In my quest to invest in at least one real estate a year, I started my 2013 surveying Singapore again. After all, after six to seven anti speculative measures from the government, I was thinking that perhaps sellers would be more realistic. Also, I've heard from anecdotal evidence that rents have dropped by 10 - 20% in the last six months. The drop is due to a large number of new properties completed recently, and a smaller increase of foreign talent.
I was quite disappointed with my search. Sellers are still very unrealistic about their prices. They were also very fickle, choosing to withdraw their adverts after several offers. I felt that many were merely testing the market to discover the true value of their homes / shops.
After this fruitless exercise, I may have to venture abroad to look at properties which give better potential returns.
2013 is where a flood of completed residential properties hit the market. I remember there will be around 35,000 to 40,000 new residential dwellings completed in 2013. In 2014, it gets worse because there will be 45,000 to 50,000 new completions. In 2015, 55,000 to 60,000 new dwellings will be completed. This is the start of rents dropping and by the time we reach 2015, rentals may fall by 30% on average. With gross yields already at 3.2%, it may drop to 2.5% even if prices remain where they are. We are also expected interest rates to creep up. So those residents who are highly leveraged and holding on to more than three properties may be under pressure to drop their asking prices.
Europe and the US may be far better investment destinations for the next three years. I've also discovered several new destinations that have good rule of law and far better income to price ratios compared to Singapore.
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