Offshore property investments reached $2 billion

The value of overseas property purchases by Singaporeans have risen to $2 billion last year from $1.4 billion in 2012, according to Mr Lawrence Wong, Minister for Culture, Community and Youth.

Given the increase, the Monetary Authority of Singapore (MAS) "is concerned that some individuals may be overextending themselves through such investments, or may not recognise the risks involved," he said.

Hence, MAS has warned Singaporeans about three major risks tied to offshore property investments.

First, Singaporeans may encounter difficulty in assessing property price fluctuations in another country due to its unfamiliar market. Second are foreign exchange and interest rate-related risks. Third, the legal and regulatory framework governing property purchases and financing agreements in other nations could be different from Singapore's.

Mr Wong also pointed out the overseas property buyers are covered under the Total Debt Servicing Ratio (TDSR) framework if their financing comes from a bank in Singapore.

"With global interest rates at very low levels, it is quite understandable that Singaporeans should want better returns than what bank deposits offer. But most local savers already own a property in Singapore, and have to be concerned about how much concentration they can afford to have in properties, especially when taking risks in overseas property markets," he said.

"Financial advisors also advise that investing in a diversified portfolio of assets, such as bonds and equities in addition to the property they already own, is generally a more prudent way to seek good returns, and at lower risk than concentrating investments in properties."

Mr Wong spoke on behalf of Deputy Prime Minister Tharman Shanmugaratnam, who is also the Minister-in-charge of MAS, in response to a parliamentary inquiry earlier this week.

Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg

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