I am collecting REITs in Singapore.
Although REITs are listed in many countries, Singapore is particularly attractive as a REITs investment destination for the following reasons:
1. Strong and stable Singapore economy
Singapore is one of the most stable countries not only in Southeast Asia, but also in the world.
First, is it politically stable, with little political risk and has the world’s highest per capita GDP as it is Asia’s logistics and financial hub.
Below is a table of various economic indicators and data in Singapore as of 2020.
| Population | 5.7 million |
| GDP | $600 billion |
| GDP per Capita | $105,000 per capita GDP |
| GDP sector | Services 75%, Manufacturing 25% |
| Major Industries | Finance, Logistics, and Energy |
| Corruption Perceptions Index | 4th out of 180 countries in 2019 |
| Human Resources Development Index | 9th out of 189 countries in 2018 |
| IMD National Competitiveness Ranking | 1st among 63 countries in 2020 |
(Data source: IMF, Department of Statistics Singapore, World Bank and search)
Therefore, REITs listed in Singapore also have a high potential to grow along with the stable Singapore economy.
2. Diversity of REITs
REITs listed on the Singapore Stock Exchange are not limited to Singapore real estate.
Singapore REITs have properties in various other countries, such as the US, Japan, China, UK, Korea, Australia and etc, with 6 different REITs sectors to invest.
Therefore, you can invest in real estate in more diverse regions/countries than US REITs, which are mostly focused on the US market.
3. Low tax rates
REITs listed in Singapore are not subject to dividend and capital gain taxes.
Furthermore, Singapore has one of the lowest tax rates in the world. Singapore’s income and corporate tax rates are only 22% and 17%, respectively (in Korea, 49.5% and 27.5% including local taxes, respectively).
A low tax rate gives individuals and corporations an incentive to engage in economic activities more diligently and is a driving force in the economy.
In addition, various real estate-related taxes are also lower than in Korea, so profits from real estate operation are inevitably higher than in Korea.
4. Stable Singapore Dollar
The exchange rate is very important for foreign investment.
Many investors have already invested in high-yield products such as Brazilian bonds and Turkish bonds back in the 2010s, which were once popular, but they must have been aggrieved when the sharp decline in the value of currencies in emerging countries caused a great deal of investment loss.
However, Singapore dollar is one of the most stable currencies in the world.
You can easily see the stability by looking at the exchange rates of Won/Singapore Dollar and Singapore Dollar/US Dollar.
From January 2000 to August 2020, the value of the Singapore dollar rose 22% against the US dollar, and the Korean won fell 21% against the Singapore dollar during the same period.
It can be seen that the value of the Singapore dollar has remained stable or increased over the past 20 years.
Even if you invest in Singapore REITs, the probability of making a profit due to the exchange rate is higher than the probability of losing it, and you do not have to worry about currency risk because the value of SGD is quite stable.
This article is an excerpt from “Preparing to retire as a Singapore REITs owner”, and my know-how about Singapore REITs is contained in this e-book.
You can find the same Korean article here.
