Property Investment
Unlike the stock market, Singapore property investment is easier with an understanding of the individual property. Nevertheless, the capital needed is higher as we need to own the property in full with a minimum downpayment.
For stocks investment, it allows investors to own part of the company stakes. Also, the price of real estate is not so prone to short-term swings due to news. As for the stock market, the price can change rapidly depending on local or global news manipulation.
Property Investment in Singapore
When it comes to property investment in Singapore, it’s crucial to pick a property that has the potential to maximize your returns. An uninformed investor may choose the less expensive property available as an investment property.
They simply assume that it’s the best method for capital gain. But that’s not the way the property market works. More often than not, expensive properties in upmarket locations are likely to ascertain a greater increase in prices when the market picks up momentum.
There are many millionaires in Singapore from all across the globe. They invest in Singapore property as it has proved to be rather lucrative throughout the years. Investing in property is one of the popular ways to grow your money in Singapore.
Cooling Measures
For Singaporeans and PR, it’s one of the investments you’ll spend your CPF savings on. As for foreigners, you can still invest in certain properties in Singapore but with a higher ABSD rate of 30% (Updated on 16 DEC 2021).
Property investment in Singapore is so lucrative, in fact, that prices for homes have increased to the purpose where the government has seen fit step in. Cooling measures are imposed to make sure that homes remain affordable enough for Singapore citizens to cope with.
Singapore is doing what it can to control the increase of property investors looking to invest in property for profit. Hence, property investment may be getting tougher nowadays. However, there are more ways to earn money than simply buying and selling property. With cooling measures imposed, it is still possible to invest in Singapore real estate for long term.
What are the attributes that you should consider before finalizing your property purchase? Are you curious to find out how you can start your real estate investments in Singapore? If so, you need to understand the fundamentals of property investment in Singapore.
Features of Property Investment
1. Rental Yield
The rental yield can be a good monthly passive income if your property location is great. Either private property or HDB, the demand from foreign workers or expatriates to rent is high. Please take note that the maximum number of occupants in Singapore is 6 including landlord if you are staying with your tenants. Hence, a bigger property does not guarantee a higher rental yield as it’s capped at 6 occupants.
Rental Income Tax
As for commercial and industrial property, owner-occupier tax rate does not apply as it’s only applicable to residential property in Singapore.
2. Capital Gain
For long term, you will expect a good amount of capital gain when selling your property. However, there are a few things to consider when selling your Singapore real estate.
Recent Transaction Price
For HDB, you can refer to Resale Flat Prices to check the recent transactions around your area and take it as a guideline for selling. As for private property, you can refer to Private Residential Property Transactions from URA.
Seller Stamp Duty (SSD)
The SSD rate applies when you are selling your property in Singapore. Depending on the number of years you are holding, the SSD can be up to 12% of your actual price/market price, whichever higher. There is no SSD payable if you hold your private residential property for more than 3 years.
How to Increase the Value of Investment Property
1. Painting Service
Whether it’s your first time selling your home or an old professional, the details of the finished product can mean the difference between your asking price and a retail price of thousands of dollars.
For example, did a homeowner with a black painted door know that the price of a home would increase by nearly 2.9%? Even if you’ve loved the bright yellow front door for years, making this small pre-movement change is an affordable way to add hundreds of dollars (if not thousands) to the value of your investment property.
Painting Service or DIY painting? Either way you will make your property looks new and increase its value.
2. Home Staging
Whether it’s your first time selling your home or an old professional, the details of the finished product can mean the difference between your asking price and a retail price of thousands of dollars.
For example, did a homeowner with a black painted door know that the price of a home would increase by nearly 2.9%? Even if you’ve loved the bright yellow front door for years, making this small pre-movement change is an affordable way to add hundreds of dollars (if not thousands) to the value of your investment property.
For financial transactions that are as important as the sale of a home, you don’t want to have an unnecessarily low sale price or a longer time to market. In terms of hours and money, staging could be one of the most profitable projects ever done.
Potential buyers are not only looking for housing structures but also ways to realize their dreams and improve their lifestyles. Staging can cause more emotional purchases for buyers and ultimately more money for sellers.
Home staging is also beneficial. Because potential buyers don’t want to see what they need to do when they move home. For every issue they see, they deduct the cost from their asking price. If you have too many problems, you may stop buying a home altogether.
Other than home staging and painting services, sometimes a hacking service can be useful to open up more space. To renovate, you can hack the non-load bearing walls, window grills, ceiling, tiles, etc.
For HDB, you will need to seek HDB’s approval before engaging a hacking contractor in Singapore. This is because HDB will arrange for an inspection appointment 5 days after the HDB resale application is accepted. The purpose of the inspection is to check if your flat complies with the Building & Construction Authority’s requirements. They will also check for unauthorized renovation work.
Please make sure that you only engage approved hacking contractors listed on the Directory of Renovation Contractor for HDB.
Hiring a renovation contractor in Singapore can greatly increase your property value. The renovation cost is often considered in the selling price and it can be accepted by most buyers. Buyers save time as they do not need to look for a renovation contractor.
Renovation works consist of tiling service, plumbing service, carpentry works, etc. Make sure you find the right contractor for your renovation.