Foreigners shopping for homes again

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Published June 3, 2009

Foreigners shopping for homes again

Their purchases of private homes have picked up and the trend could continue

By KALPANA RASHIWALA


(SINGAPORE) After a nervous lull, foreign buyers are property-hunting again. Their private home purchases in Singapore have begun to recover after bottoming out in Q4 last year, according to the latest analysis of caveats by consultancy DTZ. The momentum is expected to continue.

URA Realis data as at May 29 show that foreigners (excluding Singapore permanent residents) lodged a total 117 caveats for private home purchases in April, a relatively impressive showing given that this was two-thirds of the 174 caveats lodged by these foreigners for the whole of the first quarter of 2009.

The Q1 figure itself was an 11.5 per cent rise from the 156 caveats foreigners lodged in Q4 2008. However, with Singaporeans and PRs posting much bigger quarter-on-quarter increases of 90.8 per cent and 60.4 per cent respectively in caveats in the first three months of this year, foreigners' share of home buying slipped to 6 per cent in Q1 this year, the lowest level since Q3 2004.

On the other hand, fuelled by upgrader demand, Singaporeans' proportion of home buying increased from 79 per cent of total caveats lodged in Q4 last year to 84 per cent in Q1 - the highest proportion since Q3 2001. PRs' 10 per cent share of home buying in Q1 was the lowest since Q4 2004. There were hardly any caveats lodged by corporate purchasers in the first quarter.

'We're seeing more queries from Indonesia and North Asia. They can see the pick-up in buying by Singaporeans and want to ensure that they will also benefit should the market turn around soon,' said DTZ executive director Ong Choon Fah.

Market watchers also observed that generally, foreign buyers' share of total private residential property purchases picks up when prices are escalating and dips during the lull periods. For instance, for each quarter of 1998 during the Asian Crisis, the figure ranged from 4 to 6 per cent. And during the recent height of property buying fever in 2007, foreign buyers' share ranged from 12 to 15 per cent each quarter.

DTZ's Mrs Ong said that with capital appreciation figuring as a major goal for foreign property investors, they would prefer to enter the market on upswings. 'Foreign buying will continue to improve in tandem with the increase in home sales activity, assuming sentiment on the stockmarket remains upbeat and overall confidence returns.'

Foreigners bought 31 per cent more homes in the subsale market in Q1 2009 than in Q4 last year. They picked up 16 per cent more units from developers, Q-on-Q, and 2 per cent more in the resale market. As a result, the subsale market accounted for 27 per cent of private homes acquired by foreigners in Q1; this share was at a 10-year high.

Subsales and resales refer to secondary market deals. Subsales involve projects that have yet to obtain Certificate of Statutory Completion (CSC) while resales relate to projects that have received CSC.

Jones Lang LaSalle head of residential Jacqueline Wong said that foreigners may have been increasingly drawn to the subsale market to pick up properties in Q1 as property launches in the luxury market have almost come to a halt.

'So if foreigners want to buy something prime, they have to turn to the secondary market. They're interested in projects like Ardmore II as well as completed developments like Ardmore Park, Grange Residences and Draycott 8 that lease well,' she added.

DTZ said: 'The appeal of subsale units to foreigners could be due to immediate availability for occupation for newly-completed ones. Seventy per cent of total subsale units bought by foreigners have been granted Temporary Occupation Permit, mostly in H2 2008 and Q1 2009.'

DTZ said that while homes in districts 9, 10 and 15 remained popular with foreigners, they are increasingly more inclined to buy mass-market and mid-tier projects in suburban areas. Projects with the largest number of foreign buyers in Q1 were The Lakeshore and Caspian, both near Jurong Lake.

As for PRs, their purchases of homes directly from developers surged from 33 in Q4 last year to 115 units in Q1, as most of the mass-market launches during the period appealed to them, DTZ said. The primary market accounted for 36 per cent of homes bought by PRs in Q1 2009, double the 17 per cent share in the preceding quarter. Districts 22, 15 and 23 were the most popular among PRs, whose top picks were Caspian (in District 22) and Alexis.

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Published June 3, 2009

Rise in home buyers from China and India

Indonesians' share of Q1 buys slips; Malaysians are biggest buyers

By KALPANA RASHIWALA


(SINGAPORE) Mainland Chinese were the second largest group of overseas buyers of private homes in Singapore in the first three months of this year.

They accounted for 18 per cent of the 490 caveats lodged for private home purchases in Q1 by foreigners and Singapore permanent residents, compared with an 11 per cent share in the preceding quarter.

On the other hand, the proportion of Indonesian buyers dwindled from 24 per cent in Q4 2008 to 14 per cent, their lowest share in over a decade, according to property consulting group DTZ's analysis of caveats captured by URA's Realis system as at May 29.

'This is due in part to the poorer sentiments in the upper mid-tier and luxury segments which had traditionally generated interest from the Indonesians,' suggests DTZ's senior director and head, SEA Research, Chua Chor Hoon.

Malaysians had the lion's share or 26 per cent of total private homes acquired by foreigners and PRs in Q1 2009, replacing Indonesians who had enjoyed the pole position in Q4 last year.

Indians' contribution also rose from 9 per cent in Q4 2008 to 14 per cent in Q1 2009.

DTZ reckons the rising affluence of mainland Chinese and Indians will see them playing a more significant role on the Singapore property front.

More than 80 per cent of Indians and Malaysians and 60 per cent of the mainland Chinese who invested in private homes on the island in Q1 this year were Singapore permanent residents. In contrast, only 40 per cent of Indonesians who bought in Q1 were Singapore PRs.

The Indonesians, however, seem to have bigger budgets. Forty per cent of Indonesians purchased homes above $1 million in Q1, compared with less than 30 per cent for Malaysians, mainland Chinese and Indians.

Jones Lang LaSalle head of residential Jacqueline Wong said: 'Some private bankers are asking us for help to source for prime residential properties in Singapore for clients from India, Hong Kong and Indonesia. They generally want to buy prime properties, though not necessarily luxury. Some are looking for firesale prices, but fortunately or unfortunately, there are not many in the prime districts.'

Knight Frank executive director (residential) Peter Ow said foreign buyers from the region will return to the Singapore property market in stronger fashion once they see clearer signs of economic recovery in their home markets.

'They want to park their money in Singapore for the usual reasons like stability and transparency; they're waiting for clearer signs that prices are picking up before they enter the market,' he added.

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