Many have questioned the rationale of investing in overseas properties. While there are risks involved, it certainly does help in diversifying your investment portfolios especially when the property prices are so high in Singapore. Moreover, with the cooling measures that were in place since 2013 (TDSR, additional buyer stamp duty, seller stamp duty), it has become even more expensive / difficult to purchase a property here. Since this is the case, shouldn't we be looking at property elsewhere that has less restrictions but with more capital potential?
Just few days back, I was having a casual talk with one of my clients where he told me that he wanted to invest in a property that has high rental yield and high capital potential. That instance, I looked at him and asked him whether he is open to invest in an overseas property instead? He appeared a bit hesitant in answering. I continued on with my rationale with conviction and eventually he was convinced that at this point in time, it is better to invest in overseas property.
This is what I shared with him..
1) Overseas Property tend to have lower quantum and deferred payment meaning that in most instances, it will require you to make a down payment (typically 10% to 30%) of the purchase price during the signing of the sales contract, and the balance to be pay only at TOP. This works in the investors' favour as they do not need to fork such a huge amount at that instance. In most cases, the balance payable on TOP can be paid using the available bank loan.
2) No Additional Buyer Stamp Duty
3) Capital Gain Tax only on the Gain unlike SSD which is based on the Selling Price
4) Higher Rental Yield / Guaranteed Rental Yield for some Cases
5) Higher Capital Gain Potential as compared the property market in Singapore where it is already saturated
6) Chance to flip the property in the sub-sale market without being penalized for flipping/speculation - No SSD
7) Hedging against FX
8) Form of Diversification (its always good to have different portfolios)
There are definitely risks involved in investing in overseas property such as you may not see the actual site development unless you make a trip down, what are the leasing options, who will manage the property for you, the chances that the developer declare bankrupt before TOP etc. Therefore, it is important that you engage a professional real estate agent who has the expertise to advise you.
You can visit
PropertyforSaleinSingapore for more information.
