Taking advantage of Singapore’s property market
Paresh Raja, CEO and Founder of Market Financial Solutions, discusses how Asian investors are now gravitating towards alternative finance, particularly in the property market, offering new sources of capital outside of mainstream lenders.
When it comes to investment markets across Southeast Asia, it is difficult to look past the exciting range of opportunities currently on offer in Singapore. Recently ranked by the World Bank as the second easiest place in the world to do business, the city-state has established itself as one of the world’s leading centres for commerce and trade. This has made it a particularly attractive destination for international businesses, entrepreneurs and investors, who consider Singapore a gateway to rapidly rising Asian markets.
For investors looking to take advantage of Singapore’s open and transparent approach to business, there are a plethora of options available, ranging from infrastructure to traditional financial assets such as stocks and bonds. However, one sector in particular is set to experience significant growth over the coming years as a consequence of new projects and increasing market demand commercial and residential real estate.
Singapore’s thriving property market
It is projected that the volume of investment into Singapore’s real estate market could rise by as much as 20% in 2018 the equivalent of $48 billion. This impressive rate of growth would also be the highest volume of investment into the city-state’s real estate since 2007. With investors clearly keen to direct capital into Singapore’s residential and commercial property, it is important to understand why the sector is poised for growth.
Part of the reason is due to the healthy state of the wider Singapore economy in Q3 2017, GDP grew by 8.8% from the previous quarter, backed by the strong performance of the manufacturing industry and a declining rate of unemployment. Overall the country ranks fourth in the world in terms of its GDP per capita, making it an attractive destination for those seeking new investment opportunities.
Residential real estate
With the Singapore economy growing at pace, there has also been a significant amount of investment into property development to meet market demand for homes. The population of Singapore is set to grow to 6.3 million people by 2030, up from the current 5.7 million, which will naturally increase the demand for residential real estate. Outweighing available supply, buyer demand is expected to increase house prices by 8% by the close of 2018. New homes sales are also projected to increase throughout the year by 50%, making Singapore’s property market the most promising out of all the ASEAN markets.
Commercial real estate
Singapore’s position as a regional and global centre for commerce and trade ensures that there is always constant demand for industrial units and office properties. New commercial developments are rapidly popping up across the city, catering to business demand for offices. Similar to the residential sector, new research suggests that Singapore is likely to experience its strongest level of office rental growth over the next three years. Office rent is set to grow by 10% in 2018 the second fastest rate in the Asia-Pacific as a result of a high-performing economy and strong levels of business confidence.
Taking advantage of Singaporean real estate
Now is an ideal time for individuals or businesses take advantage of the commercial and residential real estate opportunities on offer in Singapore. Rising volumes of investment into the sector from both domestic and foreign buyers have made the market competitive, but there is no denying the sheer wealth of opportunities on offer.
Importantly, to pursue a potential property investment amidst such demand, access to fast capital is necessary. The nature of the Singaporean market means that it is extremely important for buyers to have the finance needed to complete a property transaction. With Singapore cultivating its image as leading innovator in the fintech space, property investors should also look to alternative sources of finance outside of traditional credit lines. In some cases, alternative finance ensures buyers are able to seize a real estate opportunity quickly.
Looking to the future, Singapore will continue to build upon its image as a gateway city, linking Western businesses to the East. With a vibrant financial market, the city-state’s property market is also likely to remain a popular destination for investors seeking to capitalise on the sector’s projected growth in coming years.