Monday, August 4, 2008

Property Investment in Singapore. (1)

I noticed a shift of Singaporeans perspective towards Property Investments over the past few years. Even till today, as I went through the Financial Plans of my clients, most of them with surplus in their income are considering getting another property in the next 1-3 years.

Another observation I have on these people are that they do not have a Retirement or Children Education Plan properly structured. Ironically, many of them are very risk adverse that they refuse to invest into the Financial market. They believe that the property investments can help fund all these long term plans.

I had a few debates with my clients with regards to the viability of property investment in Singapore. This is a collection of their views:
1) Singapore Population is going towards 6.5million. Shortage is inevitable. Property Price can only go up, not down over long term because of land shortages.
2) Property Investment is a lower risk investment compared to the Financial Market because, even if prices went down, they can still fetch a rental income to help pay off the loan.
3) Rental Income is like a annuity. They can depends on rental income for retirement and yet getting an appreciation on their property for their legacy.
4) They claimed to lose money money in Shares / Unit Trust. Financial market is a lousy place to put their money.
5) Property Investment is the best way to make themselves rich fastest. They can leverage by taking a loan and get a quick profit with the least amount of money.

I can empathized with their thoughts. There are too many push factor forcing them to buy an investment property. Its hot money, hot coffee house topic. Its typical psychological investors behaviour. They are paying way above valuation. Is it the peak of this asset class? Well. I'll share more in my next posting few days later...


Anonymous said...

Earthworms will always grovel at the ground.

Anonymous said...

sub-selling to make a quick buck. Some people just never learn.

Wealth Journey said...

Quite a few surveys by private banks have shown Asian HNW investors tends to put more of their money into property investments. And it is true that property is the quickest way to building greater wealth (as compared to a stock/bond portfolio).

But, you need to be investment savvy (as with all other investment type) to make the right decision.

Maybe I'll give some insights into the private banking world as a client in my blog. I'm also using leverage for buying investments.

Keep an open mind - that's The difference between haves and haves-not.