Tag Archives: Real estate investments

Times of uncertainty demand investments that protect capital

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As the financial centre of Asia, and as a small and open economy, Singapore is affected by the slowdown of Asia’s economies, led by the volatility in the Chinese market and current global uncertainty. As a result, the Monetary Authority of Singapore (MAS) has eased its monetary policy for the third time in 15 months, setting the Singapore dollar’s nominal effective exchange rate at zero percent, in turn stabilising the expected appreciation of the Singapore dollar.

It isn’t clear if a financial crisis is on the cards, but when faced with such a possibility, governments are not alone in taking preventive measures. Seasoned investors also take precautions by seeking refuge in lower risk assets. This phenomenon, known as the flight to quality or flight to safety, is where investors move their capital to safer investments, such as US Treasury bonds, gold, or tangible assets in strong currencies. 2016 is turning out to be a year marked by instability, and this has increased the appetite for such assets.

Real estate investments in prime markets are one of the most attractive alternatives right now. This was the general consensus of expert investors in an annual survey conducted by the Association of Foreign Investors in Real Estate (AFIRE), in which over 60 percent of its members said they saw 2016 as a year to increase investment in these types of US projects (Read more on Bloomberg). The survey also ranked New York as the most sought-after location, as it was the city that generated the highest returns in 2015, and prices are expected to appreciate the most over the next few years.

Investing in prime real estate in a city like New York has always been synonymous with investments that could only be made by millionaires or financial institutions. However, thanks to crowdfunding, global investors can now access such opportunities. Through this innovative model and with the benefits of technology, the small investments of thousands of people are pooled together in order to attain the amount required to acquire these assets, which range from US$100 million to US$250 million.

The company that is currently making this possible is Prodigy Network. Headquartered in New York, the city where it develops all the projects it crowd-funds, this innovative company has raised more than US$150 million in equity from small investors in 23 countries over the past three years. Together with traditional financing, the capital has financed the development of a portfolio of four projects in New York, valued at approximately US$650 million.

The company, which is the leading real estate crowdfunding platform in the USA, will hold a seminar on 4 May at the Four Seasons Hotel in Singapore on Real Estate Crowdfunding in New York. Industry pioneer and CEO of Prodigy Network, Rodrigo Niño, will share the benefits of this model to investors in Singapore who wish to access New York’s real estate market.

Reserve your spot here.

Prodigy Network’s effectiveness has already been verified by hundreds of investors who have participated in its AKA United Nations project, a building comprising 95 luxury apartments. Located in Manhattan, one block away from the headquarters of the United Nations, this project was liquidated last January, generating pre-tax annual returns of 31 percent.

Currently, Prodigy Network is running a crowdfunding campaign for its latest project, The Assemblage / 25th Street. Located in the neighbourhood of Nomad, this will soon become a 12-story building containing co-working spaces, which have been growing more than 80 percent annually since 2011. Investors from around the world can still participate in the last funding stages of this project, and earn double digit returns.

If you are interested in learning more about the benefits of real estate crowdfunding and how to access NYC’s prime commercial real estate market, do attend Prodigy Network’s seminar on 4 May.

  • Event: Seminar on Real Estate Crowdfunding in New York
  • Speakers:
    • Rodrigo Niño – CEO and Founder of Prodigy Network.
    • Leonard Chinchay – VP Investor Relations, Prodigy Network
  • When: 4 May 2016
  • Place: Four Seasons Singapore Hotel
  • Time: 6:30pm

Govt: Beware oversupply in Iskandar

Real estate investments in other countries could suffer losses and it would be hard to find tenants if there is a flood of properties, according to Minister for Culture, Community and Youth Lawrence Wong, who was speaking on behalf of Deputy Prime Minister and MAS Chairman Tharman Shanmugaratnam during a parliamentary session on Monday.

He was responding to reports about the aggressive construction activity in Johor and Iskandar, and also fielded questions from MP Lee Bee Wah on how many Singaporeans have purchased properties in Iskandar and how are local banks protected if many of these individuals default on their mortgages.

“There is indeed a real concern about future oversupply in the property market there and hence the potential decline in value of homes.

“Based on data from Malaysia’s National Property Information Centre (NAPIC), there are around 336,000 new private residential units in the pipeline — more than the total number of private homes in Singapore,” he said.

This number excludes the planned properties for the 1,400ha reclaimed land near Tuas Second Link that are expected to enter the market by 2020, Wong noted.

Given the situation, buyers have become more cautious and the number of Malaysian properties purchased through local property agencies has plummeted to 838 in 2014 from 2,609 in the previous year.

However, not all Singaporeans are aware of this, so the central bank and the Council for Estate Agencies (CEA) will continue to warn them about the risks involved in foreign property purchases.

Mr Wong also said the exposure of Singapore banks to overseas real estate is very small as they are strict on granting mortgages for such properties. In fact, such loans account for only two percent of the mortgage portfolios of major financial institutions in Singapore.

“In addition, the Total Debt Servicing Ratio (TDSR) framework introduced by MAS in June 2013 requires lenders to assess the debt servicing ability of their customers for all new property loans, regardless of whether the property is in Singapore or overseas,” he added.