Investing in Singapore Properties

“It is not in case you buy but when you sell that makes distinction is the successful to your profit”.

Hence I consistently advise my investors to be certain they have gone through their financial plans thoroughly as they will be entering into a 4-year commitment – after for the 4-year Seller’s Stamp Duty (SSD) that they must pay if they sell their property before 4 years.

Once they have determined the amount of finances they are willing to outlay, they will set themselves at a great advantage by entering the property market and generating a second income from rental yields rather than putting their cash on your bottom line. Based on the current market, I would advise these people keep a lookout regarding any good investment property where prices have dropped more than 10% rather than putting it in a fixed deposit which pays 0.5% and does not hedge against inflation which currently stands at simple.7%.

In this aspect, my investors and I are on the same page – we prefer to make the most of the current low fee and put our benefit property assets to produce a positive cash flow via rental income. I myself have personally seen some properties generating positive monthly cash flow of up to $1500 after off-setting mortgage costs. This equates for annual passive income as high as $18 000 per annum which easily beats returns from fixed deposits plus outperforms dividend returns from stocks.

Even though prices of private properties have continued to rise despite the economic uncertainty, we can see that the effect of the cooling measures have caused a slower rise in prices as the actual 2010.

Currently, we observe that although property prices are holding up, sales are starting to stagnate. I will attribute this on the following 2 reasons:

1) Many owners’ unwillingness to sell at more affordable prices and buyers’ unwillingness to commit to some higher value tag.

2) Existing demand unaltered data exceeding supply due to owners finding yourself in no hurry to sell, consequently leading to a rise in prices.

I would advise investors to view their Singapore property assets as long-term investments. Dealerships will have not be excessively alarmed by a slowdown in the property market as their assets will consistently benefit in the longer term and trend of value because of the following:

a) Good governance in Singapore

b) Land scarcity in Singapore, and,

c) Inflation which will set and upward pressure on prices

For clients who would like invest various other types of properties besides the residential segment (such as New Launches & Resales), they likewise consider purchasing shophouses which likewise can help generate passive income; that are not subject to the recent government cooling measures similar to the 16% SSD and 40% downpayment required on residential properties.

I cannot help but stress the value of having ‘holding power’. You shouldn’t ever be expected to sell your house (and create a loss) even during a downturn. Always remember that the property market moves in a cyclical pattern and jade scape you should sell only during an uptrend.