Are Small Condo Units Still a Good Investment in Today’s Market?
In recent years, small condominium units — typically studios and one-bedders ranging from 400 to 600 sq ft — have gained popularity among certain buyer groups. With their lower price quantum and affordability, these units have often been seen as a gateway into private property ownership. But with today’s shifting market dynamics, the question many investors and homeowners ask is: are small units still a good investment?
The Appeal of Small Units
1. Lower Entry Price
Small units require a smaller upfront investment compared to larger two- or three-bedroom homes. This makes them attractive for younger buyers, single professionals, or those who want to get their “first foot in the door” into Singapore’s private property market.
For investors, the affordability also means less financial strain, lower down payments, and smaller loan obligations — which can be crucial in times of rising interest rates.
2. Steady Rental Demand
In areas near MRT stations, business hubs, or lifestyle hotspots, small units continue to attract strong rental demand. Expats, couples without children, and digital nomads often prefer a compact, fuss-free apartment. This translates into healthy rental yields, especially when compared to larger units where the rental-to-price ratio may be less favorable.
3. Flexibility and Liquidity
Because of their affordability, small units are often easier for entry-level buyers to commit to. In theory, this makes them more liquid compared to higher-quantum properties that require a larger pool of financially capable buyers.
The Challenges of Small Unit Investments
While the advantages are clear, the reality is that small units also come with unique challenges that investors must not overlook.
1. Slower Capital Appreciation
Data shows that small units generally lag behind larger units when it comes to price growth. This is because demand for bigger homes — driven by families — tends to grow faster over time, especially in land-scarce Singapore. As a result, while you may enjoy good rental income, the eventual sale price may not see as strong an upside.
2. Smaller Buyer Pool for Resale
Families, who make up the bulk of property buyers, typically avoid studios and one-bedders. This narrows the resale market largely to singles, investors, or retirees. In turn, this can lead to longer waiting times when it comes to selling your unit, as highlighted in cases where owners took two to three years to offload such properties.
3. Competition from New Launches
New condominium projects are increasingly offering compact one-bedroom layouts with modern finishes, smart home features, and full condo facilities. Older small units, especially leasehold ones, may struggle to compete with the appeal of brand-new developments unless priced attractively.
Right-Sizing and Retirement Planning
Small units are not just an investor’s consideration — they also play a role in retirement planning and asset restructuring.
For homeowners nearing or entering retirement, right-sizing into a one- or two-bedder can free up significant cash while still maintaining a foothold in private property. This cash can be redirected towards living expenses, healthcare needs, or even reinvested into other income-generating assets.
The concept of asset elevation comes in here: upgrading, restructuring, or reallocating your property portfolio so that it aligns with long-term financial goals. A small unit might not deliver the strongest capital gains, but it can be a practical step in creating liquidity and reducing monthly financial commitments.
Who Should Consider Small Units?
Small units still have their place in today’s property market, but they are best suited for:
Yield-driven investors who value rental income over capital appreciation.
Young professionals or singles who want to enter the market without overextending financially.
Retirees or empty nesters who want to right-size and unlock cash for retirement.
Strategic investors who use small units as part of a diversified portfolio — balancing between rental yield and longer-term capital growth from larger units.
Final Thoughts
So, are small condo units still a good investment today?
The answer is yes — but with clear expectations.
If you’re looking for rental income and affordability, small units remain a viable and stable option.
If you’re aiming for capital appreciation and long-term growth, larger units often perform better due to broader family demand and faster value gains.
At the end of the day, every property decision should tie back to your bigger wealth and retirement plan. Buying the “right” unit is less about size, and more about whether it supports your lifestyle, financial goals, and exit strategy.
✨ Pro Tip: Always plan with an entry and exit strategy. Know your holding power, expected rental yield, and who your eventual buyer will be. That way, whether you choose a studio, one-bedder, or a three-bedroom apartment, you’ll be investing with foresight and clarity.
