Is Real Estate a Good Investment in Singapore?

Real estate, buildings, properties, and houses. Everyone needs one or the other. There are always going to be more people coming up to buy new properties and buildings for themselves, their families or their business. Real estate properties will never go out of business, not until the end of the world, at least. This is made sure by the continued population and kids coming up to adulthood to find new ways to earn income. So, everyone will need a home, an apartment, or a place where they can set up a business. Rental property has been and will be a sector of investment and business for almost everyone. Anyone looking forward to investing their hard earned money in a good investment sector, can go ahead and make it big in the real estate sector.

In Singapore, real estate is the most sought-after investment sector. Every family in Singapore has been taught by their elders, about the benefits of investing in real estate. And Singapore’s real estate market is always developing and new properties keep coming up for the investors. For the people of Singapore real estate is a place where they believe they can invest safely. And because it is a sector that is always earning and making profits, returns, although small, are assured. The most popular way of investment in properties in Singapore is through REITs (real estate investment trusts). Although people also directly invest in singular or multiple properties by buying them, REITs remain the best possible source of earning regular dividend shares when you can’t buy investment property yourself.

What are REITs?

The increased popularity of real estate investment had given everyone a good chance multiplying their wealth. Everyone in Singapore, fascinated with the results that real estate provided, started investing and buying properties. The increased rate of investment lead to the development of infrastructure and the prices of properties skyrocketed, locking out the common public from buying properties and developing them for sale. This led to the popularity of REITs as an alternative to investing in properties.

REITs are investment organizations that pool money from investors and collectively invest that money into properties. They build portfolios of several properties that are earning money by leasing or renting. The rent collected from such properties go out to the REIT firms and then they share the rent among the investors as dividends according to their invested amounts. So when the people who are unable to buy rental properties due to high prices, can get the benefit of earning from rental properties through REITs.

REIT investments work just like an investment in shares. Except in shares and stocks, there is a greater risk of losing money due to the fall of prices of the indexed companies’ shares. When you invest in REITs you invest in real assets which are developed and leased, and 90% of the income and profits that come from the leased out properties is distributed among shareholders as dividends annually.

How to invest in the REIT Organizations?

Since REIT firms work just like the stock exchange it is a simple process for investment. Like all stock exchange trades, it is required to have a Singapore Exchange (SGX) Central Deposit (CDP) Account and a brokerage account. When you have the accounts, you need to choose the REIT firm that you want to invest in and get the code for the firm. But, you must analyze the REIT firm with some research, we’ll talk about it further down. So after you have the code for the REITs you can invest in them using your brokerage account. Or you can contact your broker and he can tell the manager to make an investment for you.

If you have not set up the SGX and CDP accounts and are new to investing, you can talk to trusted brokers and they can help you apply for both the accounts at once. You will have to fill up the application forms but the brokers will help you with that. The application form then stays with the broker and he takes care of the application processes with SGX offices.

Is there a Way to Invest in Properties outside the Country?

REITs are not a common practice among many countries, but you can get to invest in Asian countries like Japan, Malaysia, India, Pakistan, UAE, Saudi Arabia, Hong Kong, etc. Other continents include Africa, Europe, and North America. You can invest in many countries but you should be careful about the economic health and development of any country you want to invest in. The REIT rules and regulations differ from country to country. This is why investment in countries abroad might not be so easy.

How to Choose the Right REIT Firm?

It is necessary for investors to keep in mind some of the factors while investing in REITs. You must always weigh the REITs on the basis of, possibilities of growth, dividend yield, and cap rate structure. It is important that you take a look at the developments that the firm has made in the past years and do not make decisions by taking just dividend yield into consideration. Avoid investments in areas with low economic development and high rates of interest.

Which REITs are the best in Singapore?

As I had discussed above REITs are similar to stock exchange markets. Just like stocks you can choose from different sectors of REIT sectors where you think your money would reap benefits. There six different REIT sectors in Singapore, they are retail, residential, office, industrial, hospitality and healthcare. According to SGX reports, REIT the second best performing sector in 2018. So, if you’re willing to invest in REITs in 2019, you can go ahead and invest in the following companies,

  1. Ascendas REIT- works in the industrial sector of real estate.
  2. CapitaCom Trust REIT- investments made in office infrastructure
  3. CapitaMall Trust REIT- expertise in the retail sector
  4. Mapletree NAC Trust- investments made in the residential market

REITs are a safe and sound method, which has evolved as an alternative for direct investment into real estate. If you’re a new player in the investment field or even if you have saved funds for investments in various schemes in the market, you can go ahead and invest some part of your funds in the REIT sector. Hope the information I’ve provided helps you on your investment journey.


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