HaioVisit Website →
← Back to blog

Rental Investment Returns in Singapore: How to Calculate Them

November 12, 2026
Rental Investment Returns in Singapore: How to Calculate Them

The return on a Singapore rental property is measured in three layers: gross rental yield (annual rent divided by price), net rental yield (rent after property tax, maintenance, vacancy and other running costs, divided by price) and return on equity (net cash result divided by the cash actually invested). Gross yields on private homes are commonly quoted at roughly 3% to 4.5%, and net yields usually sit about 0.8 to 1.2 percentage points lower, so the layer used to quote a figure changes the answer considerably.

This guide sets out each formula, the costs and taxes specific to Singapore, a worked example, and the assumptions that should be checked before a return figure is relied upon.

Haio
haio.sg
Make Better-Informed Property Decisions
Explore property valuation, market analysis, and real-time trends to assess Singapore properties with more context for your investment decisions.
Visit

TL;DR

  • Gross yield = annual rent ÷ purchase price. It is the headline figure, and it ignores vacancy, tax, maintenance and the one-off costs of buying.
  • Net yield deducts running costs, including property tax at the non-owner-occupied rates, which reach 36% on Annual Value above S$60,000 (effective 1 January 2024).
  • Return on equity can look several times higher than yield because of leverage (for example 3.6% on assets versus 14.4% on equity in a DBS illustration), but interest, fees and ABSD reduce it.
  • Yields differ by market segment: gross yields of 2.5% to 3.5% in the core central region, and up to 4.5% for some suburban new launches, according to one 2026 agency outlook.
  • A return figure is only as reliable as its inputs: vacancy, rent, loan rate, tax treatment and holding period each need an explicit assumption.

Table of Contents

What rental investment returns measure

A rental return answers a single question: how much income does the property produce relative to the money tied up in it? The answer depends on which money is counted and which costs are subtracted, which is why published figures for the same unit can differ by several percentage points.

Three measures cover most needs:

  1. Gross rental yield, the simplest, uses rent and price only.
  2. Net rental yield brings in operating costs, vacancy and tax.
  3. Return on equity (ROE) or cash-on-cash return relates the net result to the cash and CPF actually committed, and therefore reflects the mortgage.

A fourth view, total return, adds capital gain (or loss) when the property is sold. Rental yield describes the income side only. A property with a modest yield in an area where prices rise can outperform a higher-yielding unit whose price stagnates, and the reverse is equally possible. For the price side of the picture, the Singapore property market trends analysis tracks how private and HDB prices have moved.

Gross yield, net yield and return on equity

Gross rental yield

Gross yield is annual rent divided by the purchase price, expressed as a percentage. A flat renting at S$3,000 a month brings in S$36,000 a year, which is a 3.6% gross yield on S$1,000,000. DBS describes the same logic as Return on Assets: in its June 2024 example, a S$2 million condominium rented at S$6,000 a month produces a 3.6% ROA.

Gross yield is useful for a first screen, because it needs only two numbers and allows quick comparison of projects. It should not be mistaken for take-home income.

Net rental yield

Net yield subtracts the costs of owning and letting the unit before dividing by the price. The usual deductions are:

  • property tax (at non-owner-occupied rates);
  • monthly maintenance or management fees (MCST fees in a condominium);
  • repairs and replacement of appliances;
  • agent commission when a tenant is found;
  • landlord insurance, where taken;
  • income lost to months without a tenant.

Mortgage interest is not an operating cost in a pure net yield, because the measure compares income with the full price regardless of how it was financed. It becomes relevant in cash flow and in income tax. The step-by-step method is covered in the guide to rental property cash flow in Singapore, and the segment-level benchmarks are discussed in the Singapore rental yield analysis.

Return on equity and cash-on-cash return

Return on equity divides the annual net result by the cash put in. In the DBS illustration, with a 25% down payment (S$500,000) and 75% financing, the same S$72,000 of annual rent on the S$2 million condominium equates to a 14.4% ROE against the 3.6% ROA. DBS notes that interest costs, fees and taxes, particularly the 20% Additional Buyer's Stamp Duty (ABSD) on a second home for citizens, can lower the overall result by a few percentage points.

Leverage therefore raises the percentage return when the property earns more than the loan costs, and it lowers it when the borrowing rate exceeds the yield. With net yields commonly below mortgage rates, the cash-on-cash figure deserves the same scrutiny as the yield itself. The affordability check on haio can be used to test how much borrowing a given budget supports before a leveraged return is modelled.

Costs and taxes that change the result in Singapore

Property tax

A rented-out home is not taxed as an owner-occupied one. The Inland Revenue Authority of Singapore (IRAS) states that non-owner-occupied residential property tax rates, effective 1 January 2024, are progressive on Annual Value (AV): 12% on the first S$30,000, 20% on the next S$15,000, 28% on the next S$15,000 and 36% above S$60,000. IRAS gives sample results of S$4,800 in tax on an AV of S$36,000 and S$19,440 on an AV of S$84,000. The gov.sg explainer adds that AV is set by reference to market rentals of comparable properties, so rising rents can raise the tax base over time.

Because the rate is progressive, higher-value units carry a heavier tax share of rent, which pulls the net yield of prime properties lower than their gross yield suggests. A summary of rebates and current rules is in the property tax guide.

Income tax on rent

Net rental income is taxable. IRAS explains that the net amount after allowable expenses is subject to income tax, and that a deemed rental expense of 15% of gross rent is pre-filled in the online tax form for residential properties. Mortgage interest on the loan used to buy the tenanted property may still be claimed in addition, while repayments of principal may not. Owners with other income should model the tax at their own marginal rate, since the rental income stacks on top of salary. Owners who are tax residents of another country, or who are US persons, should also check the filing rules in their home jurisdiction. A guide to moving to Singapore from the US explains how cross-border tax obligations can alter the cash actually kept.

Acquisition costs and ABSD

One-off costs belong in the denominator of any honest return on investment. They include Buyer's Stamp Duty, legal and conveyancing fees, valuation fees, any agent fee and, for many buyers of a second property, ABSD. DBS estimates that total initial costs including a 20% ABSD for a citizen's second home can reach roughly 25% of the price, or about S$500,000 on a S$2 million property. ABSD is the largest single swing factor for Singaporeans buying a second property, and the current rates for each buyer profile are listed in the ABSD rates guide. The linked second property checklist covers ABSD together with the Total Debt Servicing Ratio (TDSR) limit on borrowing.

Maintenance, repairs and vacancy

MCST fees recur whether or not a tenant is in place, and repair costs arrive irregularly. A rental maintenance cost calculator can help an owner budget repair spending against income, although the figures should be adapted to Singapore fee levels and the age of the building.

Vacancy deserves its own line. According to a Q2 2026 rental outlook by a property agency, private residential vacancy settled near 7% in early 2026, with 4% to 5% in central-fringe markets with limited new supply, against 8% to 10% in newly completed developments in the Outside Central Region (OCR) where tenants are still absorbing additional inventory. A single empty month on a 12-month lease already removes 8.3% of annual rent, so assumptions of full occupancy overstate yield. The wider tenant-versus-landlord balance is discussed in the rental market analysis.

A worked example

The figures below are an illustration, not a quote for any specific unit. They assume a S$1,000,000 condominium let at S$3,300 a month, with one vacant month a year and the property tax computed from an Annual Value of S$36,000, using IRAS's published sample of S$4,800.

LineAnnual amount
Gross rent (12 months × S$3,300)S$39,600
Less one vacant month−S$3,300
Rent actually collectedS$36,300
Property tax (AV S$36,000)−S$4,800
MCST / maintenance fees−S$4,800
Repairs and replacements−S$1,200
Agent commission−S$1,650
Insurance and sundries−S$400
Net operating incomeS$23,450

The gross yield is 3.96% (S$39,600 ÷ S$1,000,000), and the net yield is 2.35% (S$23,450 ÷ S$1,000,000). The 1.6-point gap is wider than the 0.8 to 1.2 points typical of agency estimates, mainly because this example includes a vacant month and the 36% marginal tax tier is not reached. Income tax, the deemed 15% expense election and mortgage interest are not yet included, and they would change the after-tax figure.

Published agency examples show the same pattern. One 2026 cash flow guide works through a S$1.5 million property with S$54,000 of annual rent: the headline gross yield is 3.6%, the net operating yield after a vacant month and costs is 2.18%, and adding stamp duties to the denominator lowers it to about 1.77%.

To turn net income into a total return, add the change in value. If the S$1,000,000 unit were later sold for S$1,050,000, the S$50,000 gain would add 5% over the holding period before selling costs, and the seller's stamp duty on early disposals would need to be deducted (see the guide to seller's stamp duty after the July 2025 changes).

A worked example

Yields by market segment

Yields are not uniform across the island. Using Singapore's Urban Redevelopment Authority (URA) rental caveats matched to transactions, the same Q2 2026 outlook reports gross yields at the start of the quarter of 4.0% to 4.5% for OCR new launches near an MRT station, 3.5% to 4.0% for Jurong East launches, 3.2% to 3.8% in District 15, 3.3% to 3.7% in the Rest of Central Region (RCR) core and 2.5% to 3.5% in the Core Central Region (CCR). It adds that net yields typically run 0.8 to 1.2 percentage points lower.

Gross rental yield ranges across Singapore market segments

A broader survey puts the average gross yield on Singapore apartments at 3.06% for Q2 2026, with suburban Hougang, Punggol and Sengkang the highest on average at 3.30%. The same page reports that the URA private rental index rose 0.7% quarter-on-quarter in Q2 2026 and 1.7% year-on-year, which indicates that rents are firm but not rising quickly.

Two patterns follow from these figures. Lower-priced suburban units tend to show higher percentage yields, and prime central units tend to rely more on capital appreciation. For subsidised flats, the rules on renting are different, and the method for them is set out in the HDB rental yield guide.

What counts as a good return

Online calculators often cite 5% to 8% as a good rental yield. Those ranges come from markets with lower entry prices relative to rent, and Singapore's figures sit below them. With gross yields mostly between roughly 2.5% and 4.5%, a net yield of 2% to 3% is within the normal range for the market, and a gross yield above 4% usually indicates an OCR or suburban unit.

Whether a figure is good depends on three comparisons:

  • Against the financing rate. If the mortgage interest rate exceeds the net yield, the rent does not cover borrowing costs and the investment relies on price growth.
  • Against alternatives. Cash, fixed deposits and bonds provide a reference point for the income-only return.
  • Against the holding period. A 20% total return is a very different outcome over two years than over fifteen, and an annualised figure (compound annual growth rate or XIRR) makes periods comparable.

The reader's own holding period and tax position settle the matter, and a single percentage seldom does so.

Check these assumptions before relying on a calculation

Most errors in return estimates come from inputs rather than arithmetic. The checks below are worth running before a figure is used to decide a purchase.

  1. Rent. Use recent registered leases for comparable units in the same project, not advertised asking rents. URA publishes rental data, and haio's transactions tools bring sale and rental records together by project.
  2. Price. Compare the asking price with recent transactions and with a valuation. An overpayment reduces yield directly.
  3. Vacancy. Assume at least one month a year unless the area's history supports less, and a longer gap between tenancies for a new development with many competing units.
  4. Tax. Apply the non-owner-occupied property tax rates, and estimate income tax at the marginal rate.
  5. Financing. Use the actual loan rate, the loan tenure and the TDSR position, and remember that floating rates change.
  6. Acquisition costs. Include stamp duties, ABSD and legal fees in the capital invested.
  7. Holding period and exit. Estimate the sale price conservatively and include selling costs and any seller's stamp duty.
  8. Property condition. Older buildings may need repainting, wiring or appliance work, and some projects may have special levies for en bloc or upgrading works.

Perspective

We built haio on the view that most disagreements about rental returns are really disagreements about inputs. Two investors can look at the same condominium and quote a 4% and a 2% yield, because one used an asking rent and the other a registered lease, or because one left out vacancy and property tax.

For that reason we put the full transaction record, the valuation and the affordability check in one place, so that rent, price and borrowing capacity can be examined against the same dataset. Our approach is to treat the gross yield as the beginning of the analysis and to move through net yield and cash flow before any decision.

Our Property Analysis tool is designed to support that process for buyers, investors and agents who want unbiased data to show clients, and haio+ adds premium analytics and valuation reports for investors who compare several projects.

HAIO

Run the numbers on haio

Investors comparing projects can start with the free transaction and valuation data on haio, then use the Property Analysis page to review market trends for a given project. The premium haio+ plan is listed on the haio+ page at S$49 per month or S$499 per year, and covers advanced analytics and valuation reports. The affordability check helps establish a realistic budget before any return is modelled.

FAQ

What is a good return on a rental property in Singapore?

Gross yields in Singapore mostly fall between about 2.5% and 4.5%, depending on the region, and net yields are typically 0.8 to 1.2 percentage points lower according to one 2026 agency outlook. A net yield of 2% to 3% is therefore within the normal range. The figure should be judged against the mortgage rate and the expected capital growth over the holding period.

How do you calculate the return on a rental property?

Divide annual rent by the purchase price for the gross yield. For the net yield, subtract property tax, maintenance, repairs, commission, insurance and vacancy from the rent first. For return on equity, divide the net annual cash result by the cash and CPF invested, including stamp duties and ABSD.

Does leverage make rental returns higher?

It can raise the percentage return on the cash invested. In a DBS illustration, a 3.6% return on assets became a 14.4% return on equity with 75% financing. Interest, fees and taxes reduce that figure, and a loan rate above the net yield can reverse the effect.

Is a 20% return on investment good?

That depends on the period and on whether the figure is a total or an annual return. Twenty per cent over ten years averages under 2% a year, while 20% a year would be far above typical Singapore rental yields. Converting any quoted return into an annualised rate allows a fair comparison.

Which part of Singapore has the best rental yield?

Suburban and OCR locations near MRT stations generally show higher gross yields than the central region. Agency data for Q2 2026 gives 4.0% to 4.5% for OCR new launches near MRT stations and 2.5% to 3.5% for the CCR. Yields shift each quarter, so recent transactions for the specific project should be checked.

Sources