Sunday, June 15, 2008

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Reits Risky - Buying Property Riskier

Quote from:
The Singapore Stock Market: Reits may kill you during the start of a recession cycle: "

"A Reit, is usually laden with Debt to pay for Pricey Assets purchased during the economic expansion the world enjoyed for the past few years. Any Net Income it gets from this pricey properties are mostly drained away to give their shareholders dividends ..
so the danger is obvious, There are many Reits that have sprouted up and aggressively expanded during the recent economic boom and like fair weather flowers, how will this highly leveraged Reits react if the value of their properties and their monthly income gets hit by a prolonged economic downturn, something which the world could be facing today."

If buying Reits is risky today, then buying properties would be riskier, given its bigger financial commitment and its highly non-liquid nature. In view of such risks in the investment market, several banks recommended higher cash ratio.

May also want to read:
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
Smart Buyers, 10 reasons to wait
Property Price Index Graph Plotter & Online Property Valuation


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The blogger here has been affectionately named by close allies as "Smart Buyer" but really, he's not smart. Smart Buyer just believes that being prudent is smart. That's the essence of the message of this blog and Smart Buyer hopes it'll benefit other property buyers.

Smart Buyer :)