The Basics of Real Estate Investment in Singapore as a Foreigner

Translation Services Singapore, 09 July, 2020

It is so easy to fall in love with Singapore. Marked as one of the most advanced and dynamic cities in the world, it manages to juggle 'Crazy Rich Asians' and humble diversity on a little island. With a stable economy, currency, and political environment, it attracts investors to build on its bounty.

As a foreigner looking from the outside in, Singapore is very attractive, not just to stay but to invest as well. If you are exploring your options on buying property in Singapore as a foreigner, we have got the lowdown for you.

There are five regions in Singapore and each with distinctive traits. It is not all skyscrapers around and about the country. At the north of the island, nature preserves take centre stage whereas the core central region boasts rich colonial history.

You may have picked a region you think is a great investment option or have the intention to discover more about the property in a specific location because it looks lucrative in the long run. You are right. It does seem like the land scarcity issue and continued economic growth and development will make way for higher returns when it comes to real estate investment.

If you look at the history of Singapore's real estate returns, it is considered a safe place to invest in property. About ten years ago, in 2011 the Singapore property market prices hit an all-time high. There was a slow decline after that, but the chances of property rates going up with a steady increase are expected.

The Singaporean government knows its property market is attractive and therefore, have set up restrictions for foreigners to protect its citizens. If you are a foreigner looking to invest in Singaporean real estate, you will need to be in the know of the heavily regulated measures applied that are governed by the Residential Property Act.

If you are a foreigner and not a citizen, permanent resident or entity incorporated in Singapore, you are subject to a separate set of stamp duty rates.

  1. Buyer Stamp Duty - applicable to everyone purchasing property. It is based on the purchase price or market value of the property, whichever is higher.
  2. Additional Buyer Stamp Duty - applicable to Singaporeans who are buying their subsequent property. For foreigners buying residential property, it is an additional flat rate of 20%.

Singapore does not impose a capital gains tax or inheritance tax on property. The only thing you need to take note of is that stamp duty may be applicable if the property is less than four years old.

If you are looking to just buy and sell for profit, there might be some taxes imposed under the Inland Revenue Authority of Singapore.

Now that we are done with the nitty-gritty of real estate ownership, we can look at the type of properties you can invest in as a foreigner.

  1. Condominium Unit - as long as it is a development approved under the Planning Act or high-rise residential properties in private developments that are over six storeys
  2. Executive condominium - as long as it is more than ten years old
  3. Landed homes in the Sentosa Cove developments - you can't own any landed property in Singapore except the ones here, and you cannot rent it out
  4. Leasehold estate landed property - as long as the lease does not exceed seven years
  5. Shophouse - for commercial use
  6. Industrial and commercial properties
  7. Hotel - according to the provisions stated by the Hotels Act

So, we've got a clearer picture of what real estate you can invest in and the costs involved. Let us jump into how to start your purchasing journey.

First, you've got to look at what property you'd like to purchase. You can visit 99.co or PropertyGuru to start. If you got your eyes fixed on a restricted residential property, you can make an application with Singapore Land Authority (SLA), subjected to approval. It will take around three months for approval. However, if the property you are looking to own is landed property at Sentosa Cove, it will only take two working days.

You can then proceed to look at bank loans. You can start by looking at the banks but do note that when they suggest a "fixed-rate" loan, it may not mean a fix rate throughout the period of the loan; after three to five years, the loan will revert to a floating rate. Ensure you read the loan fine print very carefully.

The whole process may also be eased if you engage an agent to access and negotiate the pricing. They will also have a better grasp of what is a better purchase (think amenities, traffic and location potential) according to the location you are looking at. Charges average at about 1%, and we think it is not much, especially if you are looking to make an expensive decision that will set you back a few million dollars.

Looking to explore property investment or moving to Singapore? At translationservice.sg we can assist you in translation of your documents and marketing materials should you required.

Tags: Investment | Asia-Pacific | Invest | Live and Invest Overseas | International Living | Investment | Property Investment |

 

 





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