REITs or Real Estate Investment Trust and Stocks are two major investment categories in Singapore Stock Market. REITs investor, invest in trusts that own and manage real estate properties. Investor become kind of owner of that land property. Whereas in stock investment, investors buy stocks of listed companies from STI and become part owner of that company.
But there is a different kind of reward and risk in investing in Singapore stock and Singapore REITs.
Here we are going to discuss how Singapore REITs and Singapore Stock is different, what will you get investing in them, what will be the return and what will be the risk.
1. BASICS OF REITS AND STOCKS
Investing in Singapore real estate is the dream of most of the Singaporean. Being one of the fastest growing markets, there are many Blue chip REITs to make your investment portfolio profitable. REITs are the unconventional form of buying physical property. REITs are traded like stocks but with more exposure on the property market. When you invest in Singapore REITs you get ownership of land by spending the little amount of money. Dissimilar to other companies, REITs have an inherent portfolio for property assets with a specific structure.
Singapore stocks and Singapore REITs, both are the listed in Singapore Stock Exchange. You buy and sell stocks via a trading account or with the help of brokers. By investing in stocks you get ownership of the company you have invested in.
2. SCOPE OF SINGAPORE REITS AND SINGAPORE STOCKS
Not even in Singapore but in the USA also REITs have a history of outperforming the market index. (STI in Singapore, S&P 500 in the USA)
Many wealthy rs recommend investing in Singapore REITs as they are the steady source of passive income. Ascendas Real Estate Investment Trust (SGX: A17U), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U) Suntec Real Estate Investment Trust (SGX: T82U), are few of the most profitable Singapore REITs that are famous for high dividend payment. As REITs are less volatile as compared to other, they hold good scope for the high dividend payment in future.
The scope of the stock market is also good but due to a large number of stocks, it is difficult to select a good company in Singapore stock exchange that has a great scope in the future. But the trick is to understand the market. The stock market can be volatile due to political and economic issues. There are chances if the information sector is the top performing sector today but go down in a few years. But if you are considering all the factors, such as historical performance of the company, dividend history, ROE, EPS etc, you will get a high return in stock investment as well.
3. SECTORS IN REITs AND STOCKS
REITs and Stocks both are divided into many sectors. But, being specific to property market REITs have a less number of sectors. There are approx 35 REITs in Singapore, mainly divided into sectors for example; office, retail, industrial, hospitality, healthcare.
|Retail REITs(e.g. Shopping mall)|
MapleTree Commercial, Capitaland Mall
|Commercial REITs(e.g. Office buildings)|
Kepple REITs. Capitaland commercial trust
|Hospitality REITs (e.g. Hotel, serviced residence)|
RevPar, CDL Hospitality Trust
|Healthcare REITs(e.g. Hospital and nursing house)|
First REIT, Parkway Life
Whereas there are vast varieties of stocks in STI, namely, communication, service, consumer discretionary, Information, technology, healthcare, utilities, manufacturing etc…
Below are the example of Singapore stocks sector wise:
Communication – Singtel, Ace Achieve Info.com Limited
Consumer Staple – Best World International Limited, Dairy Farm INT’l Holdings
Energy – Golden Energy and resources, Alpha Energy.
Financial – DBS group holdings ltd, OCBC Bank.
Healthcare – MediNex Limited
4. INCOME GENERATION BY REITS AND STOCK
You will get a steady stream of income from both the investments. Singapore REITs investor earns the money from the revenue that the properties receive via lease payment and rent. They pay the investor through a dividend. Hence, as long as there are people using that property you will get the dividend payment from that.
Stocks also provide dividend from the revenue or the profit they earn by doing the business or service they provide. But there are some stocks that don’t pay the proper dividend or any dividend at all whereas there are some blue chips stocks which pay a very consistent and high dividend.
5. RISK ASSOCIATED WITH SINGAPORE REITs AND STOCKS
The risk is associated with all kind of investment whether it is stock, forex, commodities, or REITs. But the extent to which that can affect your financial stability is different.
Some Singapore REITs are riskier than Singapore stock as they are focused to ambitious gain and some are less riskier than other.
Due to lack of proper diversification in REITs investing sometimes they can be riskier than stocks. Having said that, it doesn’t mean Singapore stocks are inert to risk.
Whenever you invest in any one of them make sure that you are aware of all the risk associated with them whether you are doing them online or via a broker.
6. GROWTH RATE OF SINGAPORE REITS AND STOCKS
As I told you earlier the price of Singapore REITs is spiking. It is simple to understand why it is spiking.
Whatever rent you had paid 5 years before I am sure you are paying much more today, and if the property you are living is providing more facilities than the rent will be much higher. REITs are usually always on growth due to regular demand and modification.
Singapore is the best performing stock exchange in Asia, so, you can get an idea of how the stocks are performing. But due to recent trade war news, there were times of low performing stocks.
The point is there are good performing stocks and there are poor performing stocks in STI. You will need to know top performing stocks in Singapore for profitable investing.
The MMF Takeaways
There are different pros and cons of investing in Singapore REITs and Singapore Stocks. If invested in the right direction and with the proper risk they both are high return investment. They are the investment strategy that thousand of Singapore investors following. We do not recommend to concentrate your investment portfolio with anyone kind of investment. It will be very prudent to invest a small percentage in both REITs and Stocks.
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