A Retirement Plan through Real Estate

“What’s your retirement plan?” It’s a question that becomes increasingly relevant as you get older. While contributing to your Central Provident Fund (CPF) through both your personal and employer contributions is a solid approach – especially given its attractive dividends – another compelling option is investing in real estate. This doesn’t mean diving into a large portfolio of properties. Instead, it can start as simply as making a smart choice with your very first home and the others that follow suit.

Determine how much you spend monthly

Planning your retirement starts with understanding your future financial needs. Start by estimating your monthly expenses. For many Singaporeans, this figure is approximately S$4,000. If you’re planning to retire at 65 and have a life expectancy of 85, you’ll need about S$960,000 per person over 20 years – or S$1.92 million for a couple.

This amount typically covers only basic living expenses, excluding luxuries like multiple vacations each year. When asked whether they can save this amount through monthly income alone, many find it unlikely. That’s where property investments can help bridge the gap.

Look into your retirement goals

Before diving into the property market, it’s essential to think about what you want to achieve in retirement. Are you aiming for a comfortable nest egg, financial stability, or a steady passive income? Having a clear vision will help you make smarter real estate decisions that align with your future needs.

Your first step should be evaluating whether your current property supports your retirement plan. For instance, if you’re living in a large home with high maintenance costs, it might be worth considering a smaller, more manageable property. On the other hand, upgrading to a property with higher appreciation potential could help you grow your wealth over time.

Evaluate your current housing options

For HDB owners, the potential for property appreciation can vary greatly. For instance, a brand-new executive apartment purchased in 2003 for S$280,000 might have appreciated to around S$758,000 by 2024. If you were 40 years old when you bought it, you’d be 65 now. Selling it to downsize to a smaller three-room flat (priced at around S$500,000 in a non-prime area) would leave you with limited funds for retirement, unless you’ve saved significantly over the years.

This highlights why some homeowners explore upgrading to private property earlier in life to maximise their net worth and retirement savings.

Consider upgrading to private condominiums or landed units

If you’re in a position to afford it, buying a condominium can be a game-changer for your retirement plan. For example, a 3-bedroom condo in Marine Parade’s Cote d’Azur cost S$911,000 in 2002. Today, that same unit could fetch approximately S$2.72 million.

By selling this property at retirement age, you could purchase a resale HDB for about S$500,000 and still have over S$2.2 million in cash – providing a significant financial cushion.

Similarly, landed properties have demonstrated even more substantial appreciation. A house on Lilac Drive sold for S$1.08 million in 2009, while similar-sized properties in the same area now sell for between S$3.9 million and S$5.1 million.

Investing in larger-ticket items when you’re younger not only leverages your earning potential but also helps you build wealth over time, creating a sustainable retirement plan in Singapore.

But what makes a good investment?

When investing in private condos, choosing the right property can significantly impact your financial returns. The potential for value appreciation is one of the most critical factors. Properties that steadily increase in value over time serve as a powerful tool for building wealth, helping you secure a robust retirement plan. Beyond that, strategic location plays a pivotal role. Condos situated near MRT stations, upcoming infrastructure projects, or future commercial hubs tend to appreciate more quickly due to heightened demand and accessibility.

Emerging districts are also worth considering for their growth potential. Areas like One-North and Jurong Lake District, which are earmarked for development, often see substantial increases in property value as they evolve into vibrant commercial and residential zones.

Additionally, condos with unique selling points, such as rare layouts, unobstructed views, or proximity to major business districts, tend to hold their value better. They stand out in the market, attracting more buyers and renters, which makes them excellent long-term investments.

Don’t forget to keep in mind good investment approaches

Making the most out of your real estate investments requires smart strategies. Timing, for instance, is crucial. Buying during market downturns can help you secure properties at lower prices, setting the stage for better long-term returns when the market rebounds. Additionally, focusing on homes with unique features, such as exclusive layouts or exceptional views, can enhance the property’s appeal and ensure its value remains resilient over time.

Another key approach is partnering with a reliable and experienced real estate agent. An agent with a deep understanding of the property market can provide invaluable advice on when to buy, hold, or sell your property. They can also help you identify opportunities that might not be immediately obvious, ensuring you’re always a step ahead in your investment journey.

By adopting these thoughtful strategies, you can transform real estate into a dependable savings tool, helping you achieve financial security and a comfortable retirement.

Paul Tan YK

Paul Tan, an experienced Associate District Director at PropNex, has established himself as a trusted name in Singapore’s property market. With a deep understanding of HDB, condo, landed, and commercial property transactions, Paul is well-equipped to guide clients through every step of their real estate journey.

What sets Paul apart is his commitment to tailoring solutions to your unique needs. He takes the time to understand your financial objectives, lifestyle preferences, and long-term plans, offering insights that go beyond the basics. With his proven track record of successful transactions across diverse property types, you can trust Paul to provide valuable advice and identify opportunities that align with your aspirations.

Whether you’re exploring properties in emerging districts, considering a strategic investment, or right-sizing to fit your retirement plans, Paul’s expertise can help you navigate the market with confidence. Start your property journey with a trusted partner who understands the importance of making informed decisions for your future.

For personalised advice and expert guidance, reach out to Paul Tan today at +65 8612 7327 or [email protected]