PROPERTY UNITISATION : AN EXAMINATION OF ITS INTRODUCTION TO THE SINGAPORE COMMERCIAL PROPERTY MARKET

Abstract

Property investment has never been receiving as much attention as of now. It is traditionally not considered in the investment portfolios of many investors. This is mainly because of the many unique characteristics as compared to other investment media. The features of high capital outlay and illiquidity have always been regarded as the main obstacles to most investors.

In the more mature markets such as the UK, USA and Australia, unitisation has been adopted, partly to overcome these inherent characteristics and making it a more comparable investment medium in the general investment market. Unitisation basically serves the purpose of opening up the property market to the wider group of small investors. With unitisation gaining popularity in foreign markets, it may be appropriate now to introduce the concept to the local market.

This study looks at the existing problems in the office investment market which may hinder its growth. Some of the inefficiencies of the market’s operations, its deficiency in funding and other unhealthy practices of the market are examined. It is argued that these problems warrant the introduction of unitisation which can help to overcome them.

The study also aims to base its argument on observations obtained from these empirical evidence. It does not mean to be a conclusive study but intend to serve as an attempt to instill awareness into the real estate industry in Singapore on the role unitisation can play.

The study suggests that unitisation can play a major role in enhancing the attractiveness of property investments and allowing more Singaporeans to participate in direct property investments. However, its feasibility may be questionable in view of the non-existence of an illiquidity premium.