How to invest in real estate without breaking the bank

Unlike direct property investments that require high up-front payments, Reits offer an affordable, alternative way to make money on real estate

Navigate the daunting world of real estate investment with the help of digital wealth manager, Syfe. PHOTO: GETTY IMAGES

If you grew up with traditional Asian parents, there's a good chance that you've been told to work hard and save towards owning a piece of real estate. Seeing as land is a scarce resource in many cities around the world, this may seem like a pipe dream, especially since purchasing a property usually requires a huge capital outlay.

But wait, there is a surprisingly affordable financial instrument that can help you circumvent this, let you catch your breath and even earn you money while you're sleeping or away on a trip: Real Estate Investment Trusts (Reits).

Passive income through real estate investing is one of the more popular paths investors who want to put their money to work for them can take. Here's what you need to know:

What are REITs?

These are real estate companies that own, operate or finance income-producing properties, such as hotels, offices or residences. Listed on the stock exchange, Reits have benefits other investment vehicles don't have, such as allowing individual investors to earn dividends from investments without buying, managing or financing any properties themselves. By investing in Reits, individuals can enjoy a steady stream of passive income without the downsides usually tied to owning a property.

At present, the Singapore Reit market is one of the biggest in Asia, with 42 listed Reits and a market capitalisation of over S$100 billion.

While this may sound daunting to get into, digital wealth manager Syfe takes the ease of real estate investing further.

Invest in hotels, data centres, warehouses and more

Syfe not only allows investors a convenient and affordable way to diversify their portfolio through real estate, but the Syfe REIT+ portfolio itself is also diversified with assets ranging from offices and hospitals to logistic warehouses and data centres.

Launched in partnership with the Singapore Exchange (SGX), Syfe REIT+ is designed to closely replicate the performance of the iEdge S-REIT Leaders Index. Like the index, which tracks the largest and most liquid REITs in Singapore, Syfe REIT+ allows investors access to a broad range of quality Reits and exposure to all the properties owned by them.

What's more, there is no minimum investment and no brokerage charges or a lock-in period - plus, you can withdraw anytime.

"It is a simple way to invest with all the technical information openly shared," says Syfe REIT+ investor Mr Daniel Soh, 56. "In my search for ways to invest in real estate and Reits, I learnt that all investments come with risks. Syfe's Reit+ is the perfect combination of a sound selection of Reits with good risk management and low management fees," he says.

The portfolio focuses on quality REITs with sound fundamentals and long-term growth potential. These include blue-chip REITs like CapitaLand Integrated Commercial Trust that manages shopping malls as well as offices like Bugis Junction, Asia Square Tower 2 and Raffles City, and Mapletree Commercial Trust that operates Vivocity and Mapletree Business City.

It also includes Mapletree Logistics Trust, which owns warehouses and logistics centres across nine markets in the Asia-Pacific. Of these, warehouses associated with the boom in e-commerce have been especially popular investments, thanks to the rise in digitisation since the start of the Covid-19 pandemic.

Top 5 REIT+ holdings. PHOTO: SYFE

How you too can enjoy the risk management benefit

"I trust Syfe to do the technical heavy lifting and adjustments when the market falls, so my risks are managed. When Covid-19 struck and Reits started falling, I saw how my REIT+ with risk management eased the impact," says Mr Soh.

The REIT+ with risk management portfolio is a unique combination of REITs and Singapore government bonds via the Nikko AM ABF Singapore Bond Index Fund. During periods of volatility, Syfe's proprietary algorithm lowers your risk exposure by reducing the allocation to REITs and increasing the allocation to government bonds. This has the effect of cushioning your portfolio during market crashes. When markets recover, the algorithm once again increases the percentage of REIT holdings within the portfolio.

Syfe REIT+ is designed to closely replicate the performance of the iEdge S-REIT Leaders Index, and allows investors access to a broad range of quality Reits. PHOTO: SYFE

Younger investors are not left out

To cater to younger investors seeking higher potential returns, Syfe also has a 100% REITs portfolio. Mr Marcel Tanumihardja, 25, was drawn by this maximum exposure to REITs."As a young adult, my overall portfolio leans toward equities. I decided to invest in the real estate sector as a diversifier to improve my risk-return profile," she says. "The return is also around the line that [Syfe] has predicted for me."

The average annual return over the past eight years has been 8.74 per cent. Amid the pandemic, the Syfe REIT+ dividend yield hit 4.5 per cent in 2020. The estimated dividend yield for 2021 is higher at 5.1 per cent. This points to the resilience of the Reits sector, which should see its outlook improve as vaccinations gather pace.

Dividends are automatically reinvested for you as well. Based on Syfe's internal calculations, this can add an extra 0.5 per cent in annual returns. This covers Syfe's management fees which start from 0.35 per cent p.a.

Gone are the days when huge capital commitment was required to get into real estate investing. With no minimum investment and low fees, Syfe REIT+ is an easy and efficient way for anyone to heed their parents' age-old advice of investing in property.

For more information, visit

Syfe is a digital wealth manager licensed by the Monetary Authority of Singapore (MAS) under a Capital Markets Services (CMS) License for fund management. All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone. This advertisement has not been reviewed by the Monetary Authority of Singapore.

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