Given local property cooling measures, many Singaporeans are now looking beyond the country’s shares for property investment. It doesn’t hurt that international property investment also offers a path to portfolio diversification when done strategically. 

International real estate offers the potential for higher rental yields and capital appreciation in growing economies. If you’re interested in exploring international property investment opportunities, this guide outlines the options available to investors. 

Direct Ownership 

This is the traditional route for investors. It involves the direct purchase of a physical property abroad. 

This conventional investment strategy offers complete control over the asset. It allows investors benefit from both rental income and the capital gains upon resale of the property later on. 

Investors participating in direct ownership strategies can choose between residential and commercial options. The former tends to be popular because it has a relatively stable demand in many locations, although it obviously varies. However, it does require more active management. 

Commercial property, such as office or retail space, also has its appeal, offering longer lease terms and often higher rental yields. On the other hand, it requires a larger initial capital outlay and may have a higher risk of prolonged vacancy periods. 

Indirect Investment 

Indirect property investment offers international investors several options. Below are some of the most common routes. 

1. Real Estate Investment Trusts (REITs) 

A REIT is a company that owns or finances income-producing real estate. 

Singapore-listed REITs or S-REITs are legally required to distribute at least 90% of their taxable income to unit-holders. This makes them fairly attractive for those who want regular dividend income. 

It’s also possible to invest in globally focused REITs that hold property portfolios across regions of the US, Australia and Europe. 

2. Fractional Ownership Platforms 

Fractional ownership platforms such as RealVantage offer a new way to achieve real estate coinvestment. They pool capital from different investors to purchase a share in properties, including ones overseas. 

The strength of this option lies in its ability to give investors access to investment opportunities that would otherwise be out of their reach. RealVantage enables investors to own shares in institutionalgrade properties that would otherwise be inaccessible. 

This lowers the barrier to entry for many investors seeking easy diversification and access to attractive property opportunities across different sectors and locations. 

3. Property-Focused Mutual Funds or ETFs 

Investors can also gain overseas property exposure through funds that invest in global real estate companies or REITs. 

These function as collective investment schemes. They pool funds from multiple investors to provide instant diversification across various sectors and geographies. This type of ETF allows investors to gain exposure to a wide range of international property stocks. 

Considerations for Singaporean Investors 

No matter which investment route you select, it’s advised to conduct rigorous due diligence. Consider how well the investment aligns with your goals and investment horizon, as well as its legitimacy. 

For geographies, be sure to investigate the regulatory and tax landscape of the countries you may want to invest in. Many countries have foreign ownership restrictions, and you may need to reckon with them as well as the country’s legal framework. 

Economic and political stability are also important factors, as they affect an investment’s long-term profitability. Moreover, it’s important to review local financing options, especially if you’re considering direct investment. 

Finally, consider the taxation structure. This may include transfer taxes, stamp duties on purchase, recurring property taxes, and capital gains upon resale.