Foreigners bullish on Singapore properties

The top end of the property market has moved fast over the past 18 months due to foreign interest. Across the board, foreigners made up about 22 per cent of the total purchases in Singapore.

According to Mr David Neubronner, executive director of property consultancy Savills Residential, of the more than 9,000 purchases in the first half of 2006, around 1,900 were by foreigners. 

“The percentage goes up to 48 per cent for properties priced at $1 million or more,” he said. 

What caught the attention of participants over the weekend property seminar organised by Singapore’s largest private developer — Far East Organization — in conjunction with Today and DBS Bank, was that Malaysians formed the bulk of foreign interest in the local property scene, tying with Indonesians in the top place (see chart) to buy properties outside of the prime areas.  

Talking about the opportunities in the local property market, Mr Neubronner said that unlike in the past, where the foreign influx was driven by Hong Kong, Taiwan and Indonesia, the interest was now diverse.

“After Malaysians and Indonesians, Indian nationals are the next biggest buyers, followed by the United Kingdom, which includes Hong Kong nationals holding British passports,” he added. 

Indian, British and mainland Chinese together constitute more than 20 per cent and their presence is expected to grow larger in the years ahead. 

Other nationalities that are also buying properties here include Burmese, Middle Easterners, Eastern Europeans and South Americans. 

“Overseas buyers are attracted to Singapore because we in an early stage of a strong recovery, and overall sentiment is very bullish.”  

Easy payment schemes, with no capital gains tax and lack of any currency control are other factors. 

In July last year, the government introduced changes in the legislation, geared towards encouraging foreign ownership of properties, such as:  

• All private property buyers can borrow up to 90 per cent of the property value from banks (previously up to 80 per cent).  

• In order to obtain permanent resident status for foreigners, an amount of at least $2 million has to be invested in businesses and up to 50 per cent of the investment can be set aside in private residential properties.  

• Foreigners are free to purchase apartments in non-condominium developments of less than six floors, although approval is still needed for landed property.  

Another factor behind the foreign interest in the local market, according to Mr Neubronner, is that growth potential of Singapore’s property market surpasses that of its neighbours like Beijing and Hong Kong.

“Since 2003, during the Sars period, the Hong Kong market has recovered very fast. In fact, many of the properties that you bought in 2003 today would be worth twice as much. The Beijing market too cooling,” said Mr Neubronner. 

Singapore, on the other hand, has lagged its peers, especially at the top end of the market. 

There are also more foreign developers in the domestic market now than three years ago, like Hong Kong’s Sun Hung Kai, which, together with CapitaLand, won the Orchard Turn site with a bid of $1.38 billion. 

Australia‘s Land Lease set a record price with its winning bid of $617m for Somerset Central Site, reflecting the developer’s confidence in Orchard Road and the retail tourism scene.  

Mr Neubronner believes that the diverse foreign interest gives the local property market greater depth and strength, making it more resilient and stable compared to the mid-1990s.  

He added that Singaporeans have been active at the high end of the property market in recent months.  

“Many of them, we believe, are beneficiaries of the recent collective sales in prime areas like district 10, such as Ardmore II and Newton One, which had a large number of Singaporeans. We are confident this trend will continue in the months ahead.”  

Mr Neubronner identified high-end residential areas, where prices have been slowly edging up since 2005, as one of the growth areas in the property market. 

“Developments in and around MRT sites, such as those near the Circle Line, which is under development right now, will continue to be in demand, along with developments near the new downtown, like The Clift.”  

He expects prices for luxury high-end properties to creep up from the current $1800-S$2,000 per sq ft to $2,500-$2,800 per sq ft by early 2007.  

For similar properties, geared towards “lifestyle” living, prices are expected to move from the current $1,200-$1,500 per sq ft to $1,500-$2,000 per sq ft over the same time frame. 

Presently, units at the Lakeshore — which boasts a spa concept development and is located near Lakeside MRT — are priced from $552,000 onwards.  

The seminar, entitled “Seize the Fantastic Opportunity in the Real Estate Market at the Right Time”, drew strong interest, with more than 120 people making their way to Far East’s Icon Sales and Design Centre opposite Tanjong Pagar MRT station on Saturday. 

Participants were given a taste of the diverse real estate options offered by Far East Organization, and which officials adding that many expressed genuine interest in the properties.  

Source: TODAY, 20 October 2006 

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