Money exists for two reasons: you can either spend it or you can learn how to multiply it. The means to make more money is by placing your savings or financing instruments on an investment.Something that will pay off more money than the one you placed on your initial bid for success.
Many people look for safe options to place invest their money, some look to make their mark on the commodities market, some bet in the wild playground of stock and bonds while others do some hard homework to invest in the Number One Property in the real estate market of Singapore.
The old rules of offer and demand apply here: you will win more money if you buy at low prices and wait for the right moment to sell the property at an increased premium.In the business environment of Singapore, there are a number of specific factors affecting the prices of any property. Some of them are rules of the international market. Others are rather unique to the country’s economy.
Let’s take a look at some of them:
- Prized Location, Strong Infrastructure
This two-in-one combo is one of the oldest equations regulating the demand game on real estate properties around the world. Any project that holds a premium location is bound to costs more as times goes by. What determines how “premium” is a location? It all comes down to the easy access to it by any means of transportation, especially by public means. If the project also has sources of amenities and entertainment close to it, it greatly increases the final price of a single habitation unit.
- The Condition of the Property
These are other universal rulings shaping deals on real estate properties. The older they are, the less interest they gather, unless of course, the leaser makes periodical modifications to it. The search for the Number One Property doesn’t have to be limited to new projects only. While these tend to gather enough heat because of the technological advancements placed on them, some of the smartest choices are in older properties that showcase top conditions because their tenants do their best to keep them in top shape at all times.
Leaseholds are not an exclusive condition to the real estate market of Singapore but it’s how most of the residential properties are handled. These lease contracts usually have a very extensive longevity since they are offered to trust fund and associations that are meant to last past the time of the original brokers of the deal. Properties managed by government-issued leaseholds tend to be more accessible than the few ones still running on a freehold, but these ones usually retain their value for much longer.
- Interest rates and Economic Policies
Both factors are closely tied in Singapore’s real estate market. Since the country has experienced a booming economy in the last few years and the government doesn’t have any intention of slowing down the process. To attract more investors they intervene periodically with policies that keep interest rates very low, even in top real estate projects. Having a shot at making a deal on your perceived Number One Property suddenly becomes a reality and you just need the initiative to take the shot.
Restrictions and Taxation
Given the state of a booming economy in Singapore, it would be very easy for investors with deep pockets to speculate on the market, to avoid that scenario the Singapore government as put in place a series of rules and regulations that make reselling your property something of a hassle.
While the measures are not meant to discourage investment they certainly make it harder for people looking for short-term earnings to collect profits unless they deal with some heavy levels of bureaucracy. Among these regulations, you will have to get an Additional buyer Stamp of Duty from the government if you wish to invest in more than one property. If you are selling just after 3 or 4 years of ownership you’ll need a Seller Stamp of Duty.
There is also a preset limit on the amount of money you can get granted by a bank if you own more than one residential property. In accordance with the laws of Singapore, the more properties you have, the less the bank will loan to buy every new one you add. Just to give you a clear idea, the loan to value ratio for your third property would be of just 35% of the total value of it.
Finally, when it comes to taxation, the government asks for a share of your profits in accordance with the number of properties you own and the value they hold on the market. For a resident, a small living space that costs over $55,000 will pay 4% of the total value of it each year. But multiple properties going over the $130,000 mark will have to pay at least 16% of their registered value. Non-residents that are perceiving income on leased properties will pay much more with rates going as high as 20% for any property going over the $90,000 mark.