Property Investment Singapore
Property investment Singapore is always very popular in this land scarce country. About 80% of Singapore’s resident population stay in HDB and 90% of these resident households owning their HDB flat. The rest stay in private condominium and landed properties. This is due to the popular public housing policies implemented by Singapore Government.
Many Singaporeans are asset rich but cash poor. HDB owners often thought that they are quite well to do as their HDB flats may fetch hundreds of thousands or even reaching to the million dollar mark for certain desirable districts such as Bishan, Tiong Bahru and Tanjong Pagar. To give you an idea, the top HDB resale transaction ever done in Singapore HDB resale market history to date was a whopping $1.09 million for a HDB Maisonette located at Bishan St 13 on October 2014.
Having said that, many fellow Singaporeans fail to understand that their flats are actually liabilities and not assets if their flats are meant for own residential purposes. According to Robert Kiyosaki, a widely renowned property investment guru who owns over 2,000 properties, says that properties are only assets if they can make money for the owners. This logic may seem simple but yet not many Singaporeans can really appreciate the exact meaning.
Regardless of what stage you are in, it may be good to start your property investment journey younger. By acquiring adequate property investment knowledge and knowing what you are actually investing in will certainly help to reduce the underlying risks to the minimal. There is no such thing called 100% risk free investment in the world.
Why Property Investment?
Singaporeans choose to invest their money in real estate over the stock or forex trading market for a number of reasons:
- A property provides investors with a tangible asset.
- Property investments provide better capital growth returns on both long term and short term investments
- The Singapore property market is definitely less volatile than the stock market due to land scarcity and increase in population.
- Investors in property have more control over their investments than they would investing in the stock market
- Properly structured rental returns usually cover the monthly mortgage and maintenance cost so as to provide passive incomes.
Many Singapore property investors favor property investments for rental yields while many others like the decent capital appreciation after holding the property for a while. However, property prices can fall and selling a property can take time which could be a problem if cash is needed immediately. Property investments also require a large amount of capital and there is a risk that too much of your wealth is concentrated in only one asset class.
Types of Property Investments
- Residential property investments are properties such as HDB flats , Condominium units, terrace houses, bungalows, apartments where a person or family pays you to live in the property. The length of their stay is based upon the rental agreement, or lease agreement.
- Commercial property investments consist mostly of office buildings. If you own office units, you could lease them out to companies and business owners, who would pay you rent to use the property for their business operations.
- Retail property investments consist of shop houses, retail shopping stores and other retail storefronts. In some cases, the landlord also receives a percentage of sales generated by the tenant store in addition to a base rent to incentivize them to keep the property in top-notch condition.
- Industrial property investments consist of warehouses, industrial units (type B1/B2), factories and other special purpose real estate that generates sales from customers who temporarily use the facility. Industrial property investments often have better and stable yields as tenants will not likely to move from one location to another.
- Mixed development type of property investments are those that combine any of the above categories into a single project. There is a growing popularity and trend in Singapore for these type of mixed development properties with residential cum retail units. It reduces investment risks and increase gains.
- Real Estate Investment Trusts or REITs usually come with higher dividend yields and they are traded like stocks and own a portfolio of underlying real estate or real estate mortgages. This can be a cleaner entry for new investors who want to get a share of the property investment returns.
- Alternative Investments or Crowd Funding for property development projects will be a strong growth segment for Singaporeans when it may be no longer viable to invest in physical properties especially at the peak of the Singapore Property Market Cycle. Investment in lower quantum or by lots can be more affordable to average Singaporeans to take part in property investment in a smaller scale and risk.