REAL RESIDENTIAL INVESTMENT IN SINGAPORE

Abstract

In Singapore, especially in 1989 when property prices across all sectors reached peak high levels, real estate as a mode of investment is definitely an undeniable allurement. But all these do not happen in isolation, other forms of economic activity were also on the rise; interest rates and prices were no exception. With all these escalations, investors may want to know if the returns from their investments are able to protect them in real terms. Illusionary even though their returns from capital and/or rent may look attractive, investors still stand to lose if the underlying costs of their investment are not covered. Despite of the common faith that inflation will bring about an increase in the value of property investments. High inflation rate in some countries has forced knowledgeable investors to consider explicitly the impact of inflation on the profitability of their investments. This dissertation ventures to peruse and analyze the investment characteristics of residential properties, namely condominiums and apartments across the island as a hedge against both expected and unexpected inflation. The corollary of the above-stated proposition reveals that investments in either condominiums and apartments, or both, provide an adequate protection against expected inflation and at least a partial guard against unexpected inflation, in Singapore. In an effort to interpret condominiums and apartments individually, it was found that the former relatively accommodate a better protection against inflation than the latter. This, presumably could be explained by the superiority in quality and popularity of condominiums among home searchers. It was further deduced that the greatest hedge has come from Districts 9, 10 and 11 in the analysis. Hence, although an investor has the choice of putting money in any types of investment in any place at anytime, it is imperative that the investor endeavours to assess whether the level of conceivable proceeds is sufficient to reimburse the risks, especially inflation risk, involved in making the investment.