SINGAPORE (July 8): This past week, an offer I made for a bright and airy apartment located along a quiet street in the Newton area was accepted. In a couple of months, if all goes well, I will be a property owner again. And, unlike residential properties I have owned in the past, I intend to hold on to this one for a long time.
In land-scarce Singapore, investing in real estate is an excellent means of riding the country’s economic growth. Economic activity creates demand for commercial property, while rising incomes and population growth drive demand for residential property. Yet, I have always been leery of investing in my own home, despite the massive gains that residential property has chalked up over the last two decades.
While it is easy to invest in commercial property through real estate investment trusts, there are no such securitised products in the residential property sector. As a result, transaction costs are high and one has to be prepared to hold an asset that is relatively illiquid. Moreover, the rental yields were never high enough to make it seem worthwhile for me to switch from renting to living in my own home.