rental yield. It’s useful for initial screening, but it doesn’t reflect your actual profit because it ignores expenses like mortgage interest, property tax, and maintenance.
How do you calculate net rental yield?
Net rental yield is a more accurate picture of your investment return because it factors in annual costs. Serious investors focus on net yield, as it shows what you’re actually putting in your pocket.
Net Rental Yield Formula:
[(Annual Rent – Annual Costs) ÷ Property Purchase Price] × 100
Key costs to include:
- Mortgage interest (use our bank rates page to estimate)
- Property tax (calculate using IRAS guidelines)
- Condo maintenance or MCST fees (for private properties)
- Home insurance
- Rental agent fees (typically one month’s rent per year)
- Vacancy buffer (e.g., 1–2 months’ rent loss per year)
Example (2-bedroom condo in District 15):
- Monthly rent: $3,000 → Annual rent: $36,000
- Annual mortgage interest: $12,000
- Property tax: $2,400
- Maintenance: $2,000
- Agent fee: $3,000
- Other costs (insurance, repairs): $1,600
- Total annual costs: $21,000
- Net annual income: $36,000 – $21,000 = $15,000
- Property price: $900,000
- Net rental yield = ($15,000 ÷ $900,000) × 100 = 1.67%
As you can see, the net yield (1.67%) is much lower than the gross yield (4.0%). This is typical in Singapore, where net yields are often 1.5–2% lower than gross yields due to high holding costs.
What is the difference between gross and net rental yield?
The main differences are:
- Gross rental yield only considers rent and property price. It’s a quick, high-level metric.
- Net rental yield subtracts all annual expenses, giving a more realistic view of your actual return.
For a true picture of your property ROI in Singapore, always calculate net rental yield. Relying only on gross yield can lead to overestimating your returns and making poor investment decisions.
How do you calculate rental return on investment (ROI)?
Rental return on investment (ROI) is similar to net rental yield but can be calculated based on your total cash outlay instead of the property price. This is especially useful if you’re using a mortgage and CPF.
ROI Formula (based on cash outlay):
(Net Annual Rental Income ÷ Total Cash Outlay) × 100
Total cash outlay includes:
- Downpayment
- Buyer’s Stamp Duty (BSD)
- Additional Buyer’s Stamp Duty (ABSD)
- Legal and conveyancing fees
- Renovation and furnishing costs
- Agent commission (if applicable)
Example:
- Property price: $720,000
- Downpayment (25%): $180,000
- Stamp duties and fees: $102,600
- Renovation and furnishings: $15,000
- Other costs: $5,000
- Total cash outlay: $302,600
- Net annual rental income: $6,403
- ROI = ($6,403 ÷ $302,600) × 100 = 2.1%
This 2.1% is your net return on investment, which is what you’re actually earning from your cash investment in the property.
What is a good rental yield in Singapore?
As of late 2025, average gross rental yields in Singapore are around 3.3–3.5% for private residential properties, with HDB flats often slightly higher. However, net yields are typically lower, often in the 1.5–2.5% range after costs.
A “good” rental yield depends on:
- Property type (HDB vs condo vs landed)
- Location (central vs suburban)
- Market conditions (rental demand, interest rates)
- Your investment goals (cash flow vs capital appreciation)
As a rule of thumb, a net rental yield above 2% is generally considered attractive for a private property in Singapore, but always compare it with alternative investments and consider long-term capital growth.
How do I estimate rental income for a property?
To calculate rental yield, you need a realistic estimate of rental income. Here’s how to do it:
- Check recent rental listings for similar units in the same development or nearby projects using project data and property search.
- Look at units of similar size, floor level, and condition.
- Adjust for market trends (e.g., higher demand in central areas or near MRT stations).
- Be conservative – assume some vacancy (e.g., 1–2 months per year) and avoid overestimating rent.
For example, if similar 1-bedroom condos in District 10 are renting for $2,200–$2,500 per month, use $2,200–$2,300 as your base figure for yield calculations.
What costs should I include in my rental yield calculation?
To get an accurate net rental yield, include these annual costs:
- Mortgage interest – based on your loan amount, interest rate, and loan tenure.
- Property tax – calculated on the Annual Value (AV) by IRAS.
- Maintenance fees – condo maintenance or MCST fees for HDB flats.
- Home insurance – especially important if you’re renting out the property.
- Rental agent fees – typically one month’s rent per year if you use an agent.
- Vacancy and repairs – set aside 1–2 months’ rent for vacancies and minor repairs.
- Other fees – such as cleaning, pest control, or aircon servicing (you can book aircon servicing through Homejourney).
Don’t forget CPF usage rules and TDSR/MSR limits when planning your financing, as these affect your cash flow and net returns.
