Why 2018 is the year to diversify your real estate investment portfolio

By Alex Bellingham / Bloomberg | January 29, 2018 8:45 AM SGT
At QIP, a Singapore-based, private-equity, real estate firm, we are firm believers that property should be part of every investor’s portfolio.
However, each individual sector of property has an upside and a downside, and for those who are looking to invest in markets such as the UK, 2018 is a good time to see which non-traditional options are available that might better suit the economic forecasts and investor sentiment for the years ahead.
Real estate is featured in only 20% of family office portfolios in Asia-Pacific and yet it has proven to be a reliable asset class, particularly for those seeking longer-term returns.
The number of international students is high, and they expect modern, well-equipped and well-managed rooms throughout their university studies (Photographer: Graham Barclay/Bloomberg News)
Real estate has consistently provided positive returns with low volatility for investors. So, why haven’t more investors entered the property market?
Many individuals place their trust in bricks and mortar — investing in an asset that can be seen and touched. However, the implications of becoming a landlord (particularly a residential property landlord) can be off-putting for many high-net-worth individuals and family offices in particular.
The majority of Singaporean real-estate investors have full-time careers away from property. As an asset class, property is considered “high maintenance”, as it requires considerable time, energy and further capital to be a well-managed, long-term investment.
Arranging furnishings, finding tenants, checking references, managing deposits and keeping the property maintained are important yet time-consuming aspects of becoming a real estate landlord.
In addition, landlords need to keep up to date with the various laws affecting overseas property investors, not to mention filing annual tax returns and adhering to regulatory matters.
If you are an accredited investor, you may want to consider the most efficient and profitable way to benefit from real estate without the need to be as hands-on.
Real estate investment trusts are often invested in for this reason, but they are subject to the risks inherent in equity markets, and the tradeable price is often reflective of investor sentiment and not necessarily the underlying asset value. However, REITS are an easy-in and easy-out option.
Areas of real estate investment that are becoming increasingly popular for professional investors include student accommodation, retirement...