Bearing in mind our need for income (more important than windfall appreciation), let’s pit the best property (shops with rental guarantee) against best dividend stocks (REITs). Below are my personal biases, without any real evidence.

• liquidity — stocks win. We can sell and buy them easily.
• quantum — stocks win. We can trade with $100.
• legwork — (active management) REITs beat most properties except properties with guaranteed rental.
• credit risk of the promised dividend — stocks win. Investors don’t need to worry about missing rental receivables.
• transaction cost — stocks are very efficient. Property sales requires commission, legal fees, taxes, etc. These transaction costs need to be included as purchase price.
• currency risk –stocks win if they are in the investor’s home currency. A lot of rental properties involve currency conversion, but some shop units (Cambodia for example) are priced in USD
• regime risk — stocks win, as most stocks are in developed countries.
• legal risks — stocks win since they are supposed to be less affected by local legal issues. In the case of my shop units, the lease agreement (companion to the purchase agreement) is a 17-page legal document with lots of fine prints … presenting legal risks to the investor.
• repairs — REITs win as the maintenance responsibilities are taken care of. If a shop unit is new and well managed by a local agent, then repairs are taken care of too.
• ^^^^^^ All these factors make listed securities appear easy, familiar, approved / regulated / legalized … safe-looking
• —Now the strengths of rental property
• #3 current income — shop unit wins with guaranteed rental. A residential rental property also generates typically higher income than the average stock, though some dividend stocks can generate 10%+ possibly unsustainable.
• #2 stability of income — shop unit wins IMHO. A shop in a good location will not stay vacant. In general, properties (not stocks) give me confidence to invest 6-digit sums to generate substantial income for retirement. No stock can guarantee any dividend.
• #1 principal protection — shop units show more rock-solid strength, esp. when endorsed by Shangrila and CapitalLand.
• #4 appreciation — shop units show more potential, largely because of very limited mind-share .. exotic alternative investment. The lesser known, the more potential for appreciation. See also owning property^REIT

Personal experiences:

1. rental property — I collected some guaranteed rent from Cambodia. My own HDB home was rented out for a few years. More importantly, I myself lived in my own HDB home for years, saving thousands of rental dollars every month
2. high-dividend mutual funds — I invested for many years since 2012. Rather poor performance, probably 2-3% yield only.
3. REIT or high-div stocks — no experience

Based on my experiences and analysis,

• my property assets will be my core portfolio, generating income that I need here and now. I’m less worried about cash flow in the distant future.
• I will buy some REITs and high-dividend stocks primarily for the income. Any appreciation would be bonus. Budget = 2k, rising to 100k, paying out a consistent $500/M. I would need to use SGD.

However, property rental income still feels superior because “NAV fluctuation” is unknown and therefore a non-issue so the asset is a cash cow. In contrast, stocks show visible fluctuation so we question whether the dividend is paid from NAV. With the high-dividend unit trusts, a lot of times dividends are indeed paid out from NAV. I hope with blue-chip stocks I can rest assured that dividend comes from operating profit.