SINGAPORE – known as the Lion City of Asia. It is the home of heavily diversified culture, ever growing economy, modern infrastructures, sumptuous food and world-class tourist attractions. Tagged as one of the finest countries in the world, even the real estate industry of Singapore had become a major fascination. With small parcels of land gradually turning into highly modernized commercial and residential properties, indeed it became a multi-billion-dollar industry attracting hundreds of investors all over the world.
Even though land-scarce, properties in Singapore are comparable to those of Beijing, Tokyo and even New York. The wide availability of different property types makes it even more attractive to locals and expats alike. But with the cooling measures laid down by the government and hundreds of unsold condominium units, why buy property in Singapore? Is the gamble worth the risk? Will your hard-earned money yield profitable income in the near future? Is it smart investing lands in Singapore? All this and more on this property investment Singapore 2016 guide.
8 Reasons to Buy Property in Singapore
New and resale properties are getting more affordable.
In previous years, properties in Singapore rose by almost 80%. Alarmed and worried, the government quickly took several cooling measures to calm down the market by introducing Additional Buyer’s Stamp Duty (ABSD) and Total Debt Servicing Ratio (TDSR). These cooling measures worked well and prices of real estate properties subsequently went down as the year goes by.
Come 2016, more and more properties are now selling way below their asking price which is good news to potential home buyers. And with new launches situated on prime locations being introduced from time to time, prices are expected to be more competitive. In addition, many resale properties are still available pass beyond their launch date meaning you can negotiate a better price for an apartment that has been sitting on the market for quite some time now.
Acquire a substantial loan with low-interest rates.
Compare to other types of investment, buying a property in Singapore allows you to borrow money from the bank. For those who don’t have liquid cash to pay the property upfront, this indeed is a smart and clever move. Home loans can go as high as 80% of the property value and the bank approval system is very clear not to mention concise.
Home loan interest rates are likewise attractive. It can go as low as 1.5 – 2% while some banks offer fixed interest rates for the entire term. Most properties in Singapore will require at least 20% down payment but public housing units such as HDBs are more lenient with their 10% down payment option. And if you’re a qualified Singaporean, using your Central Provident Fund to help with your property down payment makes everything even more cost-effective.
Incomparable standards of real estate developments.
From luxurious condominium units having direct access to shopping malls, mixed development properties with commercial establishments on the ground, hybrid executive condominiums featuring private-like facilities, down to HDB flats equipped with quality finishes – certainly there are countless reasons to buy property in Singapore.
The quality of real estate developments in this country is impeccable, similar to major key cities in the world. Buildings, old or new, are well maintained and there are strict guidelines enforced by the government that when ignored will result in hefty penalties. Every property is well inspected, provides a concrete plan for major disasters, safety measures are carefully planned out, and there are a good mix of ethnic race to public, private and commercial properties.
Efficient transport system and modernized locations.
It’s convenient to travel in Singapore, you can hop in from one destination to the other easily via different modes of transportation. There’s the old but reliable bus system, Light Rail Transit (LRT) and Mass Rapid Transit (MRT). And if you want to explore the islands, ferryboat services provide a relaxing journey. Singapore’s Changi Airport, on the other hand, is a major aviation hub in Asia servicing flights all over the world.
In every district, there is a master development plan laid out by the Urban Redevelopment Authority of Singapore, the main body responsible for urban planning in the country. Long term strategic goals and detailed local area schemes are frequently carried out to distribute economic growth all across the country. It only means that even if your property is not located near major districts, expect it to flourish as time goes by through the efficient transport system and smart urban planning.
Demand for property is at an all-time high.
There’s no denying that Singapore is a land-scarce country. Compare to other countries in South East Asia, Singapore is categorically small at 719.1 square kilometers. While this might be a major problem for the government, because they need to provide sufficient housing for its growing number of residents, this, in turn, makes the demand for properties at an all-time high. The lessening number of viable lands and non-stop population makes properties in Singapore highly sought-after just like gold.
But why buy property in Singapore when rumor has it that there’s an oversupply of residential units? Simple, the continuous flock of immigrants in the country counteracts the decreasing number of local property demands. More and more foreigners want to take a slice of Singapore’s growing real estate business. Also, the expansion of financial districts is projected to attract hundreds of additional workforce, thus increasing the need for housing.
Properties as an additional source of passive income
Next on this property investment, Singapore 2016 guide is the income-generating side of real estate properties. Aside from owning a piece of land that serves as a shelter to you and to your family, you can similarly use it to gain valuable monthly income. How? By renting rooms or even the entire flat. Leasing is big business in Singapore, especially long term renting of more than six months. You can rent out your entire property or extra rooms of your condo unit. Even HDB flats can be rented out to foreigners or locals.
As long as you fulfilled the Minimum Occupancy Period of your property, if there’s any, qualified homeowners can apply as landlords. In Singapore, the rental rate is still higher than the mortgage interest rate. So owners who are still repaying their homes can grab this big opportunity to further stretch their proceeds. Rental income is a passive, substantial and sustainable form of earnings especially if your property is situated on prime location.
The high cost of living but lower tax rates.
Singapore has been consistently rated as one of the world’s most expensive city to live in. Thanks to exuberantly prized apartments, high petrol, stringent requirements of owning a car and an efficient yet expensive transport system, living in Singapore can easily drain out your monthly paychecks. So why buy property in Singapore if it’s expensive to live there? The reason is that taxes are way more reasonable than in any part of the world.
For those who spend less than 183 days a year in the territory, you will pay 0% tax. And the highest tax rate that the government can ever impose is capped at 20%. So if you’re a foreigner thinking of buying a second home, either for business or pleasure purposes, getting a property in Singapore will save you from hefty tax rates. You don’t even have to be there 365 days a year, you can hire someone to look after your property but still own a piece of city-state paradise.
Various real estate properties to choose from.
In Singapore, there’s no shortage of real estate property types to choose from. Especially residential properties, you can opt for subsidized HDB flats or go private without breaking the bank with executive condo hybrids. And if you have tons of cash to burn, who would say no to grandiose private condominiums or the top tier of all properties which are landed homes. Mixed developments are likewise gaining popularity because of its unique aspect of combining both commercial and residential aspects.
Included on the reasons to buy property in Singapore is that aside from various property selections, the real estate tenure is similarly flexible. There are properties with a 30-year lease, 60-year, 103-year and the most common amongst all the 99-year lease. Freehold properties are still preferred by many locals as well as the 999-year lease which is almost the same as freehold but technically different.
Final thoughts…
Why buy property in Singapore – a very vague question with millions of possible answers. Whether you are a local eyeing for a nice home to stay, a foreigner who wishes to build a second abode away from home, or a business-minded person who wants to enter the rental industry; acquiring a property is always a personal decision. Though, don’t forget to study the market and weigh its pros and cons to make your investment truly worth it in the long run.
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