Using NPV and MIRR to Value Property Deals in Singapore (2026)

Net present value (NPV) tells you whether a property deal beats the return you require. You discount every future cash flow back to today at your required rate, then subtract what you pay. A positive NPV means the price is below what the deal is worth to you. A negative NPV means you would be paying too much. The modified internal rate of return (MIRR) gives you a single percentage that fixes a known flaw in the better-known IRR.

At a glance

• NPV answers “how many dollars better or worse than my hurdle is this deal?” IRR answers “what yearly rate does it earn?” You need both.
• A S$1.4m unit with S$41,200 of yearly net income has an NPV of −S$77,394 at a 4% hurdle and −S$292,212 at 8%. The most you can pay for a 4% return is about S$1.29m, with stamp duty on top.
• The right hurdle is your own opportunity cost. CPF Ordinary Account money earns a risk-free 2.5%, so a hurdle of 4% to 6% is realistic for a let-out home.
• IRR can rank deals the wrong way round. MIRR and NPV avoid that by stating the reinvestment rate openly.
• Excel’s NPV function treats the first value as one period away, a common source of errors.

Step 1: price a deal with NPV

Take a hypothetical unit. You pay S$1.4m. It earns S$41,200 a year after operating costs, which is a 2.9% net yield. You plan to sell after five years for S$1.4m, with selling costs of 1% (S$14,000), so you receive S$1,386,000. We ignore the loan and stamp duty for now.

Suppose you need a 4% return. Divide each year’s cash flow by 1.04 raised to the power of the year:

Year	Cash flow	Discount factor at 4%	Present value
1	S$41,200	0.9615	S$39,615
2	S$41,200	0.9246	S$38,092
3	S$41,200	0.8890	S$36,627
4	S$41,200	0.8548	S$35,218
5 (rent + sale)	S$1,427,200	0.8219	S$1,173,054
Total			S$1,322,606

The deal is worth S$1,322,606 to someone who needs 4%. You would pay S$1,400,000. The NPV is −S$77,394. At a 4% hurdle, you would overpay by about 5.5%.

Buyer’s Stamp Duty on S$1.4m is S$40,600, which pushes the real outlay to S$1,440,600. The maximum price that gives you 4% is therefore lower again. Because duty rises with the price, it works out to about S$1.29m, with S$36,000 of duty on top. That is the number to take to a negotiation. Buyers who pay a second-home 20% ABSD face a much larger gap.

Step 2: choose a discount rate you can defend

The discount rate is your required return. An old version of this article used 8%, and at 8% this deal has an NPV of −S$292,212. In 2026 that is a very high demand for a unit that yields 2.9%. A better method is to build the rate from what you can earn elsewhere:

• Risk-free return. CPF Ordinary Account savings earn 2.5% and carry no tenant or price risk.
• Cost of borrowing. After the Fed’s September 2026 hike, banks quoted floating home-loan packages of about 1.5% to 1.8% and fixed packages of about 2.0% to 2.2%. Banks still stress-test your loan at 4%.
• Risk premium. Add something for vacancy, repairs, illiquidity and the chance that prices fall. The size is your judgement.

Hurdle rate	NPV of the S$1.4m deal (before stamp duty)
4%	−S$77,394
6%	−S$190,751
8%	−S$292,212

The IRR of the deal is 2.75% before stamp duty and 2.13% after it. A property that earns less than the 2.5% risk-free rate after costs needs a good reason, such as strong price growth.

Step 3: IRR and why it can mislead

The internal rate of return is the discount rate that makes the NPV exactly zero. It is easy to read, which is why agents quote it. It has two weaknesses.

It ignores scale. Compare two hypothetical unlevered deals, before stamp duty. Both hold for five years.

• Deal A: pay S$600,000, earn S$24,000 a year, sell for S$650,000 net of costs.
• Deal B: pay S$1,200,000, earn S$38,000 a year, sell for S$1,330,000 net of costs.

	Deal A	Deal B
IRR	5.49%	5.12%
NPV at 3%	S$70,609	S$121,299
NPV at 4%	S$41,096	S$62,332
NPV at 5%	S$13,199	S$6,610

IRR says A is better. NPV says it depends on your hurdle. At 4%, B creates more dollars, because it puts S$600,000 more to work at a return above 4%. The extra S$600,000 in Deal B earns about 4.8% a year. If you can only invest that S$600,000 elsewhere at 3%, B wins. If you can earn 5% elsewhere, A wins. Rank by NPV when deals differ in size, and ask what you would do with the money you do not spend.

It assumes you reinvest at the IRR. An IRR of 9% is correct only if you can reinvest every payout at 9%. A landlord who parks rent in a savings account or CPF earns about 2.5%. This is where the MIRR helps.

Step 4: MIRR with realistic reinvestment

The modified IRR names two rates: a finance rate on the money you put in, and a reinvestment rate on the money you take out. It then compounds all inflows to the end date, discounts all outflows to today, and finds the single yearly rate that links them.

To see the effect, take an unusually generous illustration (no Singapore home yields this): pay S$1,000,000, receive S$90,000 a year for five years, and sell for S$1,000,000.

• IRR: 9.00%.
• MIRR, with a 2% finance rate and 2.5% reinvestment: 8.05%.

The 0.95-point gap is the reinvestment assumption. With the low yields on Singapore homes the gap is small. Deal A above has an IRR of 5.49% and an MIRR of 5.28%. But MIRR becomes important when income is high, as with some commercial leases (see our guide to valuing strata-title commercial property).

In Excel the formula is =MIRR(values, finance_rate, reinvest_rate) (Microsoft). Use a realistic reinvestment rate, such as the CPF OA rate or the best deposit rate you can get.

Step 5: avoid the spreadsheet traps

• The NPV function starts one period late. Microsoft’s documentation says the NPV investment begins one period before the first value and ends with the last. If you put today’s outlay in the list, Excel discounts it by a year. In our example that gives −S$74,417 instead of −S$77,394. Use =NPV(rate, years 1 to 5) + year-0 cash flow.
• Include every cost. Count stamp duty, legal fees, agent fees, vacancy, property tax and any Seller’s Stamp Duty if you might sell within four years. Treat CPF money as invested capital, since you refund it with interest on sale.
• Use equity cash flows if you borrow. Put in your downpayment and costs, then the net cash after loan payments, then the sale proceeds less the loan balance. Use a higher hurdle for these flows, because leverage adds risk. Our guide to calculating return on investment builds such a model, and you can test loan payments in the mortgage calculator.
• Test the forecasts. NPV is only as good as your growth, rent and exit assumptions. Nobody can predict prices. Run a low, middle and high case and ask whether you still accept the deal in the low case. See should you believe expert forecasts.

Bottom line

Use NPV to find the maximum price a deal can bear at your required return, use IRR to compare rates, and use MIRR when income is large enough for the reinvestment assumption to matter. Choose a hurdle from your real alternatives, such as the 2.5% CPF rate, plus a risk premium you can explain. Then negotiate from that number, not from the asking price. For the yield side of the story, read our guide to rental yield.

Sources

• MIRR function — Microsoft Support, checked Oct 2026
• Buyer’s Stamp Duty (BSD) — IRAS, rates effective 15 Feb 2023 (checked Oct 2026)
• Seller’s Stamp Duty (SSD) for residential property — IRAS (checked Oct 2026)
• CPF interest rates — CPF Board (checked Oct 2026)
• S’pore mortgage rates rise following Fed hike: What home owners should look out for — The Business Times, 2 Oct 2026
• Measures to promote sustainable conditions in the property market — MAS, 29 Sep 2022
• NPV function — Microsoft Support (checked Oct 2026)