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Singapore Real Estate Remains to be an Attractive Popular Investment Asset Class
When property is a subject in a chat with foreigners (which you can observe on TV or personal encounters), foreigners will talk about weekly rental, where to rent cheaply. When a country is big, people will relocate away from their home town to work, they have the choice to choose which state or which town and as a result, staying in a property becomes transient.
In Singapore and being Asian, property is viewed quite differently. It is the preferred choice for long-term wealth creation as Singapore is hub to many trades, it has solid growth prospect (grew at 3.3% in 2018) and Asians’ desire (usually deeply rooted, for status, for practical reasons) to own a property.
Many have seen value of their property appreciating over a long term. I was one of the luckier ones who brought a ground floor unit in an East Coast Condo New Launch Preview stage (many years ago before I become a Property Consultant) and sold it before it was completed, reaping good profit.
Effects From Demographics
The general demand for property is closely knitted by one key factor that is demographics. Population growth is estimated to grow to 6.5 million in 2030. Annual demand for private properties per year is forecasted to range from 12,000 to 13,500 units with majority from HDB upgraders. A bullish year could seen possibly of 17,250 units. (1) According to URA, the number of new sale units transacted in 2017 was 10,566.
Singaporean and Permanent Resident Context
There are two main reasons that property remains an attractive investment product: historical long-term growth in value and the ‘Asian Culture’ of providing a headstart for the future generations. I have met many clients whose purpose of buying properties is for the sake of their children.
This pursuit of getting a private property is very ingrained in the pysche of the local residents, many do not just own one, but several properties for investment and some do with for speculation.
Given the higher awareness of the stagnation of HDB resale flat prices, many do not now see HDB as an ever-appreciating asset. This could be one factor why HDB dwellers are moving to private apartments.
In the context of Singapore, the Government has historically kept a close watch on supply, easing and tightening the supply to stablise the property market. One of the levers was the implemention of cooling measures.
There are many investment options, such as shares, bonds, unit trusts and Reits. However, property is a tangible investment class and will always has a special place in the hearts of many investors.
Property Portfolio In Singapore
There are numerous buyers who are keen to kickoff or enhance their Property Portfolio. This will be dependent on a mix of components, such as, your objective, length of time and risk resilience.
When figuring out how to start a property portfolio, investors should initially consider the expected number of years they plan to put resources to accomplish their ideal objective, along with their risks versus compensation or profit approach. Risk and reward are characteristically interwoven with property investment, so the risk resilience will at last be chosen by a investor's willingness to lose some– or all– of their investment to reach their financial goals.
If you already own a home and are contemplating to diversify your investment by building up a property portfolio, it may not be as troublesome as you envision. For some home owners, the value in their present property can be sufficient to put resources into a second property.
Equity is the difference between what your property is worth and your remaining mortgage loan. So if the value of your home has increased since you bought it, and in that time you’ve also paid off a chunk of your mortgage, you might have the capacity to leverage to buy your second property. This could also apply to HDB Owners.
With regards to owning investment properties, would you say you are looking for rental yield or capital growth? In a perfect world, you may be able to enjoy both, however this isn't constantly conceivable.
Plan as Long as Possible
Building a property portfolio requires undertaking over a long period, it is not an overnight activity. Some property specialists exhort that you have to clutch your property for no less than seven to 10 years, to enjoy greatest profit by capital appreciation. Each situation is different and you have to monitor it. Typically the longer you keep your property or properties, you almost certain you'll have the capacity to ride out any downturns in the market cycle.
How to Start?
One-and two- bedroom units make great starter investments. Look out for an area that is either simply starting to transform, or an area that is a hotspot for rental. The former offers possibly higher capital appreciation, however the latter may give better quick rental returns.
- Begin Young and Just Do It
The more youthful you are at the point you make that enormous move to purchase your first property, the happier you'll be later on. Many of my clients (and even myself) always regretted and say “If only I had bought any property before”. This is especially prevalent to those who are close to retirement.
Take little steps as it doesn't occur within a short period. As equity, income and rental increase, you can take a gander at another speculation a few years later.
- Evaluate Your Borrowing Capacity
Each individual has a limit about what they can borrow based on their financial situation, expenses and assets. Consult a banker or mortgage specialist for an assessment so you will know the limits before hunting for a property. There are also many monetary rules that must be abide such as TDSR and the various taxes and expenses to consider.
Keep in mind that nothing is guaranteed and there are risks involved in any property investment. It's vital that you do as much research as you can to reduce the danger of something unexpected occurring.
If your desired goals are:
- To anchor your future retirement objectives in, maybe, 20 to 30 years' time
- To gain comes back from a property portfolio that can beat the inflation rate
- To make passive income from exceedingly trustworthy property resources or
- To enhance and upgrade the lifestyle of yourself and your family in a sustainable way
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