Why You Want to Invest in REITs in Singapore
As an investor, it is always good to have a diversified portfolio so that your investments bring good ROI (return on investment). While there are plenty of investment opportunities on the market, today we recommend REITs. Singapore is a well-known investment market where REITs are spiking and are considered to be a great opportunity for any investor. But what is the advantage of investing in REITs? Well, REITs are considered a lower risk investment as compared to other options, which is a great reason why you should start investing in them. In fact, there is a lot more to find out about REITs and there are many reasons why you should invest in Singapore REITs. So, let’s explore them further.
REITs are interest groups that purchase properties which they manage and rent out to collect rent from tenants. Investing in a REIT means being part of this group and collecting a sum of money every trimester/year. Investing in REITs is similar to investing in stocks and there are plenty of options for you in Singapore. There are multiple types of REITs to invest in, so choose the special one for you from commercial, industrial, retail, hospitality, healthcare or ETF options.
In order to get good merit out of your investment, let’s see which are the advantages of investing in REITs:
A diverse market
As said above, there are multiple types of REITs you can invest in. Therefore, betting your money on multiple REITs allows you to gain access to multiple buildings or overseas properties. Plus, you get to take advantage of the diverse REITs market with a low investment – usually starting from $5,000. Plus, this is a more practical approach compared to buying real estate from different sectors.
You can start with a lower capital
When it comes to buying real estate, you always need a lot of money to start investing in properties. However, REITs offer you similar advantages, but with a much lower capital. As mentioned earlier, you need about $5,000 to start compared to more than $100,000 to buy a property.
One great advantage of REITs investments is that you are able to preserve liquidity balance. How come? When you own shares in REITs and not actual real estate buildings, you can sell and buy your shares at current market rates in a few days and it’s always easier compared to selling and buying real estate properties that could take months or even years.
REITs usually have professional managers that take care of the portfolios and are managing properties. This means you have more freedom and fewer worries – you will not be involved in the buying process, will not have to worry about the large down payment and will not be involved at any stage of the entire process of building management. This effectively means that you will not have to collect rents and make sure your tenants pay the money in time, take care of taxes, cash flow, government policies or maintaining the property in a good state. These actions consume time and energy and some of them are quite expensive. With REITs, you get to be part of a great industry, without all the responsibility that comes with it.
Enjoy the tax-free law
REITs in Singapore are obligated to distribute 90% or more of the profits in quarterly or semi-annual distributions to unitholders. This means that investing in REITs will help you get good yields. Plus, the investment comes with stability for you as an investor. Compared with owning a property where you have to worry about taxes, this is a tremendous advantage of REITs.
A good return on your investment
Another reason to invest in REITs is the return you get for your money. Usually, in Singapore, the yield is between 5 – 7 % yearly. The profit comes in dividends which are either paid every 6 months or quarterly. This is a very good return on your investment being one of the highest yields on the market. This is possible thanks to the tax-free law discussed earlier which makes REITs a very safe option to invest in for businessmen. However, treat REITs as stocks (as they are very similar) and expect ups and downs in share prices.
Let’s get started…
Now that you feel pretty convinced to invest in REITs and trust this market more, starting your journey as an investor in the REITs’ world is simpler than you think. Open a CDP account to start and then choose a brokerage firm where you can set up your first trading account. As said earlier, REITs are more affordable than individual real estate investments, so you will need between $5,000 and $10,000 to get started with your investment journey.
Some of the best REITs in Singapore to invest in are:
- Sabana REIT
- First REIT
- Ascendas REIT
- SPH REIT
- Keppel REIT
- Suntec REIT
- Starhill Global REIT
- Soilbuild REIT
- Ascott Residence Trust
- Frasers Centrepoint Trust
- Mapletree Commercial Trust
- CapitaLand Mall Trust
All these REITs are much diversified and each of them has its own merit to be on this list. The share price is between $0.44 and $2.65, with yields between 4.76% and 8.4%. This is good news for any investor looking for safer investments that bring good ROI. When choosing a REIT to make sure you go past the highest yield and share price and check data about its stability on the market. Yes, REITs are similar to stocks, where a good long-term investment doesn’t only focus on yield but also on stability in the future.
REITs are great investments both for beginner and expert investors, for all the reasons listed above. Plus, Singapore is a thriving market with a stable economy and many opportunities for investors. Therefore, parking your money in REITs in Singapore is a great idea. REITs can constitute a good part of your portfolio and will offer you both stability and flexibility, letting you focus on other investments while you get a good yield out of it.