Nov 22, 2013

    What to look out for when investing in property

    COOLING measures or not, property still comes out as one of the top choices for many in land-scarce Singapore when it comes to investment.

    With the huge amount of capital involved, it is vital that those looking to invest in property - be it residential or commercial, here or overseas - do their homework before getting into such long-term commitments.

    Property analysts told MyPaper that one thing Singaporeans should not overlook is to invest within their means.

    "Property, as an investment option, is regarded as a long-term hedge against inflation," said Dr Chua Yang Liang, Jones Lang LaSalle's head of research in South-east Asia.

    Noting that property investment offers "a steady stream of income, in terms of rental and capital appreciation", he said that it is not uncommon for Singaporeans to leverage on borrowing for such ventures.

    "But do your sums, be financially prudent, and do not over-leverage," advised Dr Chua.

    Mr Eugene Lim, key executive officer of ERA Realty, voiced similar sentiments: "Property investment is a long-term game and one must be able to ride the up-and-down cycle in between. So it is wise to buy within your means."

    Mr Lim added that buyers should zoom in on other equally significant factors when considering a property project, most notably its location.

    "Being near to an MRT station is important, as are shopping (options), eateries and good schools, among others," he said, pointing out that a good location would make a residential property more appealing to potential tenants.

    Upcoming developments that are minutes away from an MRT station include La Fiesta in Sengkang, Ecopolitan in Punggol, and Nine Residences in Yishun.

    Mr Lim added that location is equally important for commercial properties here. "Connectivity and accessibility are key as tenants want to be near major clients that are in the Central Business Park or regional centres," he said.

    Investing in overseas properties is also a growing trend among many Singaporeans.

    Dr Tan Tee Khoon, managing director of Knight Frank Property Network, noted that many have taken to overseas properties as a result of the "robust residential-property prices here", and also to capitalise on Singapore's strong currency.

    These properties are mainly located in Australia, Britain, Malaysia and Thailand.

    "The same considerations as local property investments, including estimated returns, and the credibility of the developer, should apply to those overseas," he said.

    Nikki Beach Hotel & Spa in Phuket, for instance, ensures that the principal investment amount is fully insured under First American Title Insurance. It also holds the assets in trust for the duration of the investment.

    In addition, Dr Tan stressed that "it is imperative that buyers understand the legalities surrounding a foreign purchase", which involves levies, government consent, tax structures, and prospects for resale.

    Said Dr Chua: "As these assets are farther away, chances are you will need a reliable agency on the ground to help manage and maintain the property and leasing activity."