Most Singaporeans would have heard of foreign property investments through the extensive marketing campaigns being targeted at Singaporeans. Or perhaps, we simply happen to know someone who might have owned an overseas property.
Compared to the prices of real estate in Singapore, most of these foreign property investments are comparatively cheaper. Due to the scarity of land in Singapore and the thriving local economy, it is to no surprise that long-term property investors in Singapore have seen their assets rise in value. Because of that, the general impression that Singaporeans may have is that property is a profitable type of investment to be making.
In this article, we debunk the myths that one might be guilty of when making the decision of an overseas properties investment.
Myth 1: Country X’s growth opportunity equates to growth in property prices
Way too often we hear these “property investment advisors” telling us that a certain country has great growth opportunity and that it is a good time to start investing in the properties of the country. Singaporeans tend to instantly relate it to the context of Singapore and agree with the statement without much further thoughts.
There is no doubt that Singapore’s property prices have increased as Singapore flourished as a nation. However, there are many other factors, which play a key role aside from the economic growth of the country. Such factors include Singapore’s lack of geographical space, which made land in Singapore much more expensive, and also the presence of demand for Singapore property which made sales transaction of your property even possible.
No two countries are the same, and it will be inappropriate to assume the same context for property prices in Country X and Singapore. The last thing you want is to be owning a piece of property overseas which no one wants to buy, due to the overwhelming supply and ample space that the place already have.
On top of that, the time taken for a country’s growth is always forecasted but never certain due to the uncertainty of future events.
Myth 2: You think you know the country’s government policies well
Advertisements and salespeople may have painted the perfect picture of a certain country. From the political stability to the strong growth that the country is experiencing. You do some research on your own and the research shows that what the advertisements and salespeople are saying is right. But should you believe them?
Singaporean investors who have ventured overseas for their businesses would readily share the advice that you can never know a country well until you spend a reasonable amount of time living in the country.
Certain policies implemented by the local government can sabotage your property investment plans. Policies such as implementing a quota for foreigner owned properties could greatly decrease demand for your property, since you may only be able to sell it to other foreigners. A change in government’s developmental plans can hinder the value of your property too.
Myth 3: All of the risk lies in the country of investment
Having taken into consideration all the risks involved, one might have made up his mind that he will be going ahead with his investment. Most people are so busy being caught up with the risks of owning the land overseas that they do not realise the biggest risk lies in the advisor sitting in front of him. The company which the advisor is acting for who is developing the land also adds to the risk of your investments.
The credibility and financial health of the company has to be taken into account too since such projects involves investing in developments which have yet to begin, and which make take a few years for completion. Any failure to complete the promised project might lead to loss of your investments.
In short, we are pretty sure there are some gems in foreign property investment which are definitely worth putting your money in. However, these gem comes with a lot more uncertainty than buying a property locally, and are subjected to greater risk. The decision ultimately lies in your hands.
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