How To Make Money In Today's Singapore Property?
Updated: Nov 11
In order to make money in Singapore property, we need to study the location of the project and determine the potential upside by comparing it with the surrounding projects and past history of the property. We also need to look at demand and supply, facing of the unit, future developments in that area and land size. These are the main factors I use to help me determine the potential gain of the unit.
Land is scarce in Singapore, making prime locations more valuable. For example, projects near the Integrated Resorts, such as Marina Bay, are properties that have strong potential for future growth as the government has spent billions of dollars to develop the infrastructure in the area, and want the rich and famous to live and invest there. This is why all the top banks are situated at the Business Financial Hub and this is to attract High Net Worth (HNW) clients. Singapore is one of the few places in the world where one can Live, Work and Play with good governance and tight security. The whole CBD area is going to be transformed and there is only a limited supply of residential units that are closed to the Integrated Resort and Marina Bay.
If the location is not good, price might remain stagnant, even if the project is freehold. The price of a property in a good location may drop due to poor market sentiment, but when the market picks up, it will be the first to appreciate, and will do so faster than other projects.
Past History Of The Property
In order to advise my clients whether to buy or sell, I need to look into the historical prices of the project over the last four years. The main reason I do this is to know the peak and the lowest prices of the project. I would usually touched on the two most critical tips when looking for a good property - the size of the unit determines the size of your profit and look for areas where demand outstrips supply. This is how you make millions from property investing. So what are is the best time to buy and sell property? In my opinion, it is not east to judge the best time to buy or sell a property. I always advise my clients that buying properties is not about speculating but about long term investment. If anyone has spare cash, it will be good to put it in this asset due to the scarcity of land and as a good hedge against inflation. To me the best time to invest is when no one dares to go in to buy any property as that will be the best price you will be getting due to low demand.
Is It Worthwhile To Enter The Market Even Price Has Reached Its Peak?
Barring any dramatic economic upheavals, property prices will likely to stabilize and slowly increase in the near future. Most sellers will not want to sell at a lower price today, and are not under pressure from a large mortgage due to low borrowing costs. Provided that you do not sell your property during the downturn - as you will inevitably lose money on it - the value should increase. The key is that the buyer must have holding power if the market deteriorates and should not buy unless they have the holding power to weather any market condition. Prices will eventually rise again as we witnessed in 2008, when prices declined but eventually rose to, and in some cases surpassed the 2007 peak. Many people choose to purchase an asset like property because of the asset's enduring value even during a financial crisis. People feel safer putting their money in a real asset rather than in financial instruments, as your real asset will always be there, even when market conditions are not good. Buyers who are looking at property as a long-term investment are less concerned about the market's short term movements. Property in Singapore will most likely appreciate in the long term due to the scarcity of land. While having a diversified portfolio is a good thing, as a long term investment, property is generally going to make more money than other instruments. Investing in bonds, for example is a safe investment, but your capital appreciation will be limited. But property is not the ideal instrument for speculators. Not only has the government introduced measures to discourage property speculation, but you will be much more vulnerable to market fluctuations.
Mistakes Novice Investors Make
Most investors do not do much research and buy because of hype, without doing work on the potential upside of the project or the risks involved. Before we buy property, we need to work out the exact breakeven price and know the surrounding projects' transaction prices too. Investors need to know how much profit they can make plus the necessary costs involved, plus have an idea of when their projected price can be achieved. Many new investors know how to buy properties but do not know how to exit and re-enter to multiply their capital. They prefer to hold the unit for a long period and hope the price will continue to go up but fail to appreciate that prices cannot escalate year after year without dropping. One should capitalize on the profit made and upgrade to a better property, which in return can help you make a bigger capital gain. All this information and research can be done if you choose the right agents to work with.
"It is not when you buy but when you sell that makes the difference to your profit."
Brian Loh CN
MSc. Applied Finance, University of Adelaide, Australia