Interest among Singaporean investors in the overseas property market has remained steadfast in recent years, driven by various compelling reasons that make investing in real estate beyond domestic borders an attractive proposition.
They can be attributed to various factors such as portfolio diversification, lower cost of ownership for a second property, the advantage of favourable currency exchange rates, planning for children studying abroad, and even investing in a holiday or retirement home.
Let's take a look at some of the factors driving Singaporeans to consider investing in real estate overseas.
1. Diversification of Investment Portfolio
Diversifying your investment portfolio can spread risks and capture opportunities in different markets.
Real estate, as a tangible asset, offers an appealing alternative to other investment options such as stocks, bonds, and mutual funds.
By including overseas properties in your portfolio, investors can mitigate risks associated with local market fluctuations and benefit from potential capital appreciation and rental income.
2. Lower Cost of Ownership for a Second Property
With the implementation of Additional Buyer's Stamp Duty (ABSD) measures in Singapore, acquiring a second property locally has become more costly.
Singaporean investors may be prompted to explore overseas property markets, where ownership costs can be comparatively lower.
By investing in overseas properties, investors typically expand their real estate holdings while managing the financial implications more effectively.
3. Taking Advantage of Currency Exchange
When the Singapore dollar strengthens against foreign currencies, it provides a favourable environment for purchasing overseas properties.
Investors can benefit from potentially obtaining more value for their money and leveraging currency movements to enhance their investment returns over time.
4. Planning for Children Studying Abroad
Many Singaporean parents plan for their children's education abroad, which often involves significant expenses.
Investing in overseas property that is in close proximity to schools can provide a practical solution by not only securing accommodation for their children but also potentially generating rental income.
This approach allows parents to take a proactive stance in preparing for their children's overseas education while making a long-term investment.
5. Investing in a Holiday or Retirement Home
Singaporeans, renowned for their love of travel and exploring new destinations, often seek opportunities to own a holiday home or plan for retirement abroad.
Investing in overseas property allows them to fulfil these aspirations by securing a comfortable retreat or a future retirement residence.
The property can also be rented out when not in use, offering the dual benefits of a personal haven and a potential income stream.