Owning an investment property and collecting good rental income is one version of the Singapore Dream wafting through show-flats everywhere.
Real estate investment - once considered a no-brainer as prices kept going north - has become more complicated in recent years, with changing market dynamics brought about partly by new government policies and measures to cool the market.
More than three years since the last set of cooling measures was introduced, talk is rife that home buying sentiment has improved and that the private residential market is nearing its trough.
Demand for new homes perked up last year, with sales rising by 7 per cent to 7,972 units from the 7,440 units in 2015.
The sales momentum appears to have kept up. Two recent new condominium projects - The Clement Canopy in Clementi and Grandeur Park Residences in Tanah Merah - booked healthy sales on their first weekend of launch.
The prospect of an improving property market outlook, cheap loans and relatively more affordable small apartments have lured many investors back to real estate.
However, even as buyers' interest picks up, investors ought to be wary of the persistently poor rental market.
Property remains an attractive long-term investment, but thorough consideration must be made - beyond just interest rate movements and location of the project - before investing in one.
"The whole market is different now; there are lots more boxes to tick before you buy a property," noted Mr Desmond Sim, head of CBRE Research for Singapore and South-east Asia.
WHAT HAS CHANGED?
The property market is closely tied to the economy. For many years, home owners and landlords have benefited from capital appreciation and healthy rental income.
However, the growth outlook has darkened considerably since, amid greater global uncertainties.
"Much of the gain was due to the successful transformation of the Singapore economy and the building of the integrated resorts. GDP growth used to average about 6 per cent annually, but the pace has slowed down to only 2 to 3 per cent in recent years," said Cushman & Wakefield research director Christine Li.
The slower growth in the Singapore economy, weakness in the oil and gas sector, and continued tightening of the foreign worker policy have crimped business expansion and the hiring of foreigners.
Figures from the Manpower Ministry showed that foreign employment - the number of foreigners in jobs - fell by an estimated 2,500 last year. The number excludes domestic workers, and represents the first decline since 2009. From 2010 to 2015, the foreign workforce - excluding maids- grew, with the largest increase of 79,800 in 2011, and the lowest rise of 22,600 in 2015. There were about 1.15 million foreign workers, excluding maids, in Singapore as at the end of last year.
The number of permanent residents here dipped slightly from 527,700 in June 2015 to 524,600 in the middle of last year.
A declining foreigner population here, coupled with an influx of newly built units, will dampen rentals.
"Investors need to take a longer-term view in buying property. They have to look beyond the glitz of the show-flat and assess the property based on its fundamentals,"said Dentons Rodyk & Davidson senior partner Lee Liat Yeang.
LACKLUSTRE LEASING MARKET
CBRE Research noted that islandwide rents fell 13 per cent as at the end of last year from a peak in the third quarter of 2013, while the vacancy rate crept up from 6.1 per cent to 8.4 per cent over the same period.
Mr Sim added: "I expect vacancies to potentially rise to 10 per cent in the next few quarters. Rents will remain under pressure, amid fewer expatriates and the cut in their housing budgets."
Property agents say it now takes twice as long and multiple viewings to secure a tenant - and that was for landlords realistic about rents.
PropNex Realty senior associate director Anthea Yeo said: "Some landlords still have high expectations. They think cutting rents by $100 or $200 is enough. Some even want to mark up rents because tenants would bargain, they say."
She has slashed the rent for her one-bedroom apartment in Novena from $3,700 to $2,000 over the years, adding: "In the past, I leased to a Japanese expat, now it's a Singaporean student. I have to review the rent again when the lease is up for renewal."
International Property Advisor key executive officer Ku Swee Yong says prospective investors also have to assess the profile of the potential pool of tenants and companies located in nearby commercial hubs. Are the companies downsizing? Is there a surfeit of Housing Board flats available nearby for rent, which vie for tenants on tighter budgets?
On the plus side, the longstanding low interest rate environment has sweetened the deal for home buyers. Judging that the Government isn't about to lift property curbs any time soon, many are trickling back to the market to buy.
Ms Li added: " There is so much liquidity in the market, and buyers continue to favour real estate compared to stocks, bonds and commodities due to the hedge against inflation."
The moderation in prices has also nudged buyers to pick up units, including housewife Adeline Soong, who bought a two-bedroom Grandeur Park Residences unit for about $840,000 for investment.
"A slowing economy and weak rentals are worrying, but I think it's best to purchase now before prices rise," said Ms Soong, 40, who believes prices have bottomed.
Overall home prices fell by the slowest rate last year, amid a three-year losing streak - down 3.1 per cent compared with declines of 3.7 per cent in 2015 and 4 per cent in 2014. Home values have declined by about 11 per cent since the third quarter of 2013, following a raft of cooling measures - including the total debt servicing ratio (TDSR) - which had tamed property demand.
On this note, investors hoping to sell their properties for a hefty capital gain should know that the TDSR - which limits a borrower's total monthly debt obligations to 60 per cent of the individual's monthly gross income - will peg back their asking prices.
TWO-SPEED MODE PROPERTY MARKET
Observers say the lag in the leasing market and the pickup in property purchases put the market in somewhat of a "two-speed mode".
Dentons Rodyk & Davidson's Mr Lee notes: "This divergence between the pace of buying and leasing is set to widen this year, as the rental market remains weak in the face of newly completed properties coming into the market."
Many investors, like civil servant Ms Lakshmi T., are hoping that the rental market will recover by the time their new apartments are built - usually in three to four years.
"Weak rentals are a concern but I expect the market to turn in the coming years," said Ms Lakshmi, 56, who bought a one-bedder - also at Grandeur Part Residences - over the weekend for about $618,000.
She was attracted to the project's amenities and proximity to the MRT station and Changi Business Park, and is not relying on rent to service the monthly mortgage.
TIME TO ENTER THE MARKET?
Analysts advise that those looking to invest in property now take a longer-term investment horizon, as there is limited potential for short-term gains, unlike in the past when prices could appreciate by 60 per cent in a few years.
"Investors have to consider the cash-flow potential of the property and whether it could cover mortgage and running costs, and need to be prepared for negative cash flow for the periods that they cannot find a tenant," noted Ms Tang Wei Leng, managing director at Colliers International, Singapore.
Most importantly, experts say, think about job security and stability of income, which directly affect one's ability to hold on to an investment property during rough times. In any form of investments, there are no sure bets, even for the most astute investor - so the advice is to think hard before ploughing that hard-earned cash into real estate.