Understanding how to calculate rental yield in Singapore is one of the most important skills for any property buyer or investor. Whether you are eyeing a resale HDB in Tampines, a new launch condo in Lentor, or a shoebox unit in Geylang, your rental yield and overall property ROI Singapore will determine if the numbers truly work for you and your family.[5][7]
This definitive Homejourney guide is written for first-time buyers, upgraders, and seasoned investors who want a safe, data-driven approach to rental return. We combine real Singapore examples, official regulations, and insider tips from on-the-ground experience in estates from Punggol to Tiong Bahru, so you can make confident, well-informed decisions in a trusted environment.[5][7]
Table of Contents
- 1. What Is Rental Yield and Why It Matters in Singapore
- 2. Key Rental Yield Concepts: Gross, Net, and Cash-on-Cash ROI
- 3. Step-by-Step: How to Calculate Gross Rental Yield in Singapore
- 4. Step-by-Step: How to Calculate Net Rental Yield (Real Rental Return)
- 5. Singapore-Specific Costs That Affect Rental Yield
- 6. HDB, Condo, and Landed: Typical Yields and Market Benchmarks
- 7. CPF, Stamp Duties, LTV, and TDSR: How Financing Impacts Yield and ROI
- 8. Practical Framework: Using Rental Yield to Choose the Right Property
- 9. Common Mistakes Singapore Investors Make with Rental Yield
- 10. Worked Examples: Realistic Singapore Rental Yield Scenarios
- 11. FAQs: Rental Yield, Property ROI Singapore, and Investor Questions
- 12. Next Steps and How Homejourney Helps You Invest Safely
1. What Is Rental Yield and Why It Matters in Singapore
Rental yield is the percentage return you get each year from renting out your property, based on how much you paid to buy it.[1][3] In simple terms, it answers: “For every $100 I put into this property, how many dollars of rent do I receive each year?”
In Singapore’s 2024–2025 market, where private property prices remain high and interest rates are off their peak but still elevated, rental yield is crucial to avoid being over-stretched.[1][7] Average gross rental yields for private properties are around 3.3–3.4% islandwide, with some city-fringe and heartland areas doing slightly better.[7][9] That means a 2–2.5% net yield after costs is common, not the 5–6% some marketing brochures suggest.[4][5]
For Homejourney users, understanding yield is part of our broader focus on a safe, trusted property journey. By verifying numbers and explaining risks clearly, we help you avoid over-optimistic projections and make decisions that hold up even in tougher rental markets.[5]
Why rental yield matters to different buyers
- First-time buyers: Even if you plan to live in the property first, having a clear idea of potential rental yield gives you a safety net if you need to rent out later (e.g. overseas posting, right-sizing).
- Upgraders: Many consider keeping their existing flat or condo as an investment. Rental yield helps you decide: keep and rent, or sell and reduce debt.
- Investors: Yield is your core metric, alongside capital appreciation. A property with strong, stable rent in a mature estate (like Queenstown) may outperform a speculative new launch with low yield but potential upside.
- Foreign buyers: Singapore is seen as a safe haven. Yield helps compare Singapore properties to investments in your home country and other global cities.
2. Key Rental Yield Concepts: Gross, Net, and Cash-on-Cash ROI
Before you calculate rental yield, you must differentiate three related but distinct metrics used by serious Singapore investors.[1][3][4]
2.1 Gross rental yield (headline yield)
Gross rental yield is your annual rental income divided by the property purchase price, expressed as a percentage.[1][3]
Formula (featured snippet-ready):
Gross Rental Yield = (Annual Rental Income ÷ Property Purchase Price) × 100[1][3][5]
Gross yield ignores all expenses. It is useful for quick comparison between units, but never sufficient for final decisions.
2.2 Net rental yield (real rental return)
Net rental yield deducts annual costs (tax, maintenance, insurance, mortgage interest, vacancy, agent fees) from your rental income before dividing by the purchase price.[1][3][4]
Formula:
Net Rental Yield = [(Annual Rental Income – Annual Expenses) ÷ Property Purchase Price] × 100[1][3][5]
In Singapore, net yield is typically 1.5–2 percentage points lower than gross yield once you include realistic costs.[5] This is the number experienced investors and banks focus on.
2.3 Cash-on-cash ROI (what your cash actually earns)
Cash-on-cash return, sometimes called net rental yield on cash outlay, looks at how much net rental income you earn compared to your actual cash invested (downpayment, stamp duties, renovation, legal fees), not the full purchase price.[4]
Formula:
Cash-on-Cash ROI = (Net Annual Rental Income ÷ Total Cash Outlay) × 100[4][5]
For highly leveraged properties with big upfront ABSD and renovation, the difference between net yield on purchase price and cash-on-cash ROI can be huge. This is particularly important for Singaporeans buying a second or third property where ABSD is significant.
2.4 Quick comparison table
3. Step-by-Step: How to Calculate Gross Rental Yield in Singapore
Gross rental yield is straightforward and a good starting point before diving deeper.[1][3][5]
3.1 Step 1: Estimate realistic monthly rent
Do not rely solely on asking prices. Use recent transactions and comparable listings:
- Use Homejourney’s verified Property Search to see recent rental rates for similar units in the same development or nearby blocks. Property Search
- Cross-check with URA’s private residential rental statistics or HDB’s published rental data for towns and flat types.[5]
- Adjust for floor level, facing (e.g. noisy PIE vs quiet inner stack), renovation condition, and walking distance to MRT.
Insider tip: In estates like Bishan and Queenstown, units within a 5–7 minute shaded walk to the MRT (via covered walkways or underpasses) can sometimes fetch $100–$300 more per month than units technically within 500m but involving uphill stairs or unsheltered crossings.
3.2 Step 2: Annualise the rent
Multiply the realistic monthly rent by 12 months.
3.3 Step 3: Use the actual purchase price
Always use the total purchase price you are paying (not valuation alone). For new launches, use the actual transacted price including discounts. For resale, use the agreed sale price (including any COV for HDB, if applicable).
3.4 Step 4: Apply the gross rental yield formula
Using the example above and a condo bought at $900,000:[1]
Gross Rental Yield = ($36,000 ÷ $900,000) × 100 = 4.0%[1][2][5]
This 4% looks attractive at first glance—but as we will see, net yield after costs is what truly matters.
4. Step-by-Step: How to Calculate Net Rental Yield (Real Rental Return)
Net rental yield is the metric that should guide your decision because it reflects what you actually keep in your pocket each year.[1][3][4]
4.1 Common costs to include in Singapore
- Mortgage interest (not principal repayment)[1][4]
- Property tax on residential investment property (non-owner-occupied rates from IRAS, based on Annual Value)
- MCST / condo maintenance fees or town council/service & conservancy charges for HDB
- Repairs and maintenance (aircon servicing, painting, appliances, plumbing) – see Homejourney’s trusted aircon services network. Aircon Services
- Landlord insurance (optional but recommended)
- Agent’s commission for leasing (typically 1 month rent for a 2-year lease or 0.5 month for a 1-year lease, depending on the arrangement)[4]
- Vacancy allowance – assume 1–2 months of vacancy every few years, especially in areas with many competing units like Punggol or Sengkang.
4.2 Step 1: Start with annual rental income
Using a realistic rent (e.g. $3,000/month), your annual rental income is $36,000, as before.
4.3 Step 2: Estimate yearly expenses
Let’s use realistic 2025 figures for a 2-bedroom city-fringe condo:
- Property tax: About $2,400/year for an Annual Value of $24,000 (illustrative; actual IRAS bands apply).[4]
- MCST fees: ~$250/month = $3,000/year for mid-sized projects; higher-end condos with big facilities can exceed $400/month.
- Repairs & upkeep: ~$1,000/year (more if older unit or if you include full repainting every 3–4 years).
- Agent’s commission: If you pay 1 month’s rent for a 2-year lease, spread as $1,500/year.
- Landlord insurance: ~$300/year.
- Mortgage interest: Depends on your loan amount and rate – we’ll cover this in the detailed example later.[4][5]
Non-mortgage costs in this example: $2,400 + $3,000 + $1,000 + $1,500 + $300 = $8,200 per year (before mortgage interest).
4.4 Step 3: Deduct expenses from rental income
If annual rent is $36,000 and total non-loan costs are $8,200, then your net income before interest is:
$36,000 – $8,200 = $27,800
Once you subtract mortgage interest, this may drop significantly. A worked example later shows how a 4% gross yield can become 2–2.5% net yield, or even lower, depending on financing.[1][4][5]
4.5 Step 4: Apply the net rental yield formula
Using the formula with a hypothetical total net annual income (after all costs including interest) of $18,000 on a $900,000 property:
Net Rental Yield = ($18,000 ÷ $900,000) × 100 = 2.0%[1][3][4]
This 2.0% is your real rental return before considering CPF opportunity cost and capital appreciation.
