Many Singapore investors are well-travelled and are up-to-date with the foreign market situations, hence quite a number of them are savvy about investing in the overseas real estate market. As more and more people are becoming financially knowledgeable, they are constantly searching for effective ways to increase their wealth. Here are 3 reasons why Singaporeans are looking to invest in the property market outside of Singapore.
1. Diversifying Investment Portfolio
Foreign investment is a smart option to diversify an investor’s portfolio and property is an excellent asset type to use as a hedge against gloomy market conditions outside of stocks, bonds, and mutual funds. Additionally, it is a good method to profit directly or indirectly from the growth of the markets. To reduce risk exposure, one way is to spread your assets across a wide range of investments to balance risk and return in your portfolio. There is a saying “don’t put all your eggs in one basket”.
2. Children Studying Abroad
It is important to foresee where your children will continue their further studies and buy a home that is in close proximity to their schools. Usually the properties in these crowded cities will have exorbitant rental prices. Instead of renting, where rent may be a significant expense, a better option will be paying your own mortgage which is an asset, as opposed to paying for someone else’s mortgage (through paying rent). This will make greater financial sense.
Not to mention that renting out the house once your children graduate from school will give you an additional source of income. If your children decide to stay in the country to settle down, the property will offer them a secure place to live, work and play. The chance of capital gains after selling off the property may also be the next reasonable option.
3. Hedge Against Inflation With Passive Rental Income
In the long run, real estate is a great investment option in reaction to inflation, a situation where rental rates and interest rates inevitably move in tandem with market conditions. Real estate owners frequently see the greatest price increase during periods of high inflation since it is widely regarded as the ultimate hard asset. Due to the fact that rental prices often increase along with the market, renting out your foreign property might decrease the effect of inflation on your total portfolio. Therefore, it is essential for investors to pick prime locations that are easy to lease out.
One of the best methods to reduce risk and diversify a portfolio is to invest in a home abroad. Despite this, it is understandable why some investors who are inexperienced with overseas markets find it intimidating. If you’re looking to invest in properties overseas like New Zealand and Australia, feel free to reach out to our Singapore client consultants and start your overseas property investment journey.