Question: What are the business aspects that we need to seriously consider before making a decision to invest in Singapore property?

Answer: First of all, you need to know who your target market is. Some 90 percent of Singaporeans already have landed houses, so expatriates make the country's main market target for apartment leasing. Expatriates in Singapore come in two types: students and professionals. So you need to decide who your target market is and suit your investment to cater to its needs.

When you invest in a Singaporean apartment, it is better if you buy small units because they are sold much faster than large units, simply because their prices are cheaper. This principle, however, does not always work. You must take your target market into consideration. For example, if you lease your apartment unit for students, they will probably rent small units. But when it comes to professional expatriates, usually they will choose larger units for reasons of convenience.

Where are the most strategic locations for property investment in Singapore?

Singapore is a relatively small country where the distance between places is relatively close. Because of this, location plays a relatively small role in determining whether a property investment will succeed or not. An investor, however, needs to go back to this question: who is his or her target market? If you target university students, for example, you need to buy an apartment which is located near universities. If you target professionals, you need to buy one located near business districts.

Indonesians usually pick the Bukit Timah area as their location of choice, due to the high trade and tourism activities in the area. Investors also need to notice that the Singaporean government is currently preparing the reclamation of the country's south area. With the development of new property development centers, the sector's development is now expanding in that direction.

Is it better to pay on cash or apply for mortgage when we buy property in Singapore?

It depends [on whether the buyer has enough cash or not]. Singaporean banks, however, make it possible for buyers to apply for mortgages with an interest rate of around 2 to 3 percent, which is lower than that in Indonesia [which could amount to 12 percent].

The credit matures within 65 years minus the buyer's age. With an interest rate of around 2 to 3 percent and a rent price rate that could reach 3 to 4 percent of its yield, it is possible for mortgage applicants to pay their installments with the money they generate from leasing their apartment unit.

What are the factors that we need to consider to make sure that our property investment will be profitable?

You need to consult property agencies that will guide you on that. Not all of these agencies, however, have been certified. It is better for investors to consult certified agencies.

How long does it take for investors to get a return on investment in Singaporean property?

With the existing capital gain and rental yield, it is estimated that investors will receive a return of investment within eight to 10 years. This is relatively longer to the amount of time for return of investment in Indonesian property, which on average can take five to six years. Despite the longer return of investment period, however, investment in Singaporean property brings additional benefits as it has a bigger leasing market compared to Jakarta. The country also has higher legal certainty and better consumer protection than Indonesia, which leads to a safer investment.

You mentioned that Singaporean property had a bigger leasing market than Jakarta. Why is that?

First of all, when we talk about apartments, some 90 percent of Singaporeans already own landed houses, leading to a scarcity of land. This scarcity of land has driven the growth of vertical living in Singapore, so there are a lot of demands for apartment units there. Meanwhile in Jakarta, there's still plenty of land for landed houses, so the demand for apartment units might not be as high as that in Singapore.

Another important factor is the fact that Singapore allows foreigners to own property there. The number of expatriate workers in Singapore can be three to four times that in Jakarta. There are only some 45,000 expatriates in Indonesia and some 70 percent of them live in Jakarta. This is the factor that drives up the country's property market.

What about the legal aspects of property investment in Singapore?

The Singaporean government is very strict on matters related to legal compliance. Therefore, investors need to really understand the legal aspects, especially concerning taxation, of investing in Singaporean property. Their agencies will help them on that.

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