No Comments

Things to Consider Before Investing in Overseas Properties

Previously we discussed the opportunities offered by Singapore property and overseas properties investment, and how the two investments compare. Today, we discuss the considerations that could impact your property investment returns. 


Trivia: Recent studies show that real estate is more valuable than all global equities and debt securities combined, and almost 4 times that of global GDP. This makes real estate the world’s most significant store of wealth.

Investing in Overseas Properties: An Investment Strategy

Previously purchased as holiday or retirement homes by the ultra wealthy, buying overseas properties has become more mainstream among astute investors. A key benefit of overseas property investment is diversification, reducing the risk of investments from being concentrated in a single area while improving the returns of an investment portfolio. 

Overseas properties can bring you higher returns, compared to the 3% - 4% rental yield from investment properties in Singapore. Source & image: PropertyGuru
Although Singapore property commands a 3% – 4% rental yield, overseas properties can bring you higher returns. Source & image: PropertyGuru

Besides protecting your portfolio, overseas property investment can bring you higher returns, compared to the lower 3% – 4% rental yield from investment properties in Singapore  despite the recent uplift in the performance of the rental market. 

Crucially, investing in overseas properties allows Singaporeans and Singaporean Permanent Residents (SPR) to circumvent the newly tightened Total Debt Servicing Ratio (TDSR) and the increased Additional Buyer Stamp Duty (ABSD), which is now at an eye-watering 17%-25% for Singaporeans, and an even more crippling 25%-30% and 30% for Singapore PRs and foreigners, respectively. 

Why Should You Consider Investing Overseas? 

Residential real estate has proven to be particularly resilient to the pandemic and the resulting economic shockwaves, with global real estate investment volumes bouncing back in 2021. Residential property overtook offices for the first time, and became largest sector for investment globally in 2021.

Last year, residential property (namely multifamily, but also encompassing student and senior housing) became the largest sector for investment globally, overtaking offices for the first time. Source & Image: Savills Research
Last year, residential property (namely multifamily, but also encompassing student and senior housing) became the largest sector for investment globally, overtaking offices for the first time. Source & Image: Savills Research

The 2022 global house price index shows that average house prices in more than 55  countries and territories worldwide have increased 10.2% over a year. Singapore comes in at 39th place with 6.9% growth, which is certainly an improvement compared to the 48th place (0.4% growth) in a previous year. Yet, such rapid price growth is often predictive of and a precursor to the Singapore government’s move to cool the market. Market cooling measures are barriers to entry and result in higher costs upfront, thus lowering returns on investment from the onset. 

Comparatively, the growth rate of overseas properties points to better potential for higher returns. Investors looking for good returns from the get-go should invest in countries with better price growth and a lower barrier to entry. The UK is a good example: at 26th place with 9.8% growth in house values, it currently faces a 4 million housing undersupply (commanding good capital and rental growth unlike in Malaysia which faces a housing oversupply), and has a low barrier to entry. There are no limitations to the type of property that Singaporeans can purchase in the UK, nor is any approval application required, unlike with Australian property. Currency-wise, UK property is also very affordable for Singaporeans.  

See also  Manchester: Best Property Investment Yields

Can HDB Property Owners Invest in Residential Overseas Properties?

HDB property owners can invest in residential overseas properties only after fulfilling the Minimum Occupation Period (MOP) of 5 years. Once the MOP is over, there is no limit on the number of private residential properties you may purchase. HDB property owners must dispose of their HDB flats within 6 months of purchasing your overseas residential property. 

Note: MOP period does not apply for HDB flat owners investing in commercial / non-residential overseas properties. 

Can CPF Savings be Used to Invest in Overseas Properties? 

Savings from the Central Provident Fund (CPF) cannot be used to invest in overseas properties. Also, any loans taken from a Singaporean bank to facilitate the purchase of overseas properties will be subjected to TDSR. 

But, on a very positive note, Singapore investors can apply for a mortgage from foreign lenders and get up to 80% financing for the purchase of overseas properties. Ask us how you can apply for the best mortgage terms!

To learn which market presents the best investment opportunities, click HERE.

Other Considerations: The CSI Property Game Plan  

There are other considerations to look into before making that leap to invest in overseas properties. The best way to do it is by using the CSI Property Game Plan which focuses on 3 key pillars that help empower investors to grow wealth exponentially even if they have little time or experience

The CSI Property Game Plan which focuses on 3 key pillars that help empower investors to grow wealth exponentially even if they have little time or experience.
The CSI Property Game Plan focuses on 3 key pillars that help empower investors to grow wealth exponentially even if they have little time or experience.

#C for CRITERIA

Use our S.A.F.E.T.Y. 1ST © Criteria to safely identify the right projects to invest in, so you can sleep well at night while growing your wealth. 

Don’t make the 3 Cardinal Sins that investors often make when investing overseas of falling in love with a property (emotions always get in the way of sound decision-making), getting unqualified advice (‘Aunty May’ who studied there 10 years ago is not an expert of the current property landscape), and failing to optimise (don’t hold on to underperforming properties). 

our S.A.F.E.T.Y. 1ST © Criteria to safely identify the right projects to invest in, so you can sleep well at night while growing your wealth
#S for STRATEGY

Use our G.O.L.D.M.I.N.E. Strategy © to grow your property goldmine by picking the right city or country to invest in. Let us show you how to unlock hidden cash and use the power of leverage to grow your wealth exponentially. 

See also  Manchester Property Benefits from Victoria North Urban Renewal

Use our G.O.L.D.M.I.N.E. Strategy © to grow your property goldmine by picking the right city or country to invest in
#I for IMPACT 

There’s no point investing in overseas properties without optimising your portfolio across all aspects of property investment, including financing, tax planning and property management. The right financing helps you optimise your ROI through leverage. The right property management agency can help you rent out your property faster, i.e. less void periods. With the right tax planning, you avoid paying exorbitant taxes. Plus, you can do all the above with no hassle. Our familiarity with the industry and connections that we have built with various service providers in the market for over a decade, means we are well positioned to find the best rates and services.

As part of the CSI Property Game Plan, we offer a complimentary one-on-one impact assessment to evaluate the performance of an investor’s portfolio. The impact assessment identifies avenues for optimisation, helps investors discover underperforming properties within their portfolios and gives them the option to refinance or sell those underperforming properties to convert to properties that provide a better/ higher ROI.

Conclusion: Investing in Overseas Properties is A Good Strategy 

Property is an attractive investment option as it is secure, generates income, has underlying demand because of its quality as a basic human need (home), and is generally resilient in the face of economic headwinds. But having a property game plan and ensuring it has impact is crucial to enable you to make the right choices and sleep well at night as your wealth grows.

Contact us to learn more about the CSI Property Game Plan, or to schedule a free 1-2-1 IMPACT ASSESSMENT with one of our directors to find out how your property is performing, and how you can Optimise your portfolio for better returns.

CLICK HERE TO SCHEDULE YOUR IMPACT ASSESSMENT TODAY

By Vivienne Pal

  • https://www.savills.com/impacts/market-trends/the-total-value-of-global-real-estate.html
  • https://www.propertyguru.com.sg/property-guides/singapore-property-market-index-report-q2-2022-64954
  • https://www.savills.com/impacts/market-trends/real-estate-investment-in-2022-global-outlook.html
  • https://content.knightfrank.com/research/84/documents/en/global-house-price-index-q1-2022-9098.pdf
  • https://content.knightfrank.com/research/84/documents/en/global-house-price-index-q2-2020-7432.pdf
  • https://www.cpf.gov.sg/member/home-ownership/using-your-cpf-to-buy-a-home

Comments (0)