Diversification key to growing a real estate portfolio

Having a real estate portfolio could be one of the best ways to hedge one’s funds, and that could be true in many cities. Singapore is but just one of them.

Developers, fund managers, and individual investors are all looking for opportunities to grow their business or monies. So just how do you go about doing that in real estate?

Singapore

Developers who are open to joint ventures may benefit despite lower profits

Increasingly, developers are looking at joint-ventures or partnerships. This can be seen in the recent line-ups of successful collective sales.

Many massive projects are often better dealt with by consortiums. The profit margin for individual entities may be lower in a collaboration, but the horizon for opportunities is wider. These modes of collaboration allow developers and those with related expertise to leverage on one another, allowing them to bid for larger projects and even open windows overseas in countries such as China, Australia, and the UK.

Many developers are also venturing into different segments within the real estate market. Looking beyond residential properties, they are also diversifying into the mixed-use, industrial and commercial segments. This allows them to manage business risk and also the regulatory changes according to the segment or project type.

RelatedHolland road site sold to consortium led by Far East Organization for $1.213 billion

Individual investors will do well to be sensitive to shorter property cycles

Leonie Gardens

2018 could be a good recovery year for the local real estate industry following a 4-year slump. 2013 was the last time prices and sales volume were at a record high. But home prices have been on the rebound for the past 3 consecutive quarters. And this is in spite of the governments’ cooling measures still being in place. This could mean that market forces are getting stronger.

Property analysts have given a forecast of 5% to 10% recovery in home prices this year. En bloc sales are expected to reach $12.8 billion.

As the property cycles here become shorter, some industry players’ advice is for timely and accurate responses to market shifts. Holding power is another crucial factor.

While the residential property is the most mentioned segment, the industrial and office segments are more indicative of the economy’s direction and indirectly, the real estate sector’s growth.

Related: $800 million reserve price for Leonie Gardens

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