Buying and investing in Singapore real estate
Buying off-plan can turn huge profits
Many expats over the years have jumped onto the Singapore property ladder as it guarantees a relatively secure long term investment. It is also the most transparent and best regulated market in Southeast Asia and the purchasing process can be completed quite swiftly in most cases, even for foreign buyers.
The downside to all this is naturally the price. Singapore has proven to be an investor’s dream for residential and commercial properties and nowadays real estate prices are the highest in Asia. Some areas even eclipse parts of Australia and Europe for price.
How to invest in Singapore property
There are still bargains to be had in Singapore and the exotic, multicultural way of life with year round tropical sunshine is definitely money well spent so few people regret their move here.
As a foreigner there are no restrictions on buying leasehold property in a private apartment block, but for vacant land and freehold houses, prior approval is needed beforehand from the Singapore Land Authority (Shenton Way, 27-02 Temasek Tower). Each case is assessed on its individual merits but permission is rarely given as this type of real estate is in very short supply and generally reserved for Singaporeans.
Unlike many other countries in Southeast Asia, you can apply for a bank mortgage of up to 80 per cent to pay for your home purchase subject to the usual rules on proof of earnings. Many long term Singapore expats have gained ‘permanent resident’ status which opens several more doors with lower taxes, freedom to move between jobs and the opportunity to purchase lower priced HDB resale flats too.
The buying process is all quite straightforward and starts with an ‘Option to Purchase’ which is a signed intent to purchase a property. At this time you are required to hand over one per cent of the agreed purchase price and have 14 days to decide to proceed. For these 14 days, the seller is forbidden to sell to anyone else. The next step is to forward a further nine per cent of the price and then legal documents will be drawn up, title searches completed and, if all is in order, your lender will release funds for the purchase.
Only invest with reputable companies
Do plenty of research, speak to other expats and always seek impartial legal advice beforehand. It is vital to factor in all costs before committing yourself. In addition to the deposit and mortgage repayments, there is stamp duty, property tax (paid annually) solicitors fees and real estate agents’ commission which is split between the buyer and seller.
There are no specific restrictions on buying properties to let although mortgage repayments are usually a little more expensive and tax has to be paid on all rental income. Choosing the ideal location for your new home in Singapore is no easy task. It is all about getting the right balance between travel time to work, shopping and leisure facilities and schooling at a price you can comfortably afford.
There are numerous localised housing markets in Singapore comprising well-to-do areas that are extremely expensive like Orchard and Bukit Timah, to leafy suburbs in the north of the island that still offer good value and plenty of scope for appreciation. Property price rises in Singapore are steady rather than spectacular and investors should be looking for long term growth rather than a short term 'get rich quick' philosophy.
There are hundreds of real estate agents ready to assist with your house hunting. While the vast majority are honest and professional, use an agency accredited by the Institute of Estate Agents which offers arbitration and legal recourse if there are any disputes. Most expats are attracted by the experience and expertise of the many specialist agents such as Knight Frank (several branches in Singapore) who have consultants dealing exclusively with foreign buyers. They also provide a comprehensive expat buyer’s guide for all foreign house hunters.
