Singapore Property could be The Best Way to Grow and Protect Your Wealth
Singapore Property remains relatively resilient despite current pandemic situation. So far, new home sales seem to have bucked the corona virus gloom, surging more than 114 per cent in February compared to a year earlier, according to Urban Redevelopment Authority data, agents were similarly upbeat. Pointing to the value proposition of the sector, Alice Tan, senior director of research and consulting at Edmund Tie, said new private homes in Singapore commanded a premium of around 40 per cent over resale units last year, and this is expected to continue.
“With ample new supply coming on-stream and demand staying stable for 2020 in the light of low interest rates, it is anticipated that the price differential between the primary and resale non-landed markets will remain at 40 to 45 per cent,” she said. “There is therefore a distinct possibility that 2020 will outdo the preceding year.”
While stock markets and even the relatively more conservative bond markets have taken a nose dive since the spread of Covid-19 throughout Europe and the US, strategists from all over the world have been trying to call the bottom. Many are optimistic and project a V-shaped recovery which they determine will be propelled by pent-up demand and re-investment into various sectors in particular the consumer sector, construction and travel sector. As the pandemic progresses, some strategists are suggesting that a meaningful recovery will only occur in 12 to 18 months when a vaccine might be widely available. Whatever the prognosis is, this will all come to pass and the global economy will be revived again.
The question is for how long we will have to wait for global growth to return to long term growth trend, if ever. The world as we knew it before Covid-19 struck has changed drastically. The apparent hyper-virulency of Covid-19 seems to imply that safe distancing and face-mask wearing might be here to stay for a while; but people will adapt, life will go on, new growth sectors will emerge and the global economy will be vibrant again, one day. So how can we turn this threat into an opportunity? Consider Singapore Residential Property.
Properties are less easily traded and therefore does not have the same volatility when ‘black swan’ events like the global financial crisis or Covid-19 come along to disrupt the global economy. That said, the resilience of Singapore Property would depend on many other factors including its location, the price trend before the event (for example, was there already a bubble), long-term demand/supply for that area, type and age of property etc.
There might be some meaningful impact on Singapore Property prices eventually, especially if the virus leads to large-scale job losses, but with the concerted effort of governments, central banks and mortgagers, we believe shocks to the Singapore property sector will remain manageable and the probability of panic-selling should remain low.
Property is a stable, long-term investment that requires time, above all other considerations, to grow in value. It is a proven inflation-hedge and long-term store of value. The inability to execute and complete a property transaction on impulse also provides that “cooling-off period” between the event and effect of the event (for eg. potential job loss).
While we cannot project with certainty where Singapore property (residential) prices might be a year from now, we are cautiously optimistic that prices will remain relatively stable amid the crisis, underpinned by a stable political environment, an effective set of tools the Singapore government has in place to tweak the market if necessary, higher national savings rate, increased interest from regional investors, a clear developmental blue-print and last but not least, stable prices.
As the saying goes, “nothing ventured, nothing gained”. It may be difficult to time the market amid this pandemic but it is best to be prepared by keeping tabs of potential property investments. This just might become the best opportunity to own an appreciating Singapore Property of your life time.
About the Author
Lisa Khoo CFA is a Chartered Financial Analyst with more than 20 years of experience in the financial markets. She worked as an economist and investment analyst at a major insurance company before moving on to manage Asia Pacific equities for both institutional and private clients. In her last appointment before retreating from corporate life, Lisa headed Product Sales at a global asset management firm, responsible for product and client analysis/reports and RFP generation, She is now an independent investment analyst and writer with special interest in economics, investments and lifestyle, She can be contacted at Linkedin.
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Buying guide
What you can buy from S$1.7 million (US$1.2 million) in Singapore:
A new home (3 bedrooms) in the Avenue South Residence, an upcoming iconic landmark at Silat Avenue, overlooking Sentosa and The Greater Southern WaterFront. This large residential site have two 56 storey towers, 1074 residential units , a childcare center, 8 commercial units, five 4-storey conservation blocks and a public park.