There are two things you must know as an investor and should consider before settling on a property, for the purpose of renting out in the mid-term, then exiting when the time is right.
First thing, is to know who is your potential target audience, whom you can rent your property out to. We have subdivided Singapore into 3 regions and named them in our industry jargon: the core central region (CCR), the rest of the central region (RCR), and lastly outside the central region (OCR). You need to take into account these regions, as each individual regions have differing tenant pools. Your future potential buyers will also take this into consideration when deciding to buy over your property, if you decide to exit in the future.
The CCR includes district 9, 10 and 11 Downtown Core, and Sentosa.
The RCR, also known as the city fringe area, is the rest of the central region other than the CCR.
And lastly, OCR, also commonly known as the sub-urban region, consists of the rest of the 16 districts in the North, East, West and North-East parts of Singapore.
If I were to buy a property in the suburban areas for investment purpose, I need to consider two things:
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Who is the potential tenant pool that I will rent the property to?
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In 5 years’ time, if I would like to sell and exit, who are my potential buyers? In the suburban areas, my potential buyer is probably going to be a family that is looking to upgrade from a HDB to a Condominium, perhaps a married couple with a couple of children. They would need a larger unit, perhaps a 3- or 4-bedder to fit their family’s needs. Taking this into consideration, would it be wiser to buy a larger unit, in anticipation that I will be targeting to sell to a larger pool of HDB upgraders and therefore be able to exit more easily, or should I simply choose a smaller unit for myself?
Of course, I’m not saying necessarily that smaller-sized apartments do not allow an easier exit. There are simply different factors to take into consideration in different zones of Singapore. For example, if I am looking at the city fringe area or RCR, what size should I consider?
As mentioned above, I would need to consider two different segments of the audience: my potential tenant pool and my potential buyers in future. These two pools of target audiences should be factored into my decision-making process right from the start because I would need to plan in advance: if I plan to rent out for the next few years, or if I want to exit at the 5-year mark or 7-year mark.
VIsualise your potential audience for the estates and regions you are interested in, so that you can make a sound purchase decision accordingly.
This is what we usually cover in our coffee sessions with our potential clients. We will also advise you accordingly on the right kind and size of property for your individual circumstances.
So if you’re still sitting on the fence or have some considerations, get in touch with the PropertyLimBrothers Buyers’ Consult team to have a chat.
Cheers
Marc Chan
