What if we told you that all you need is 3 minutes to start investing in Singapore’s property market?
Everywhere you go in the sunny shores of Singapore, towering skyscrapers, quaint apartment buildings, and mega malls stand tall on our land-scarce island.
What is Singapore’s property market like?
Singapore’s property market has been remarkably resilient despite the pandemic and recession last year and continued uncertainty over Covid-19 risks this year. Although the nation’s economy shrank a record 5.8-percent in 2020, the damage to the property market has been minimal. This attests to the strong fundamentals that underpin the market, as well as the effectiveness of governmental support measures to keep business afloat, and real estate space in demand.
More families are also staying at home, and Singaporeans have been reimagining their homes – that’s why residential properties also continue to see healthy demand. With the world – Singapore included – scrambling back to some resemblance of normalcy by adapting to living with the virus, economies are expected to rebound, and Singapore’s property investment sales market is on path to picking up in 2021.
“With the economy expected to rebound, coupled with optimism surrounding the availability of COVID-19 vaccination, the availability of ample liquidity and the pressure to deploy, Singapore’s property investment sales market is poised for a pickup in 2021.” – JLL, February 2021
Investing in property has long been a satisfying and lucrative investment strategy. Unlike investing in stocks and bonds, real estate owners – or landlords – finance the mortgage of the property, and receive rental income. As with other investments, investors receive a stream of passive income – arguably a better strategy than stashing all your cash in bank accounts that offer minimal interest.
However, being a landlord comes with additional responsibilities, paperwork, and hidden red tape. This is even more so for foreigners, who face restrictions on the types of property they can buy in Singapore, and have to shoulder the Additional Buyer’s Stamp Duty (ABSD) when buying private property. For foreigners, the ABSD on a property that costs $800,000 is a whopping $160,000, or 20-percent of the property price.
This might put off non-Singaporeans from buying real estate as a means of investment. Besides the lengthy procedures and unending bureaucracy, many are also hesitant to buy properties and finance mortgages due to the transient nature of their stay in Singapore. Indeed, it takes a lot of time, effort, and money for foreigners to actually own a property in Singapore.
So how exactly can owning and investing in property be easy? How can you start “owning” and investing in real estate in Singapore? What is an alternative to buying properties if you’re not going to stay in the country long-term? Let us introduce to you REITs: Real Estate Investment Trusts.
What are REITs?
REITs (Real Estate Investment Trusts) are like equity funds, except the assets in question are property instead of corporate stocks. Different equity funds use your investments to invest in different companies – some focus on tech giants, while others support healthcare services.
Singapore REITs are listed companies that you can invest in, and your funds are used to buy, operate, and manage properties. Like these equity funds, there are various types of REITs, with some comprising a portfolio of Commercial properties, while others are primarily made up of Residential properties.
When you start investing in a REIT, you are essentially investing in the properties managed by that particular REIT. You become part-owner of those malls, business parks, or whatever it is the REIT manages. You too can own a part of VivoCity, Mapletree Business City, Bugis Junction, and various data centres and logistic hubs across Singapore.
With REITs, you can have a reliable source of passive income, without the hassle of being a landlord.
A portion of what the REITs property earns in rental income will be yours, and the money paid through dividends. It is possible for dividends to be regularly paid out because REITs are required by law to redistribute at least 90-oercent of their taxable income each year (through dividends). So, you can be assured of a recurring source of income with REITs.
There are a few different types of REITs that may or may not suit your needs. One of the largest REITs in Singapore is the CapitaLand Integrated Commercial Trust (retail and commercial) with a market cap of S$14,753m, as well as the Ascendas REIT (industrial) with a market cap of S$12,223m. There are REITs which comprise mainly data centres too – like the Keppel DC REIT, or those which focus on healthcare property – such as the ParkwayLife REIT.
In a recent market note, digital wealth manager Syfe noted that industrial REITs have the most resilient growth potential. Many players from Ascendas REIT to Mapletree Industrial Trust have been shifting towards business parks and data centres. The pivot to these assets positions them to ride on future structural growth trends such as e-commerce and the new digital economy.
How do I start investing in REITs?
While you may buy individual REITs through a brokerage platform, there’s an easier way to invest in REITs with Syfe. Syfe is a digital wealth manager licensed by the Monetary Authority of Singapore (MAS; CMS License No: CMS100837).
Syfe offers a rich portfolio of REITs to invest in – 20 in fact – and are diversified across industries and territories. They span across sectors including retail, industrial, office and logistics. The top five REIT holdings include the following blue-chip REITs:
- Mapletree Industrial Trust (includes several data centres and business parks in Singapore and the United States)
- Mapletree Logistics Trust (comprises warehouses and logistics centres across nine markets in Asia Pacific)
- Ascendas Real Estate Investment Trust (contains business and science parks, logistics centres, data centres across Singapore, Australia, United States, the United Kingdom, and Europe)
- CapitaLand Commercial Trust (with popular shopping malls and offices like Bugis Junction, Asia Square Tower 2 and Raffles City)
- Mapletree Commercial Trust (including malls and offices like VivoCity, Mapletree Business City)
Syfe REIT+ was launched in partnership with the Singapore Exchange (SGX). This first-of-its-kind portfolio allows anyone to easily invest in and track the SGX’s iEdge S-REIT Leaders Index, one of the most popular indices of the Singapore stock market.
Syfe REIT+ has generate an average annual return of 8.7-percent for the past eight years. This portfolio achieved a dividend yield of 4.5-percent in 2020 despite economic downturns and is projected to increase to 5.1-percent in 2021.
With Syfe, there is NO minimum investment, and NO lock-in periods. You can start investing in REITs from as low as $100, and enjoy the flexibility of withdrawing your funds anytime.
Syfe accepts clients from over 40 nationalities, and creating an account takes just three minutes if you have MyInfo. Otherwise, you may sign up manually and submit your required documents online via the Syfe app.
Fees range from 0.35-percent to 0.65-percent per year based on the higher of your total assets under management or total invested amount. You can view their pricing tiers here.
What’s more, dividends are automatically reinvested for you at no extra charge. According to Syfe’s calculations, this adds an extra 0.5-percent in returns each year, which covers a substantial part of their management fees.
TLDR? Here’s a handy recap of Syfe REIT+ in 30 seconds:
There’s no better time to start investing and to put your money at work. Rather than accumulating a few cents each year with your money in your bank, why not invest it in REITs with its strong and healthy returns. With Syfe, it is all so much easier.
If nothing beats a quality conversation with a financial expert to learn more about investing, be sure to schedule a free call with a wealth expert at Syfe today. You can also learn more about their REIT+ portfolio and how it can help you to take advantage of the property market in Singapore.
Syfe is a digital wealth manager licensed by the Monetary Authority of Singapore (MAS) under a Capital Markets Services (CMS) License for fund management. All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone. This advertisement has not been reviewed by the Monetary Authority of Singapore.
By Derrick Tan, July 2021. This sponsored post was brought to you in collaboration with Syfe.