Singapore Real Estate Market

Buy sell Property & Real Estate Investment Guide

Buying Property Tips#1: Choose the Right Location
Before you choose a location, it is of utmost importance that you consider the development prospect of the area. Other factors to consider here is crime record of the area, availability and nearness of public facilities and utilities.
Buying Property Tips#2: Study the Local Market Dynamics
It is important to get well familiar with the local realty market. Learn the variation in property prices by street. Don’t shy away from asking a few realty investment agents questions to get better insight on the matter.

There has been reason to believe that the year of 2014 could be a turbulent year for the real estate market in Singapore.

There are going to be a considerable number of new properties that will flood the market. Government data indicates that 82,575 new, private residential units are expected to be built between 2014 and 2018. That means an annual rise in the supply of property of around 20,000 units; approximately double the average over the last 10 years. But are buyers listening? Prospective homeowners are reluctant to shell out premium prices for seemingly inflated housing assets. Furthermore, it is expected that the market will see a further onslaught of properties for sale with more resale units being available on account of the expiration of the four-year seller stamp duty. The supply glut is expected to put the Singapore real estate market – especially in luxury developments – in a precarious situation. Luxury property developers in Singapore are facing the most depressing sales forecast in six years as a flurry of government measures look to cool one of the most expensive real estate markets in the world. Land prices in some parts of Singapore are climbing at three times the pace of apartment costs, with plot values rising by an average of 30 percent per annum since early 2011. The increase in the cost of land ownership is creating margin pressures on developers. On top, lack of demand and rising risk of penalties on unsold units within two years of completion is putting further pressure on developers.

Buying Property Tips#3: Choose the Right Property
Getting the right property right away is quite unlikely. First, you need to be clear on why you want to buy an investment property. After that, you will be able to make right decision based on factors like remoteness or accessibility of the property.
Buying Property Tips#4: Do the Math Properly
Get a precise idea on the value of assets you have available. If you are investing in rental property, make sure you can easily cover the mortgage payment through rents. Additionally, get a clear idea on the appraisal value of the property beforehand.
Buying Property Tips#5: Consider Additional Expenses
When purchasing an investment property, it is not only the selling price that investors need to consider. There are various additional expenses such as property tax, home owner’s insurance, repair & maintenance that must be considered.

Low interest rates in the range of 1.5% to 3% over the past few years led to ample liquidity which resulted in banks meting out extremely favourable lending conditions to Singaporeans. If people were swayed by this and over stretched themselves either by investing in several properties or acquiring debt far beyond their means, it is only expected that they will have a rough time in the current real estate scenario. The market would see these properties back for sale in a bid to reduce its owners' financial strain. This backed with the fact that the pool of potential property buyers has shrunk immensely will further apply brakes to the already slowing real estate market.

However, one can observe an interesting trend in the prices of listed real estate developers. In a period as short as the first four months of 2014, private transactions hit a record US$7.94 billion as compared with only US$10 million during the same period in the year gone by.These deals were seen in the capital markets as investors are likely betting on attractive entry point valuations as share prices of traded real estate developers have slumped. Declines in the share prices of listed real-estate companies appear to have exceeded the fall in prices in the underlying property markets, providing an opportunity for long term capital market investors to enter these stocks.

CapitaLand Ltd., Southeast Asia's largest property developer by virtue of market value offered to take CapitaMalls Asia Ltd. (in which it owns a majority stake of 65.3%) private for a staggering price of US$2.44 billion. Another key development is the offer of US$1.6 billion for Hotel Properties Limited by a consortium that includes Wheelock Properties (Singapore) Ltd., the Singaporean unit of a Hong Kong real-estate firm, and Cuscaden Partners Pte.. Long term investors seem to be taking note of lowprices and are betting that the market sentiments will return to normalcy in the longer term.

In a bid to tame down housing inflation, Singapore has introduced measures that limit mortgages, require higher down payments, impose new taxes and cut sales of residential plots. While Real Estate developers are anticipating prices to fall due to the measures, ithas not stopped them from buying more land. Recent bids for land are an indication of high competition for land bank amongst developers as they continue to place aggressive bids to restock their declining inventories despite a drab outlook for the property prices.

Buying Property Tips#6: Inspect the Property
To ensure that you are getting everything you are paying for, a thorough inspection of the property is essential. Besides ensuring that you are not overpaying, a rigorous property inspection also gives you a good estimation on what the additional expenses might be.
Buying Property Tips#7: Pick the Right Financing Option
While interests on investment property loans are tax free, some borrowing costs aren’t immediately tax deductible. Knowing that, and structuring your financing in accordance is crucial. Don’t hesitate to ask for help from a financial advisor.
Buying Property Tips#8: Invest through Equity
One of the best ways to purchase an investment property is to leverage the equity of another property (including your primary home). This is a preferable way among regular investors, especially due to added tax deduction advantages.
Updated: March 6, 2018 — 5:42 am
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