Singapore millennials favour investing in property?

SINGAPORE’S millennials, defined as those who are currently between the ages of 25 and 34 years, favour investing in property as a means to achieve financial security. But their satisfaction with rental yield is the lowest in Asia.

The latest Manulife Investor Sentiment Index (Manulife ISI) survey has found that more than two-thirds (68 per cent) of Singapore millennials aim to purchase local property, with two out of five intending to do so for investment purposes to generate rental income. Other upcoming executive condo launches include Hundred Palms Residences ECYio Chu Kang EC, Inz Residence EC, Anchorvale Lane EC,  while existing ones include The Terrace EC, Brownstone EC, The Vales EC, Parc Life EC , Sol Acres EC, The Visionaire, Bellewoods EC, Signature at Yishun, The Criterion EC and NorthwaveHundred Palms Residences details and Hundred Palms EC show flat will be available shortly.

But only 58 per cent are satisfied with the rental yields compared to an average of 78 per cent in Asia. The highest satisfaction levels with regard to rental yields were in Indonesia (97 per cent) and the Philippines (92 per cent). A statement by Manulife said this suggests that Singapore millennials who bank on rental income may need to seek other alternatives.

Wendy Lim, Manulife Asset Management chief executive, said: “Overall in the last decade or so we have seen yields falling across the board, be it rental, dividend or bond yields, and the market on the whole has experienced higher volatility.

“Against this backdrop, investors should build a diversified portfolio across asset classes instead of depending on one asset class or property alone to achieve their retirement goals.”

The latest Manulife ISI survey was conducted in September and October 2016, and was based on 500 online interviews in markets including Hong Kong, China, Taiwan and Singapore. Respondents were middle-class to affluent investors aged 25 and above, who are the primary decision makers of financial matters in the household and currently have investment products.

The study found that Singapore millennials were more optimistic about their retirement prospects than older generations – eight out of 10 believe they will be able to maintain or improve on their current lifestyle when they retire. In contrast, older investors tended to lower their expectations as they drew closer to retirement – 44 per cent above the age of 50 expect to scale back their lifestyle in retirement.

Millennials, however, do recognise that financial and health concerns may challenge their retirement aspirations. Seventy-four per cent plan to continue working in a full-time or part-time job after retirement, and expect their work income to contribute close to 20 per cent of their retirement income.

But more than half feel their health condition may not allow them to continue working.

Millennials may also become the “sandwich” generation, expected to care for their children and ageing parents. More than a third (34 per cent) believe they will need to support their children and their parents even after they retire, as opposed to 8 per cent for those aged 50 and above.

Forty-four per cent do not expect to receive any financial assistance from their children. Half of millennials expect they will still be carrying debt or a mortgage in retirement.

Naveed Irshad, Manulife Singapore chief executive, said: “It’s heartening that millennials in Singapore are hopeful about their life in retirement, while still having realistic views about the financial and health risks that may be present. When it comes to saving for one’s retirement, the key is to start as early as possible.”

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