You have been approached by a Hcto either a Good Class Bungalow (GCB) or REITs in Singapore. No leverage will be used for the purchase.
Using appropriate available property tools of property portals such as URA websites, Property Guru, REALIS etc. and financial websites or portals (SGX, Yahoo finance, Bloomberg etc.) including information from your lecture and relevant research, compare your property purchase with REITs as part of your HNWI’s strategy to diversify his portfolio.
You must address the following:
a) Background of your client
Provide a brief background of your client with assumptions such as nationality, number of properties he has to date, investment objectives etc. to facilitate meaningful computation/evaluation.
b) Physical Property
Purchase the GCB with an objective for investment.
§ Choice of Property and reasons
A brief narrative of the property selected and provide three reasons to be substantiated with data, figures, charts, price trends etc.
§ Appropriate Computation
Based on a date of purchase in Jan 2019 (or thereabouts), it should include all cost including commissions, tax considerations, ABSD, stamp duty etc.
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– Total Returns
Capital appreciation and rental income, if appropriate based on purchase, less taxes paid, other ancillary cost/expense etc. For return, assumed property sold under current market conditions at last done market price and liquidated in the first quarter of 2024.
c) REITs
Choose 3 SREITS and reasons for choice over others within its industry (with metrics, quantitative & qualitative reasons based on current market conditions).
§ Appropriate Computation
Calculation of yield and holding period return on the selected REITs from period Jan 2019 to Jan 2024
d) Conclusion
Draw meaningful conclusion of the choice between the property and REITS based on your findings. Your evaluation should go beyond mere computations with a need to consider factors/assumptions indicated in the background of your client. Research has to be done to substantiate your evaluation and provide sound advice to your client.