Insights for Real Estate Investing in Singapore

For 4 consecutive years, Singapore has been named as the ‘World’s Most Expensive City for Expats’ at least according to the Economic Intelligence Unit (EIU). The high costs are however justifiable due to the availability of top companies and jobs setting base here.
Nevertheless, even though land is limited here, this place is the core of real estate investment opportunities that you’ll appreciate over the next couple of years. As such, this post will take you through the insights for real estate investing in Singapore. Here’s what you should know:

The Basics

First of all, you must familiarize yourself with the basics before diving into any real estate market. The basic price of purchasing a residence is what determines your entry price point. The average price per square meter is about SG$15,251 along with a rental yield (your return rate on the home’s cost) of 2.83%. In simple terms, this’s your annual makings versus the initial investment. With this price, at least you have an idea of what to expect, but it doesn’t mean you’ll get this much or it will cost you this much.

Restricted and Non-Restricted Properties

You’re allowed to buy any commercial or industrial property in Singapore. However, according to experts at Sothebys Singapore, “the Residential Property Act in Singapore has categorized residential properties as restricted and unrestricted.” Under this act, you have to obtain approvals from the LDAU (Land Dealings Approval Unit) before acquiring the following properties:

• Vacant residential land
• Landed property
• Landed property in a strata development

The same act states that the following properties are non-restricted:

• Any apartment in a building
• Any unit within an approved condominium development which is under the Planning Act
• Leasehold estate within a restricted residential property and not exceeding a 7-year term

Taxes

Singapore is one of the top countries with the best tax rates for financial investments from both individuals and foreign entities. For people making money via the country itself – such as landlords – monthly incomes ranging between $1,500 and $12000 attract a flat rate of 15%.

Furthermore, the progressive tax on your home’s annual value depends on whether you live in it or not. Owner-occupied property gets an additional 4% concessional rate and all properties costs an extra 10% for non-Singaporeans. However, rental properties, industrial properties, and commercial properties attract a flat rate of 10 %.

Location

This’s a factor that you should never overlook when looking to invest in a property. Despite Singapore’s small size, property value varies depending on the location. Bukit Panjang is where you’ll get most expensive properties. However most apartments here are in form of HDB apartments, which is a program sponsored by the state for subsidized housing. That said, Bukit Panjang is outclassed by regions such as Sengkang, Jurong West, Choa Chu Kang, and of course Bedok (most expensive) when it comes to rental costs.

Stamp Duty

You’ll get 2 types of stamp duty in terms of buying which are all payable. The stamp duties include the Buyer’s stamp duty for all properties and additional buyer’s stamp duty for residential properties. The Buyer’s Stamp Duty (BSD) attracts a progressive rate of 1%-3%.

On the other hand, ABSD (Additional Buyer’s Stamp Duty) which only apply to purchase of residential properties has a progressive rate of 15% for foreigners and entities, 5% for permanent residents, and 0% for Singapore citizens.

All in all, these are the main things you should take note before making any real estate investment in Singapore. However, your goals and individual circumstances will play an essential part in the choice of property you invest in. Do you want to keep it rental or sell it after 5 years?