Types Of REITs in Singapore – Which is the Best Investment for the Beginner?
Singapore is not only a great place to visit, but also a very good option for you if you’re a beginner in the investment world that is looking for hidden gems. There are many types of investments that you can try in Singapore such as dividend stocks, deep value investing and REITs. As an investor in Singapore you would be interested in any of these opportunities but, if you are just beginning, going with the REITs investments would be the best choice for several reasons.
Some of them include the following:
- Singapore is a safe and stable choice which is very important for an investor that is just entering the marketing.
- No tax is applied for REITs in Singapore which is important for new-comers looking for some lucrative investments.
- The REITs are regulated by law which means they are safer than any other method of saving.
- There is a high yield, averaged at 6%, which is way better than the profit you can get by other types of stable investments, such as bonds and fixed deposits.
- REITs are highly diversified; therefore, the risk you are assuming is not as high as with other types of financial investments.
With all these benefits, you must be interested in finding out what are the different types of REITs available for Singapore based investors. Here we have described them all for you.
Types Of REITs Available For Investors In Singapore
As specified earlier, real estate investment trusts are very well diversified in Singapore. Therefore, there are many options for the beginner Singaporean investors. The market covers a wide range of REITs including retail, industrial, office, healthcare, hotel & resort and others. Each one of these options comes with its own advantages and disadvantages and the biggest question you have to answer is how to choose the right option for you, a beginner in Singapore investments market? Before dropping to any conclusions, let’s take a look at each type of REITs and what they imply.
Retail REITs are usually very familiar to the investors – this type of investment focuses on shopping malls and freestanding retail. When investing in retail, the most important question to ask is if the retail space has success? Besides, you should also check is the store traffic good enough, are there many tenants in the store, and what type of tenants do you observe there? Retail REITs is indeed one of the most popular investments of this kind, thanks to the lower risk you are assuming. However, this type of REIT can provide lower yields due to the many investors jumping at it. As a beginner investor, you can try this very popular sector to get the hang of REITs. There are many companies to look at, the yield is good and you can easily jump to another sector without giving this one up. With calculated risks, investing in retail REITs could be a good idea.
When it comes to industrial REITs, we think about factories, business parks, and warehouses. This is, without a doubt, one of the largest REITs sectors in Singapore due to the investments brought in. As you can expect, industrial REITs do produce higher yields thanks to shorter leases than other industrial properties in Singapore, but they also bring a higher investment risk. As a beginner, you can invest in this type of REITs only if you also know someone in the field that can guide you and show you the hang of it. Otherwise, we advise trying other low-risk REITs before getting into the industrial alternatives.
As you would expect, office REITs focus on properties used for commercial purposes and for office spaces. With office REITs, you can expect fluctuations of the yields distribution due to the sensible stability of the commercial sector. If you know the field well, you could try to invest in office REITs as a start, but you should calculate your risks well and understand that the yields distribution will not always be stable and steady.
REITs that fall under the healthcare sector are nursing homes and hospitals. Such REITs present a very popular investment option for the beginners as it is a stable, resilient choice that shows its benefits in the long term. Yes, it has a lower distribution of yields, but it could be a safe start for a beginner. Therefore, we strongly recommend this as your first option – there are more advantages than risks and it could give you the opportunity to also look at other REITs as you advance in your investment career.
Hotel & Resort REITs
Hotel & Resort is a sub-segment of REITs where we can find hospitality properties i.e. serviced residences and hotels. These are also called stapled trusts. They could be a good investment, but beginners do not often choose them as a first move.
Among other types of REITs that do not fall under any category we have presented earlier, there are specialized, diversified and residential REITs. These types of REITs are recommended to more advanced investors.
Now that we have seen the most common types of REITs in Singapore in 2018 and explained each one, you might want to know how to choose the best one for a beginner? Well, there are many factors to consider when making a decision. First of all, every beginner investor in Singapore must start by setting his personal financial field and deciding how to reach his target audience. After settling on how much to save and invest, an investor needs to take the next step and open a brokerage account. After that, one of the most important moves is to decide which type of REITs is worth investing in and how to do that. The point is to build a strong stock portfolio to have a good business return.
As a Singaporean, investing in REITs in the local market will help you get ahead in the local financial practice, assume risks and build a steady income.
REITs in Singapore are a great way to invest for beginners as you will find a good variety on the market, safe stocks and many companies you could check. Always remember that investing in finance always comes with risks, but as long as you calculate your steps and follow your intuition, success is closer.