Invest in property is not necessarily to buy a house/a flat, you still have other ways, such as invest in property stocks. Such stocks include Developer stock and REITS.
Comparing among the 3: physical property, developer stock and REITs, they are different in terms of quantum of capital needed, risk and liquidity.
Physical property needs big quantum, minimum 20% of the price. In current market, it's simply 200k to 400k. But risk level is low, as the property will not be likely to vanish, or drop too much if no disasters happen. The return normally is low, but stable. And the value normally appreciates with CPI. In terms of liquidity, it's not easy. You need to search for next buyer, you need to have process time for the sales. You also need to pay fees for the sales and purchases.
Developer Stocks doesn't need too much capital. You can even invest with thousands of dollars. The risk is relatively high, as it depends on the developer's performances, and sentiments in the stock market. It is possible that your money vanish, or drop 50% or more. On the other hand, it is possible that the stocks price increase by 50% or more. In terms of liquidity, it's much more easier than the physical property.
REITS is a special instruments invented in the last decade. It is similar to stock that you can exchange with it in SGX. So it does not need high capital. But different from developer stocks, the fund raised by stocks has to be dedicated in certain usage. Such as 90% must be invested in property. The revenue is mainly from the rental. So this is like a fund manager, but fund used in property. Relatively the risk is lower than developer stocks, so the capital gain may not be that much. Currently in the market, the return of REITS are normally around 5% to 9%. Like developers stock, it's very easy to liquidize any time.
That's my personal views. This is also an exam question from REA paper.
Comparing among the 3: physical property, developer stock and REITs, they are different in terms of quantum of capital needed, risk and liquidity.
Physical property needs big quantum, minimum 20% of the price. In current market, it's simply 200k to 400k. But risk level is low, as the property will not be likely to vanish, or drop too much if no disasters happen. The return normally is low, but stable. And the value normally appreciates with CPI. In terms of liquidity, it's not easy. You need to search for next buyer, you need to have process time for the sales. You also need to pay fees for the sales and purchases.
Developer Stocks doesn't need too much capital. You can even invest with thousands of dollars. The risk is relatively high, as it depends on the developer's performances, and sentiments in the stock market. It is possible that your money vanish, or drop 50% or more. On the other hand, it is possible that the stocks price increase by 50% or more. In terms of liquidity, it's much more easier than the physical property.
REITS is a special instruments invented in the last decade. It is similar to stock that you can exchange with it in SGX. So it does not need high capital. But different from developer stocks, the fund raised by stocks has to be dedicated in certain usage. Such as 90% must be invested in property. The revenue is mainly from the rental. So this is like a fund manager, but fund used in property. Relatively the risk is lower than developer stocks, so the capital gain may not be that much. Currently in the market, the return of REITS are normally around 5% to 9%. Like developers stock, it's very easy to liquidize any time.
That's my personal views. This is also an exam question from REA paper.
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