Singapore's real estate market has long been a popular destination for foreign investors.
For instance, in 2021, Chinese investors accounted for the largest share of foreign buyers of Singapore condominiums, followed by Malaysians, Indonesians, and Americans.
What’s so special about Singapore’s property market, you must wonder?
Well, investing in Singapore real estate can offer a range of benefits, including high rental yields, potential for capital appreciation, favorable tax laws, and diversification opportunities. And this is why folks from all over the world have been flocking in to leverage opportunities.
In this article, we will explore these benefits in more detail and guide the process of buying a condo in Singapore as an Irish investor.
The benefits of investing in Singapore real estate as an Irish investor
As an Irish investor, investing in Singapore real estate can bring many benefits.
1. High Rental Yields
Singapore real estate offers relatively high rental yields compared to developed markets like China and Europe. This means that investors can generate significant income from their properties.
For instance, a typical condo development in Singapore can yield up to 5% annual returns. This is huge when you remember that places like Spain give you 4.6%, Canada (4.3%), Italy (3.9%), Sweden (3.1%), Hong Kong (1.8%), France (2.4%), and China (1.7%).
2. Potential for Capital Appreciation
Singapore has a stable and growing economy, which has resulted in a steady rise in property values over the years. Investors who buy property in Singapore can potentially benefit from capital appreciation.
According to CEIC data, Singapore’s house prices recorded an 8.6% YoY growth rate in Dec 2022, following a jump of 13.6% YoY in the previous quarter.
Based on this alone, it’s clear that the potential for capital appreciation is there.
3. Favourable Tax Laws
Singapore has a pro-business and investor-friendly tax system, with relatively low tax rates for individuals and corporations. Also, tax incentives are available for certain types of real estate investments.
4. Diversification Opportunities
Investing in Singapore real estate allows Irish investors to diversify their investment portfolios outside of Ireland. This can help reduce risk and potentially increase returns over the long term.
Factors to consider when buying a property in Singapore
If you are an Irish investor planning to buy a property in Singapore, before making a purchase, you should think about the following:
The condo's location is critical, as it can affect the value of the property and the rental yield. Consider proximity to public transportation, schools, shops, and other amenities.
A good example of a property exemplifying this is the Jden condo showflat located in Jurong.
J’den condo residences are situated in an area connected to Jurong East MRT interchange, Jem, Westgate, and IMM Building via J-Walk, a covered elevated pedestrian network in the Jurong Lake District (JLD). Furthermore, the property is built just near the public library, community club, sports centre, food centres, supermarkets, clinics, post offices, police posts, and picturesque Jurong Lake Gardens.
All these add to the attractiveness of the development, ensuring its investment success.
2. Property Type
As an Irish investor in Singapore, a condo unit is the easiest property type you can secure.
Here, foreigners can purchase condominium units without needing approval under the Residential Property Act. You can confirm this information yourself on the Singapore Land Authority website.
However, if you have other interests different from condos, here are the options available to you:
- A strata landed house in an approved condominium development;
- A leasehold estate in a landed residential property for a term not exceeding 7 years, including any further term which may be granted by way of an option for renewal; an executive condominium unit, an HDB flat, and an HDB shophouse.
3. Developer’s Reputation
It's essential to research the importance of the developer before buying a condo. Check the developer's track record, financial stability, and quality of their previous projects.
Again, the newly-launched condo development In Jurong - J’den condo – perfectly illustrates this. It is developed by some of Singapore's biggest and most credible developers. When you're shopping for properties, these are the kinds of things you look out for.
Buying Singaporean Real Estate: Tax & Duties Involved
When purchasing real estate in Singapore as an Irish investor, several costs must be considered. The first is the Buyer's Stamp Duty (BSD), which is a progressive tax based on the market value bracket of the property acquired. For example, a British non-Singapore Permanent Resident (SPR) buying an 11-year-old EC apartment with a market value of S$1,500,000 would need to pay around S$44,600 worth of BSD.
Additionally, foreigners must pay an Additional Buyer's Stamp Duty (ABSD). For example, an Irish guy named Tommy (the hypothetical foreign buyer) would need to pay a 30% ABSD of S$450,000 on top of the BSD.
Foreigners can also apply for mortgages but must be aware of Loan-to-Value (LTV) limits. The absolute LTV limit for commercial mortgage loans is 75%, and there are varying categories based on factors such as age and the type of property being purchased.
1. Eligibility & Restrictions
As a foreigner, you must meet certain eligibility criteria and comply with specific restrictions before you can buy properties in Singapore. These include obtaining government approval (depending on property choice), paying additional stamp duties, and restrictions on foreign ownership of landed properties.
2. Property Search
Once you have met the eligibility criteria, the next step is to start searching for suitable properties in Singapore. During this process, you’ll do well to consider the factors such as – location, property type, amenities, price range, etc.
After you have found a property that meets your criteria, you can make an offer to the seller through your property agent. Working with a property agent in this phase is important because of the back and forth that may ensue.
4. Legal & Financial due diligence
Before finalizing the purchase, you will need to conduct legal and financial due diligence. This involves engaging a lawyer to review the sale and purchase agreement, verifying the property's ownership and title, and ensuring that the financing is in place.
Overall, investing in Singapore real estate requires careful planning, research, and execution, but it can offer attractive returns and diversification benefits. We recommend that Irish investors consult with local experts, such as property agents and lawyers, to successfully navigate the complexities of investing in Singapore real estate. With the right strategy and support, investing in Singapore real estate can be a wise investment choice.