As children, we were often asked what we wanted to be when we grew up. The other kids said doctor, firefighter, and the occasional ice-cream taster.

One of my dreams was to be a landlord. Sit back, shake leg, and collect the rent every month. As a plan for life, it seemed hard to beat.

I suspect many Singaporeans grew up with some version of that dream. For our parents’ generation, a second private property was one of the most familiar ways to build wealth, and for many of them it worked.

Recently a client asked me something I have been thinking about for years. If the numbers so often favour other assets, why do people still buy property?

What the numbers said

In 2021, DBS compared what $100 would have grown to across different assets, from early 2009 to early 2021. In the S&P 500 it became $635, in a first private home $399, and in a second private property $209, the lowest of the group, mainly because of smaller loans and much higher buying costs.

Put another way, to end that period with the same amount through a second property, you would have needed to put in about three times as much money.

That study has limits, and I want to be fair about them. It started at the bottom of the global financial crisis, which flatters shares. Private home prices have also risen about 35% since it ended, on URA’s index from early 2021 to mid-2026. But the costs that dragged the second property down have only gone up since, and I will come back to them.

I should also say where I stand. My wife and I own an investment property and rent it out. I am not here to argue against property. I have spent over fifteen years having this conversation with clients, and the reasons people give for buying property say a lot about how all of us make decisions.

Here are the three I hear most often.

1. “I can see it”

Property feels safe because you can stand in it. You understand it. Even as a child I could picture owning a flat and renting it out, which is more than I could say for a bond fund.

But being tangible has no return advantage of its own. The money in your bank account is digits on a screen, and nobody keeps their savings under the pillow because an ATM balance is “not real”. I am sure that when the first ATMs appeared, plenty of people said exactly that.

Feeling safer with what you understand is reasonable. The trouble starts when that comfort stops us noticing how much we are putting in.

The Quantum Effect

Some years ago, a client who is a professor told me about a news story she had read, about a retiree with more than a million dollars in CPF. She was impressed by the discipline it must have taken.

I told her she had done something bigger herself. Years earlier she had bought an investment property, paid it down one monthly instalment at a time, and it was now fully paid up and worth about $3 million. The same habit, regular money into one asset over many years, at a far larger size. She had never thought of it that way, because it was a property.

I call this the Quantum Effect, quantum in the Singapore sense of the size of the sum. When the asset is property, we stop flinching at the size.

I have seen clients hesitate over $100,000 in a diversified portfolio while holding $3 million in a single property without a second thought.

The easiest way to see it is to draw your own pie chart. Say you have put $1,000 a month into funds for three years, $10,000 into shares and $5,000 into crypto. You also own an investment property worth $1.5 million, with $900,000 of the loan still outstanding, so $600,000 of it is yours.

Ring chart: property is 92% of this example portfolio; funds, shares and crypto together are under 8% 92% in property
  • Property (your equity)$600,000 · 92.2%
  • Funds$36,000 · 5.5%
  • Shares$10,000 · 1.5%
  • Crypto$5,000 · 0.8%

The funds, shares and crypto are the investments you check, worry about and talk about. Together they are a sliver. The property you hardly think about is almost the whole circle.

And the chart understates it. Your share of the property is $600,000, but its price moves on all $1.5 million, because the bank’s $900,000 is in there too. If property prices fall 10%, the unit loses $150,000, and every dollar of that comes out of your $600,000. Your net worth in the property is $600,000. Your exposure to its price is two and a half times that. The chart also leaves out the home you live in. Add your equity in that, and the slivers all but disappear.

That is the Quantum Effect at work. Because the sums are too big to feel, many of us end up far more heavily in property than we realise. I have written before about what that kind of concentration can do to a retirement.

If your own chart looks like this, there is no need to sell anything tomorrow. It is worth knowing before the next dollar goes in.

2. “I own a unit in…”

Some years ago a friend who worked as a fund analyst turned up with a new watch, a green Rolex that collectors call the Hulk. It was his fourth watch in as many months, and he wore a different one to work each day.

I asked whether he was collecting now. He said the watches were an investment.

So I asked when he planned to sell. He hesitated, and after a while admitted he had never intended to sell any of them. He bought them to wear.

There was nothing wrong with that, and the watches may well hold their value. But he had no plan to sell, so returns had never been part of the decision. Calling them an investment made a $50,000 purchase far easier to justify than calling it $50,000 spent on something he enjoyed.

Property works the same way for many people. Nobody at a party says, “I have a diversified portfolio of funds.” Mention the unit you bought and the conversation lights up. “He built his wealth in property” sounds like a success story. “He built his wealth through steady monthly investing” sounds like a nap.

There is nothing wrong with status. It has real value, in how we feel and in how others see us, and I would never tell anyone to stop enjoying what they have worked for. The question is whether you are clear what you are buying for. If it is to grow your money, it deserves the same analysis as any other investment. “Prices always go up”, “my friend is collecting rent” and “at this price it’s a steal” are good reasons to start looking. None of them tells you what the property will return.

The stories that reach us are uneven, too. The person who made 50% on a property is far more likely to tell the whole family at Chinese New Year. The person who lost money rarely mentions it. One person striking 4D does not make the lottery a good investment.

What gets missed

Before the third reason, it is worth looking at what the first two make easy to overlook: the loan, the costs, and what happens when you need the money back.

The loan

A client who describes herself as low-risk had just bought a small condominium. I asked her to imagine a different proposal. Invest $1 million in a fund. You only have $250,000? No problem. Borrow the other $750,000 from the bank. You will pay interest, but the returns should more than cover it.

She said no immediately. It sounded far too risky.

Then I pointed out that this was what she had just done with the condo.

She knew she had taken a loan, of course. But the comfort of something she could see, and a sum too big to feel, had crowded out the obvious: she had borrowed three dollars for every one of her own.

Leverage is a tool, and sometimes the right one. When you hear about someone’s big property gain, though, part of what you are hearing is borrowed money working in their favour. It works the other way too.

The costs

Imagine I brought you an investment with these terms:

  • To buy in, you pay one-off charges of about 23% of the price.
  • It pays a gross income of about 3% of the price each year.
  • Every year you pay a holding cost equal to about 15% of that income, whether the investment’s value goes up or down.
  • The net income is then taxed at your marginal rate, which can be as high as 24%.
  • If you want out within four years, there is an exit charge of up to 16%.

Would you buy it? If an adviser recommended a fund with fees like these, people would be up in arms.

What I have described is a second private property in Singapore today, bought by a citizen. On a $1.5 million unit, buyer’s stamp duty and the 20% Additional Buyer’s Stamp Duty come to about $345,000 before you get the keys. The holding cost is property tax, which in this example takes about 15% of the rent every year. The net rent is taxed as income. And seller’s stamp duty applies if you sell within four years. All of that is before interest, maintenance fees, repairs, agents’ fees and the months the unit sits empty.

None of this makes property a bad decision. It means the return has to be calculated with all of it included, and in my experience very few owners have done that sum.

The bedroom you cannot sell

If you need $200,000 for a medical bill or a child’s university fees, a portfolio can be sold $20,000 or $200,000 at a time, usually within days. A property cannot be sold a slice at a time. Getting at part of its value means borrowing against it, refinancing, or selling the whole thing, each with its own costs and each on someone else’s timetable.

In retirement this matters even more. The most straightforward income from a property you keep is rent, and being a landlord is work: finding tenants, handling repairs, waiting out the empty months.

3. The reason worth copying

The third reason people buy property is the one I admire. It has more to do with the owner than with the asset.

Patience. I know people who check their share prices several times a week, some several times a day. Every headline makes them anxious, and anxiety is how people end up buying high and selling low. Nobody calls in a valuer to price their condo three times a day. Property owners sit through the bad years because they cannot see the price moving every hour. That patience is a large part of why property has felt so reliable, and the asset usually gets the credit.

Commitment. One client was paying $25,000 a month on a property loan, and baulked when we recommended $2,000 a month into a retirement portfolio. The first question was whether the money could be taken out if needed. The mortgage, meanwhile, got paid every single month. No ifs, no buts.

The same instinct let the professor pay off a $3 million property. There was a structure and a fixed amount, and no monthly debate about whether this month could wait.

Imagine that single-mindedness pointed at a goal that matters to you, such as your children’s education, the retirement you want, or even something outside money, like running three times a week. The habit that pays off a property can build almost anything.

Why people buy property

People buy property because they can see it, because it says something about them, and because it brings out their most patient and disciplined selves. The first two are worth being honest about. The third is worth copying.

If you own property or are thinking of buying, the useful question is what you want it to do for you, whether that is to shelter your family, signal your success or fund your retirement. Each is a legitimate answer, and each needs a different set of numbers.

With doctors, the version I see most is a landed home bought in the mid-30s that stretches everything else. I write about that in Financial planning for doctors in Singapore.

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