After I have shared my blog article “Why you should invest in Singapore Property”,
I feel great that there is quite a response to my article, thank you.
Of course, not all readers can agree with what I have shared.
"Regarding investment, why I should invest in property? It takes quite a bit of time for me to reap my profits, liquidation is not as fast as other investment instruments like shares, REITs, or even just put the money in my saving / fixed deposits account to earn interest."
Comments above have been put up to me.
I know where you are coming from, and I agree that you can always do that, invest in other areas.
Property investment is one of the lower risks in all investment instruments, especially in Singapore, and will build your wealth much faster.
Let's take a look at the below scenarios.
Property Investment Vs Bank Saving
Using the example of my client for in my previous article “Why you should invest in Singapore property”,
He bought a 2 bedroom unit during the launch day at the price of S$627,000 and sold the unit when T.O.P (temporary occupation permit) for S$760k making a profit of S$133K in less than 5 years.
The amount he invested in this property is as follows.
He took out only 25% of the sale price + stamp duty (3% - 5400) from his pocket.
That come out to S$156,700 + 13,410 = S$170,110.
He made 78.23% from this property investment giving him annually 15.64% returns ROI.
Now let's compare apple to apple, with the same amount, he deposits this amount of S$170,110 into his saving accounts to earn interest for 5 years at an interest rate of 1% per annum.
5 years will bring him an interest gain of an estimated S$8,505
Hey Peter, not saving accounts, why you cannot compare with a fixed deposit?
Let's explore then.
S$170,110 placed in Fixed deposit for 5 years at a rate of 1.5% per annum, interest gains after 5 years is S$12,758.
Investing in property, for 5 years will bring you an increase in your wealth of S$133K with a low investment amount of S$170,110.
As for Saving / fixed deposits can only bring in an amount of S$8,505 / S$12,758.
The wealth brought in by property investment is much higher.
Property investment vs Shares
How about investing in Shares?
Good suggestion. Just make sure that you are investing and not gambling. Investing is talking of strategies planning, not just buying and sales.
Shares investment needs a lot of research, understanding of the background of the company, the financial stability, the progress of the company and also the projection of the company development map. Furthermore, you need to monitor the fluctuation of the stocks price daily.
Investment in shares also has a higher risk compared to property investment. Prices change anytime, and worse, a lot of information is not updated in real-time, by the time you received the announcement from the company, it will be late for you to respond and make a decision.
You can lose all your investment overnight if the company suddenly announce a suspension of trading, or delist from the trading board.
As for property investment in Singapore, you will be able to judge the trends of the property markets, real times information is online, and market prices are predictable. Best of all, regardless of how bad the markets are, your property prices will never be zero.
Why are foreign buyers are still investing in Real Estate in Singapore?
1. Singapore has a stable political platform.
2. Singapore currency is stable and strong
3. Singapore population growth
4. 4 major world-class sectors.
Stable Political Platform.
Singapore is a unique case of having a single-party government since its independence in 1965. For the past 50+ years of nation-building, unlike in other countries, you can see riots, and demonstrations along the way, but in Singapore, although is a multi-racial country, you do not see all this happening.
This has to give credit to the Singapore Government who always put the nation and the thought of the Singapore Citizens in mind, creating a peaceful and harmonious country.
With this kind of environment, your investment in Singapore will be safe.
Currency is strong and stable
Compare to other countries, Singapore's currency is very stable. Singapore has a healthy and strong foreign reserve compared to a lot of countries.
Not only that Singapore's foreign reserve strong, but the national reserve is also healthy as well, the national reserve is prepared for any crisis that will happen.
Covid-19 is a good example, The Singapore government reacts immediately by implementing the assisting packages to all Singapore citizens and companies without any hesitation, thanks to the reserve they had built over the years, this has reduced the damages to the minimum that can come along.
What are the advantages of having a strong and stable currency?
I have a Korean friend who bought a 3 bedroom unit in CityLights residences in the year 2012 at a foreign currency exchange rate of 1:924, Singapore dollars to Korean Won.
In the year 2015, he needs some urgent funds for his business in Korea, he sold the unit at the price he bought, you might wonder why he sells at this price.
He told me, “Peter, I never lose any money in this transaction, in fact, I made some profits out of it”
Let's take a look at what happening.
For easy calculation, let's assume the unit is bought at 1 million Singapore dollars.
The exchange rate in the year 2012 is at 1:924, he uses $924M Korean Won for this purchase.
The exchange rate in the year 2015 is at 1:805, selling at S$1M will give him $1,147M Korean won in return.
In the foreign currency exchange rate he makes $233M Korean Won, which gives him a profit of 25.21%.
Singapore population growth
I had mentioned in my blog article “why you should invest in Singapore property”. In the white paper, the Singapore government is expecting the growth of the population to 6.9 Million in the year 2030.
Let's take more details to look at how this will impact the prices of property in Singapore.
Population Growth must happen for Singapore's survival, to prepare for the growth of the population, the Singapore government has started preparing the infrastructure in all areas to accommodate for the growth of the population.
Singapore population charts 2019
The above chart shows the Singapore population data for the year ended in 2019. We have 5.638 Million in total. To fulfilled the 6.9 million population in the year 2030, the population's growth rate needs to accelerate once again.
Expecting a growth of an estimated 1.3 million for the next 12 years, we are looking at an average growth of 108K annually. Looking at a 1.51% increase in population each year.
The above charts show you an average of the population growth over the next 12 years from 2019 to reach the target of 6.9 million in the year 2030.
An average increase of population in the range of 58,773 to 94,692 persons annually. Based on an average household size of 3.34 persons, house for new immigrants is expected to be in the range of 18,140 to 29,226.
So as you can see, the demand for property in Singapore is Strong, and this is only referring to the residential sectors.
4 major world-class commercial sectors.
Again, I have shared in my previous article, Singapore has focused on developing 4 major sectors that support economic growth.
1. A world-class transit / logistic hub.
2. A world-class medical research centre
3. A regional financial centre / digital centre
4. Educational hubs
All these developments will give supports the population's growth in Singapore and also create jobs opportunities for Singapore citizen and foreign talents to work in Singapore, giving strong demands on the housing needs.
Don’t forget the Students that come to study in Singapore, also need a place to stay.
I hope this article I have shared, gives you a more understanding of why Singapore Property is worth Investing in.
If you’re at a loss about what you can do, you’re always welcome to get in touch with me, through our property wealth planning system, I believe I will be able to assist you to come up with a plan to build your wealth through property investment.
You are welcome to have a 30 minutes Property Wealth Planning consultation with me by booking a time schedule by clicking on the calendar below.
Please do share this article with someone keen to look into property investment in Singapore.
Peter Tan Choon Guan, The Real Estate Guy.
Associate District Director with Huttons Group
Since 1995, he has been providing professional consulting services to clients in Singapore and beyond. From strategic planning to innovative solutions, his focus is always on