Stop Guessing, Start Calculating: Future of Real Estate Investments in Singapore

Looking to invest in real estate to grow your wealth? You are not alone. Most Singaporeans view property as a cornerstone of wealth-building and financial security. High property values, coupled with land scarcity, make real estate in Singapore attractive to investors. 

However, Singapore’s booming property market has its challenges. Recent spikes in HDB resale prices—some reaching over a million dollars—have prompted strong government cooling measures to moderate prices and curb speculative buying. Limited inventory also makes it prohibitively expensive to invest in local real estate.

In this article, you’ll learn about the future of real estate investments in Singapore, whether now is the right time to invest, and the possible options out there. We’ll also look at Real Estate Investment Notes (REINs) as a viable alternative to traditional real estate investments, and explain how BigFundr works.

The Future of Singapore Real Estate Investment

This is the million dollar question on everyone’s head. While property ownership helped many Singaporeans to grow their net worth in the past, the future may be less certain. Here are some reasons why.

#1 Extended Minimum Occupation Period (MOP) for HDB Flats

For high-demand new HDB flats, such as those under the Prime and Plus schemes, the MOP has increased to 10 years. This requirement effectively locks owners into their properties, curbing the flexibility to sell or rent out these homes and delaying any potential capital appreciation. 

#2 Subsidy Clawback for Prime and Plus Flats

That’s not all. Flats under the Prime and Plus categories come with a subsidy clawback of between 6% and 9% upon resale. This measure, aimed at reducing speculative profits and maintaining long-term affordability, impacts investor returns.

#3 Stricter Resale and Rental Conditions

Restrictions on resale and rental rights for Prime and Plus flats add more limitations. Prime and Plus flat owners, for instance, are restricted from renting out their entire property, even after the 10-year MOP, narrowing their income options. 

#4 Stringent Loan-to-Value (LTV) Limits

To further dampen and moderate demand, Singapore’s policies cap the LTV ratio for HDB loans at 75%, requiring investors to make larger down payments upfront. With less room for leverage, which often amplifies returns, investors face limitations in maximising the yield from their investments. 

#5 High Additional Buyer’s Stamp Duty (ABSD)

Wait, there’s more. Growing ABSD rates further increase the cost of multiple property ownership, particularly impacting foreign buyers and individuals seeking to purchase more than one property. High ABSD discourage speculative buying and impose additional upfront costs, reducing profitability for investors hoping to build larger real estate portfolios.

#6 Inaccessibility of Industrial and Commercial Properties

For the average retail investor, Singapore’s industrial and commercial properties remain largely out of reach. High entry prices, stringent regulations, and complex financing requirements act as significant barriers. Unlike residential properties, these assets often require large upfront capital, making them difficult to finance with traditional bank loans. Furthermore, commercial investments require a deep understanding of market dynamics, making them challenging for those without industry knowledge.

Still Thinking About Investing in Real Estate?

If you’re a retail investor considering Singapore’s real estate for higher returns, here’s what you need to think about:

1. Strong Cooling Measures: HDB flats, often seen as an affordable entry, now face restrictive measures like Minimum Occupation Periods and subsidy clawbacks, limiting resale options and returns.
2. High Capital Requirement: Skyrocketing real estate prices (private residential, commercial and industrial properties) make them out of reach for most Singaporeans.
3. Market Complexity: Singapore’s real estate market is subject to volatility due to economic shifts, sector-specific demand, and continuous regulatory changes.
4. Regulatory Barriers: Strict loan-to-value limits, high additional buying taxes, and limited rental demand make profitable returns harder to achieve.

Fortunately, there are other easier ways to invest in real estate. 

Alternative Ways to Invest in Real Estate

If you're keep to tap into real estate for wealth growth but want to avoid buying property outright in Singapore, there are diverse alternative investment options to consider:

#1 Real Estate Investment Trusts (REITs)

A REIT is a company that owns, operates, or finances income-generating real estate across sectors such as commercial, retail, residential, or industrial properties. They provide individual investors with a way to invest in large-scale, income-producing real estate without having to purchase and manage properties themselves. As they are traded on stock exchanges, their prices may be subject to the vagaries of the market.

#2 Fractional Property Ownership 

With fractional ownership, investors buy shares in high-value properties, sharing ownership and potential rental income. Managed by platforms, this structure allows investors to participate in larger-scale properties, often in prime areas, without the substantial capital needed for full ownership.

#3 Private Credit Funds 

Targeting real estate development projects, these funds focus on loans and credit to property developers or investors. They offer stable income through interest payments and are less tied to real estate market volatility, offering a balance of risk and return for income-focused investors.

#4 Property Crowdfunding 

Crowdfunding platforms allow investors to pool funds into specific property projects, typically real estate developments. Investors can earn a share of rental income or potential profits from the property’s eventual sale, though these investments can be less liquid.

#5 Exchange-Traded Funds (ETFs) focused on Real Estate 

These ETFs invest in a diversified range of REITs or real estate-related companies. They offer exposure to the real estate market with added liquidity, traded like stocks on major exchanges.

Real Estate Investment Notes: An Attraction Option with BigFundr

If you’re looking for a way to invest in real estate without buying physical property, Real Estate Investment Notes may just be the solution. These notes represent secured loans backed by real estate assets. 

Instead of direct ownership, investors lend capital to developers or property owners, receiving a fixed interest rate over a set term. A form of debt investing, it comes with the following benefits:

• Lower Entry Point: Unlike direct property investments, real estate notes generally require smaller initial investments, making them accessible to a broader range of investors.
• Predictable Income: These notes offer fixed returns over their terms, providing stability and predictability, especially appealing for those seeking regular passive income.
• Secured by Real Estate: Notes are backed by property assets, providing an additional layer of security for investors.

BigFundr offers a unique opportunity to access property-backed Real Estate Investment Notes in Singapore. Our platform specialises in loans secured by real estate, providing high returns through structured short-term notes that are collateralised. 

Investors may start with as low as S$1,000, making it accessible for individuals looking for inflation-beating returns without high initial capital. Sign up today to grow your wealth through real estate investment notes.