5 hotspots for Singaporeans looking to invest in property overseas

We previously mentioned about how more and more Singaporeans are looking overseas for real estate investments.

So exactly which property markets are the most popular? Here are five of the top investment destinations:

Japan

Japan's property market has made substantial gains in recent times and buying real estate here can be a wise choice. As such, a growing number of investors from Singapore are showing interest in Japan's real estate.

According to data from the Japan Real Estate Institute, Tokyo real estate prices have been rising continuously for the last 50 months. Prices in the Greater Tokyo area alone rose by 8 per cent in the year to November 2016.

On a country-wide level, growth is particularly strong in regions such as Tohoku, Kyushu, Okinawa and Hokkaido.

Several factors have combined to boost property prices in the country. The easy availability of credit due to Abenomics is just one of the reasons for the increase in prices.

Japan's successful bid for the 2020 Olympic Games has also created an expectation that prices will rise further in the near future.

United Kingdom

London's residential and commercial properties have always been a big draw for American, Russian, and Chinese investors.

Now, wealthy Singaporeans are also showing a greater degree of interest in the city's prime real estate of late, especially with the weakening of the Pound after Brexit.

So why is London so popular with high net worth investors? One of the reasons is that its property market is easy to buy into.

The investment process in the UK is straightforward and uncomplicated. High-quality legal advice is readily available and investors are assured of a buying process that is fairly painless.

Similarly, when an owner decides to cash out, the size of London's market ensures a reasonably quick sale.

In addition to the ease of transactions, there is also no shortage of deals. There are a number of new projects coming up and resale properties always seem to be available.

On top of that, there are even opportunities to tap into the demand for student accommodation.

The popular view is that it is very unlikely for a property investor to go wrong by buying real estate in London. The city's position as a global financial hub and also its reputation as one of the foremost education centres in the world will ensure that it remains top of mind for many of the world's HNWIs.

Malaysia

Malaysia's geographical proximity gives it a great advantage as an investment destination for Singaporeans. Investors who prefer to put their money into properties that are close at hand would soon have another reason to purchase real estate in Malaysia.

In July this year, Singapore and Malaysia signed a Memorandum of Understanding to build a High Speed Rail (HSR) link from Singapore to Kuala Lumpur. The HSR is expected to be completed by 2026.

Improved connectivity between the two countries is sure to lead to a rise in property prices in Malaysia. But this advantage could take many years to play out.

The Iskandar zone in Malaysia also presents a buying opportunity. But an investment here may also take many years to yield results.

In 2006, the Malaysian government announced a US$87 billion plan to develop the Iskandar zone over the next two decades. The new developments are located across the causeway that separates Singapore from Malaysia.

Several Chinese companies are putting up residential and commercial projects in the special economic zone, which is three times the size of Singapore. The largest of the 60 projects is Country Garden's Forest City, which is being built on four artificial islands. When completed, it will house 700,000 people.

The projects in the special economic zone present a medium to high-risk investment opportunity. Buyers should proceed with caution and after conducting a thorough due diligence exercise.

Australia

CoreLogic, a provider of property information, has recently released data that shows an increase in national real estate prices of 2.7 per cent for the last quarter. For the year to October 2016, the Australian CoreLogic Home Value Index recorded a rise of 7.5 per cent.

In 2015, prices had risen by 10.1 per cent in the same period. Many investors have registered significant gains by purchasing Australian properties. But every city in Australia may not present an equally attractive opportunity.

Sydney and Melbourne are the best investment destinations in the country. Sydney recorded an increase of 10.6 per cent in property prices in the last year. But an investor who bought property in Darwin a year ago would have seen a fall in price to the extent of 3.8 per cent.

Australia's eight major cities are not equally attractive investment destinations. It is important to conduct detailed research before finalising a purchase in one of them.

Cambodia

Traditionally, the Cambodian real estate market has been dominated by investors from China and Korea. A recent report in the Phnom Penh Post says that according to government data, the last 16 years have seen private investors from 18 countries entering Cambodia's market.

They have collectively completed 287 projects at an estimated capital investment of US$4.3 billion. Over the years, the size of the projects has increased. Earlier, a project usually had 200 or 300 units. Recent projects have as many as 1000 units each.

As the country's infrastructure improves, it is expected that its real estate prices will follow suit. In the last two years, mid-range properties and high-end properties have performed well while less expensive units have not registered much of a price increase.

Investors need to be clear on their financial objectives

How can an investor decide which overseas real estate market to invest in? The decision has to be based on the investor's risk appetite and the period for which the property is proposed to be held.

Investing in overseas markets is inherently risky. But the rewards can be great as well.

ZUU Online aims to help individuals enhance their financial literacy and deepen understanding of the investment arena.