If you have thought of investing in Asia, you may have come across real estate as a potential investment. Many people start investing in real estate since Robert Kiyosaki published a book called Rich Dad Poor Dad. It may be more than 20 years since this book was first published but investing in real estate is a timeless strategy. You still can achieve enormous gain given the right opportunity.
There are real estate for investment in many countries. Many will think of UK, Canada, Japan and the likes as they are countries that most people will like to visit or stay. However, this is one gem country where real estate prices are growing and very resilience to measures and other factors affecting it. I’m talking about investing in real estate in Singapore.
Favourable factors about owning Singapore real estate
It is always an upside to invest in places that is densely populated. Singapore fits the mould as it’s landscape is densely populated due to massive influx of foreigners, coupled by good governance and low crime rate. In fact, while real estate prices had dropped tremendously, Singapore real estate price stills climbing at this time of writing.
You can be sure that the government will not allow overbuild of residential buildings in Singapore, which better position yourself to sell it for profit when the opportunity comes.
Among wealthy foreign investors, Singapore is a top choice also due to its geographic location and low tax rate. It is extremely favourable for those who want to set up family office here. Culture wise, it is the crossroad between east and west which is a favourable factor as well for those who want fast adaption in this country.
Types of properties available
Before venturing to the details of investing in Singapore properties, we first need to know what are the property types. There are residential and commercial properties. Investing in commercial properties can be challenging as it normally required much capital to purchase it.
The hottest ones are the shophouses types (that were built around a century ago) but holds enormous value if they are located in CBD (central business district). They are normally freehold and are very coveted. But purchase units there definitely requires millions of dollars. Initial Cash Outlay Fund is necessary to purchase commercial properties of you are a Singapore citizen, due to CPF savings won’t suffice in purchasing the commercial property.
Source: Tripzilla
Next is the residential properties. There are government and private residences. It is hard to purchase one as one need to be a citizen or permanent resident to purchase. Value do goes up pretty fast but not as fast as the private residences.
For private residences, most are condominium. Their value can varies widely depending on their locations. There are freehold and leasehold (for 99 years or 999 years). Leasehold will goes back to the state while lease finished. Upwards are the Semi-D, bungalows, and good class bungalow.
These forms the uniquely high end private properties. The good class bungalows are the highest level private residential in Singapore which sits on large plot of land and features amenities such as private cinemas and swimming pools. Those who own them are usually the crème-de la-crème.
Well Proven Methods to Find Under Value Properties in Singapore to purchase for Investment
A property that you owns is able to gives you financial security and stability. Besides being a place to stay, many buy it as an investment. You can sold it when the price is right. Tips is to decorate the home as this will more entice future buyers to acquire it. You can also rent it out to others and this will provide a stable income as well.
If you are new to this, it may be better to have an experienced real estate agent to broker the deal. There are many such agents in Singapore who can help you in this. They can also give advice on where are the under value properties suitable for your current budget.
Older properties in desirable locations are best for rental purpose. As locations are top priority for tenants, they will not mind if the property is old (since they using it for short term). Being older properties means they are cheaper to buy too. But you must balance the remaining lease and the cost price to see if it is suitable for your needs.
To spot undervalued properties, searching on those with low transaction volumes means there can be motivated sellers. These people who be cash strapped and wants to liquidate their assets. In this way, they can accept lower offers. They are also more willing to negotiate which is god for buyers.
Not to forgot, the fundamental to searching for undervalued properties is location, it’s neighbourhood potential and the government development plan. If you buy a property in the emerging areas, they will always appreciate faster than mature estate area. You will want to look out on what are the government plans to transform it into an activity hub- an area full of amenities. Properties by developer which are more reputable are the coveted ones as well.
Those properties that are within 10-minute’s walk to the MRT station are the best. You need to understands behaviour of the residents in Singapore who will choose locations over the others. Others to note is whether the carpark lots is big enough, or whether the amenities are sufficient (for private properties). Even the amount of time taken to drive out need to take into consideration for buying a property.
One should buy a 3 bedders unit instead of smaller ones, as you can get a handsome profit when reselling it. The units should not be odd shaped and buyers will normally avoid that. West sun will be important to note as no one want their living room to be constantly be very hot if there is west sun facing their unit.
The first mover advantage
If there is a new residential area, being the first to own a unit will have significant advantages. The area may not fully developed yet, but after development with all necessary amenities, the value there will shoot up. many earns a great profit by being the first mover.
Think about the new development at Tengah, it will be wise if you already had a property there by now. One rule of thumb: Always purchase property where residents want to live. This applies everywhere around the world.
Look for older properties
Some people will consider buying older properties. This is because they tend to have long history of transaction, which makes evaluating the appreciation and rental income much simpler.
These older properties are mostly in very good locations in Singapore. Most are near public transportation hub and their amenities. They are cheaper too which appeals to first-time buyers.
Source: Realstar premier group
Now lets know the concept in buying properties in Singapore. There is this ABSD, or called the stamp duty which varies according to purchase price. This is levied on the foreigners and permanent residents if they buy a private property. Next is the CGT (Capital Gains Tax). This is levied when you sell it off. There is 15% charges for CGT. This is for non-residents. However, it can be lesser- through deductions by insurance premiums, cost in renovation, property taxes and others such interest on home loans.
There is also the SSD, for purchase of residential properties. Many others if you find out though.
You need to know that older homes in Singapore tend to be more costly than similar properties in other countries or cities. So do your due diligence.
Others to take note
A property in the east of Singapore is good due to it’s proximity to Singapore Changi airport. It offers a more care-free and relaxed environment and is near to busier hubs like Geylang and Bedok. The west of Singapore can be less desirable to to the nearness to industrial areas which means poor air.
Buying a property is a big commitment. It requires patience with sufficient research and knows the legality of this “eco-system”. Engage a local to tell you the pros and cons, since they live in Singapore for a very long time.
Rules can come and change so you need to be updated constantly.
Good luck for your investment!
