Is Singapore property investment dead? Greener pastures elsewhere?

[Patrickstar]

Hi friends,

Good to be back after a long vacation. My assessment of the market during the break is that many are looking at greener pastures beyond our shores for more valued property investments and the property market here is getting very unattractive. Paying high property prices here that yields a paltry 3-4% in rental doesn't seem to make much sense in terms of investment when one can easily acquire a property let's say in Thailand or Australia that yields 7-10+%. I have given up buying another property in Singapore for now after observing much better returns in overseas property (not referring to malaysia of course). Would like to hear from you guys why you think it is or it is not game over for our local property market. Many people I know are just waiting for a correction and even with the correction, yields may still not be fantastic.

[gull]

You are a wealthy man who can invest in multiple million dollar properties while 95% of Singapore population struggles to have one for their own use.

You are in the wrong forum my frnd, rather spend ur time golfing out with other wealthy counterparts.

[Warren49]

Don't forget the very significant tax we have to pay on our rental income, as a non-resident of the overseas country. Easily 25% and more.

Leverage is the key to reducing the taxes payable, but after leverage, does the net yield (aft deducting interest cost) still make sense? Have to research deep into individual properties to find out.

[leesg123]

Hi friends,

Good to be back after a long vacation. My assessment of the market during the break is that many are looking at greener pastures beyond our shores for more valued property investments and the property market here is getting very unattractive. Paying high property prices here that yields a paltry 3-4% in rental doesn't seem to make much sense in terms of investment when one can easily acquire a property let's say in Thailand or Australia that yields 7-10+%. I have given up buying another property in Singapore for now after observing much better returns in overseas property (not referring to malaysia of course). Would like to hear from you guys why you think it is or it is not game over for our local property market. Many people I know are just waiting for a correction and even with the correction, yields may still not be fantastic.
If you have invested in Thailand, the depreciation in currency can wipe out your so called 7-10% rental yield. Also, hiw about income tax? Note that you are going to be taxed as Non-resident in that country and usually is vety high rate. Compare the income tax with SG (unless u are among the 1st tier bracket). How about default payment of rental overseas? You would need to engage property management company to help you with tenant matters. Typically about 8-10% of your monthly rent.

So please, a season investor wont just look at rent yield at surface value.

[minority]

Yield here can be 3-4% but interest are also low. overseas leverage cost are higher. 3-6% leverage cost.

unless all u have is cash and don't look toward leverage. if not the 6-7% yield are also no use all go to pay the bank.

the other thing is what is the base currency ? Thai bath? RMB? or USD? coz given the strong SGD the gain overseas will still get eroded by the exchange rate.

[Warren49]

Yield here can be 3-4% but interest are also low. overseas leverage cost are higher. 3-6% leverage cost.

unless all u have is cash and don't look toward leverage. if not the 6-7% yield are also no use all go to pay the bank.

the other thing is what is the base currency ? Thai bath? RMB? or USD? coz given the strong SGD the gain overseas will still get eroded by the exchange rate.

All cash may not be a gd idea. The tax on non-resident rental income is usually at least 25% or more 1.....so net yield becomes v little, if you don't use leverage.

[minority]

All cash may not be a gd idea. The tax on non-resident rental income is usually at least 25% or more 1.....so net yield becomes v little, if you don't use leverage.

yeah precisely. So comparison should not just be looking at the yield. the tax and leverage cost and currency risk needs to be taken into consideration.

[Patrickstar]

If I am of that calibre to be able to own several multi-million dollar properties in singapore, I won't be talking about high property prices here :)


You are a wealthy man who can invest in multiple million dollar properties while 95% of Singapore population struggles to have one for their own use.

You are in the wrong forum my frnd, rather spend ur time golfing out with other wealthy counterparts.

[Patrickstar]

I think overseas investment has to serve a dual purpose, buy for future own use/holiday home cum investment. I have not heard people actually paying property income tax in countries like Thailand and malaysia even though i know it exists. If you actually spend time searching popular holiday accommodations in thailand hotspots on agoda, you will notice that room rates can go for sgd2000 a month with a capital outlay of only sgd100k plus. Of course the next thing you will say is the high and low season, I have calculated that the high season of 5 months in a year is sufficient to generate 8% rental yield per annum, leaving the rest of the time for you to enjoy the place as a holiday home. Actually with such attractive rental yield, the unit can be paid off in a short time from rental income to recover your capital. If there is really a currency depreciation, I believe the property prices will be adjusted. In some of these hotspots where there is high tourism and occupancy, I don't see how prices can't hold well, but of course all things are possible which is why there is such a thing as risk.


If you have invested in Thailand, the depreciation in currency can wipe out your so called 7-10% rental yield. Also, hiw about income tax? Note that you are going to be taxed as Non-resident in that country and usually is vety high rate. Compare the income tax with SG (unless u are among the 1st tier bracket). How about default payment of rental overseas? You would need to engage property management company to help you with tenant matters. Typically about 8-10% of your monthly rent.

So please, a season investor wont just look at rent yield at surface value.

[Londonproperty123]

We find Singapore property expensive, so we have been buying in London, at least till last year. This year, London prices have shot up a lot.

[Patrickstar]

I have considered London, but the entry price is high, which means tying up a lot of cash in one place. There is also capital gains tax n high rental income tax which is harder to escape than developing economies. Managing a london property is also an issue for me coz i find the place too far to travel to and fro if i need to check on the property and it is not cheap to fly there everytime.


We find Singapore property expensive, so we have been buying in London, at least till last year. This year, London prices have shot up a lot.