Updated: Sep 5, 2020
Follow the smart dollars they say – One of the main reasons why private equity, funds and the global wealthiest are still buying buildings and real estate here.
Singapore properties will almost always result in nett positive returns whether in terms of capital appreciation or foreign exchange returns over the mid-long term.
1st, A simple check on currency pairing histories would reveal that the SGD has a clear track record of appreciation against the world’s major currencies over the past decades (10yrs Vs USD, JPY, GBP, AUD, EUR etc).
Not to mention against our neighbours in the north and south.
And we can witness similar currency strengthening measures in another small country in Europe that has similar geographic and economic conditions as us, which attracts the global elite too – Switzerland.
Why is this so and are you certain this will likely continue to be the case in the future?
Yes i am pretty certain that history will likely repeat itself as it is crucial to the survival of Singapore given how much we rely on imports.
From water, food, raw ingredients, oil to talent & manpower.
Hence, the Singapore Dollar has to strengthen continually given our resource limitations and reliance on foreign imports, manpower and the world's perception of our nation as an ideal destination for living, investment and business.
Of course, it is not all that simple.
Simply having such tight monetary policy does not guarantee that there is demand for the Sing Dollar or the manoeuvrability for our Monetary Authority of Singapore (MAS) to strengthen our currency as it deems fit.
Our country’s overall appeal as a global investment & business launch pad for Asia, honed over half a century by our forefathers foresight and proficient management skills, is the reason why the Sing dollar is well in demand by the world.
Despite not paying high interests on deposit rates (1% on fixed deposits vs many times higher in other markets like Australia, NZ etc), investors understand that the appreciating history of our currency means their assets here grow in the long term.
Much better at the end of the day than the interest collected on a depreciating asset in many other parts of the world.
And this is why, briefly, savvy foreign investors and institutional funds continue to pour billions into Singapore real estate, bonds and equities and something that Singaporeans ought to know and be confident about.
If you’re a Singaporean investor venturing overseas.
Understanding your odds through forex trends will greatly help you decide whether the overseas property you invest in will fare well when you finally convert your profits back to Sing Dollars.
Be aware of the promises of rental returns & price appreciation as the blind spot of currency risk has hurt the investment goals of many Australian, Malaysian and Japanese property investors among others.
And further to that, the difficulties of managing the property, taxes and cultural differences between the local agents and you can be a daunting experience if you do not have reliable agents there helping you.
But won't the trade wars and uncertain global economic conditions impact my investments in Singapore?
Well, one thing is for sure. When there are global crisis, almost all investments across the globe will get impacted (Sans gold or derivatives like the Volatility Index stocks which reacts inversely)
However, in the long run,
The more chaotic the world is, the better Singapore assets will do.
Singapore is one of the few safe havens for high net-worth individuals who look at our nation as an asset class in itself.
We are beneficiaries of funds flow whenever there are upheavals in the market and are somewhat akin to how gold is used as a hedge when things seem to be going south.
The key is in knowing not to over-react or to sell during a market correction if you can help it.
This graph will show you how, every low gets higher and every high gets higher each time in the Singapore Property Index after a market correction.
Hence, it is important to remember that losses are not realised until the property is sold and the storm always passes in time to come.
If you are looking for an in-depth elaboration of the Singapore property market and trends this year, read about it here at COVID-19 Phase 2: To Buy Or Not To Buy Property, That Is The Question.
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Stuart Chng, Senior Associate Executive Director of OrangeTee & Tie, is a renowned leader and personality in the real estate industry.
He adores music and can play a few instruments decently without upsetting his neighbours. When not doing so, he enjoys pillow fighting with his son and coming up with silly puns which barely amuses his wife.
Professionally, he is a licensed real estate agent, investor, team leader, speaker and columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications. Throughout his career, he has helped many clients grow their wealth through selecting great property investments and managing their portfolios actively. Read his clients' reviews here.