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Tips to invest in properties without actually purchasing one

Even though the property price has been on a declining stage since the last few years, the cost of purchasing is still high in Singapore. But still, there are plenty of options and reasons available for property investors to inject funds, whether big or small. It has always been a trend for the people of Singapore to purchase more number of properties, be it a second-hand Condo or a new launch property, and this craziness among the people, highly influence the property rise in the market. The obsession towards buying an apartment is so high, that it is perhaps the only country in the world that tracks it income level “ownership of dwellings” as a factor that adds to the gross domestic product (GDP) of the economy. In fact, this income factor was almost 5% of the GDP in 2017. In any way, investing on properties is a reasonable idea, as according to Aw Choon Hui, Deputy Chief Executive Officer of GYC Financial Advisory, reported that the return on such investment was around 6.8% from 1975 to 2017, even after the turmoil situation since the last 4 years, the average gross rental yields to 2.5% or more each year. The sluggish property market hugely affected the property price and the private residential property index and lower the market for 15 straight quarters. Until in the third quarter of last year that the property index rose to 0.5%. The last recorded data according to Urban Redevelopment Authority (URA) was 5%, which is actually an abnormal price rise since the last few years. But while watching this return on property price rise one needs to understand that various factors like mortgage interest, stamp duty, insurance, renovation, maintenance, sinking fund fees, property tax and agent fees, was not taken into consideration. According to various real estate agents in Singapore and market experts, the reason behind this price fall in the property market is affected by the various steps undertaken by the Singapore Government. This has reduced the loan-to-value ratio for borrowers willing to invest on the property. Furthermore the increase in the ABSD (Additional Buyer’s Stamp Duty) and increase on the holding period has added to the factors owing to the fall in the property price. It is said that if the Government continue to intervene in the property market, it will limit the property rise in the future. In another report published by the Global Property Guide, property owners who rent out their properties have not seen good returns for quite some time, although the rental returns are still higher than bank accounts. The report also concluded that no one will own a condominium in Singapore for rental yields. Head of intermediary and product in the Asia Pacific at asset management, Mr. Showbhik Kalra believes that there is the good amount of evidence that proves that just a physical possession to real estate is no longer an efficient way to use one’s capital. Rather than owning one, property investors can still enjoy benefits of improved long-term returns while getting listed real estate and property management. The new age market strategy discusses on how one can yield attractive returns even without owning an HDB flat, or a Condo or a flat in Singapore and one of the options available is the REIT (Real Estate Investment Trust). This enables various investors to inject their funds on properties and earn from an increase property price as REIT holds a good amount from the distribution of the rental income. Investors can avail the stock of REIT from Singapore Exchange (SGX). As per reports and past records, REIT has done a good job for its investors and made them earn around 10% per year from 2012 to 2016. This includes dividends and price increase. The biggest market soar created by REIT in 2017, with the SGX S-REIT 20 index rising about 27 %. This excludes the dividends. While individual properties and stock barely budged since 2012 to 2016 and suddenly rose to 18% in 2017. But for REIT the


returns are consistent all throughout. The other benefit of investing on REIT, apart from its positive return, investors can sell their REIT stock at any point in time, rather than holding it for months for REIT to sell the property. The diversification offered by the company offers a low starting cost, liquidity, professional management, transparency and flexibility to the investors. Just like investing in REIT, another alternative of investing on properties in Singapore without actually buying one is to buy property stocks from various developers like CapitaLand or City Developments, as they also hold numerous properties and one can earn high returns from the lease of such properties or sell them. The major difference between REIT and other property companies is that REIT pays out at least 90% of their net income as a part of their distribution, whereas other companies decide the amount to be paid to the investors. There are other companies also which holds assets apart from just properties. Investing on property shares and stocks from SGX, which holds more than 70 listed real estate companies, is a preferred option as it is an easier way to invest and at a lower cost with a higher return expectancy. There are various brokerage firms in Singapore which can give detailed information on various real estate companies listed in SGX. Before getting your hand into investing on any such real estate firm, one needs to understand the basic fundamentals, like the firm’s performance in the last years and the type of properties that this firm manages. Also, the recent announcement on share price and regulations laid down by the Government are equally important. Hence, while you are in Singapore and want to put your investment on the property market, with the constrained budget, you can always have the option to purchase stocks of REIT or various other property shares, this enables you to become a part of the rising economy even without actually purchasing any one of them. Property Agents Singapore

Tips to invest in properties without actually purchasing one  

Even though the property price has been on a declining stage since the last few years, the cost of purchasing is still high in Singapore. Bu...

Tips to invest in properties without actually purchasing one  

Even though the property price has been on a declining stage since the last few years, the cost of purchasing is still high in Singapore. Bu...

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