Known for its strong economic growth, job stability, superb educational system, conducive business environment and world-class healthcare, Singapore is considered by many as a prime location to invest in. Singapore’s positive reputation attracts an influx of foreign immigrants and investors. Singapore’s overall real estate market has grown over the years.
Singapore’s commercial real estate is expected to reach $140B this 2015 with a transaction volume of $43 billion in the last quarter of 2014.
Reasons to invest in Singapore Real Estate
Singapore Real Estate : Residential use
Are you a single person looking for a place where you can settle in and enjoy your independence? Perhaps you are looking for a house where your family could live in? Most people dream of having their own house to settle in.
Owning your own house gives you security, stability and flexibility. You have a roof over your head and a permanent place to call home. You also get the choice to decorate your place the way you want to. Financial wise, Singapore’s rental is still higher than mortgage based on the current rates. Hence, it makes more sense for most people to invest in their own homes.
For those who are looking to buy a residential property, it is vital for you to know that prices fell by 4% last year according to the reports. Property analysts predict that you can expect a double digit decline in the price of residential real estate this year, especially the high-end ones.
Singapore Real Estate : Investment
Buy low, sell high– a motto that will benefit anyone, including real estate investors. A boom, a slump and a recovery will always happen in Singapore’s real estate property values. The current trend indicates that the price of residential real estate has been declining over the last few years. However, in the long term, property prices are mostly expected to appreciate. The value of Singapore’s property had increased significantly over the last 25 years.
For some investors, collecting rents is the first immediate return they enjoy. Most buyers rent throughout their ownership period before realizing the capital appreciation of their property. Rental generates a passive source of income for its owners. Regardless of industrial, commercial or a residential property, the rental market in Singapore has become promising given its economic openness to foreigners.Although renting is a practical mean of profiting from your assets, the gross rental yields in Singapore remain poor, ranging between 2.35% to 3%, lowest it has been in decades.However, if you look at leasehold property in the mass market district where your initial capital outlay is smaller, you can net a rental yield above 5%.If you are looking to buy a property to rent, do note that rental rates are influenced by demand, economic situation, Singapore’s growth, number of foreigners inflow and supply.
Singapore Real Estate : Different Kinds of Properties
Residential, industrial and office properties are options that individuals and companies can choose from. It is important to have a basic idea about the nature of each type of real estate property that you could purchase in Singapore given the fact that real estate is a serious long term investment.
Singapore had optimized space efficiently through proper urban planning. Almost 82% of the current population is living in public housing managed by the Housing and Development Board. These are affordable housing options located in areas with a hospital, school, supermarket and even sports as well as recreational centres. According to reports, there will be 1.4 million flats in Singapore by 2018. If these numbers are correct, that is an 11% jump from the current number of flats.
As a business centre in Asia, Singapore needs to cater to enterprises of all sizes. Singapore has a healthy market for leasing industrial real estate properties. Renewals and commitments of companies aiming for expansion all contributed to growth in the industrial real estate sector. Industrial properties are mainly used for productions, warehouses, storages, workshops and business parks. Most industrial properties have 30-60 years of lease. Rare but there are some that has a 99 year lease or are freehold. It is rare but there are some that have a 99 year lease or are freehold.
Industrial lands are categorized into 3 categories:
Business uses are intended for industries, warehouses, utilities and telecommunication uses.
Office real estate is promising in Singapore due to the myriad of businesses attracted to Singapore. A main differentiating factor between commercial and industrial properties is that the commercial properties do not cause disturbance to the surrounding environment. This includes air pollution, loud noises and safety hazards. Some examples of commercial developments: office blocks, shopping centre, shop houses, development buildings that has shops on the first storey and mixed, commercial as well as residential buildings.
Locations are labelled as Grade A or Grade B. Occupancy rate is mostly above 80% in different parts of Singapore regardless of it being a premium, a Grade A or a Grade B location. Office real estate yield experienced a 6.1% jump on its yield from the third quarter of 2014 to its 2014’s 4th quarter, springing momentum for the first quarter of 2015.
As of the 4th quarter of 2014, the highest average rent in Singapore’s office space for Grade A location is at $11.9 per square foot monthly in New Downtown area. The cheapest average rent in a Grade B location is a suburban area at $4.38 per square foot monthly.
She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen).
Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).