Equities and precious metals have had their run with the previous generations. The millennials are finding lucrative investment opportunities in property finding long term financial security. There is a changing trend among the 25 to 34 year old Singaporeans. It suggest that the golden days of property investment will be back soon. The figures have some contradictions but the overall shift towards the property market is quite evident.
Singaporeans are now looking forward to purchasing local property for both residential and investment purposes. In fact, 2 out of every 5 Singaporean millennials are looking to buy property. Most of these people wish to use it as an investment. It is to strictly generate rental income and not as an appreciating asset. On the contrary, rental yield satisfaction is hitting the lowest rates, with Singapore at the end of the list in Asia. There are more than 68 percent millennials intending to buy local property. Manulife Investor Sentiment Index is showing that even though current rental yield is not enough, the millennials are banking on future growth and yields in property.
Manulife ISI figures show contradictions
The average rental yield satisfaction in Asia is 78 percent and Singapore lags by a massive number, standing at only 58 percent. Indonesia and Philippines are taking the lead in Asia with this number. Yield from rental income have certainly fallen during the last decade but this does not discourage the millennials in investing in property. This is because even the securities market has been quite volatile over the years, creating a level play field for all types of investments.
Singaporean millennials look more optimistic about their future and 8 out of 10 people between the ages of 25 and 34 are quite positive about their future, expecting to maintain their lifestyle after retirement as well. As older investors are fearful of the consequences, younger investors are less risk averse and open to challenges, placing their bets on property. Most of them even intend to stay employed, whether part-time or full-time, even after reaching retirement age.
The love for property may also become more intensified in this generation as millennials have become a ‘sandwich generation’. It is highly likely that this generation must care for their children as well as their parents. This is because a quickly aging population in Singapore is a problem for the government too. Thus allowing them to find opportunities for income generation even after retirement at their parents age. Especially if their children fail to find opportunities amidst slowing growth in the economy. Their health may also not be perfect to follow this path. Rental income is passive. Hence, millennials believe in owning property for rental purposes and stick to their post-retirement optimism.
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