http://www.straitstimes.com/Money/St...ry_807951.html

Non-residential units: Foreign interest flat

Published on Jun 7, 2012


FOREIGNERS here are not turning in large numbers to invest in commercial and industrial property in the wake of tough measures affecting residential property.

Recent figures show only a slight rise in these investments by foreigners since the hefty 10 per cent additional buyer's stamp duty (ABSD) on residential property was imposed last December.

A report by R'ST Research director Ong Kah Seng found foreigners, including permanent residents, bought 11 strata shops in the final quarter of last year, rising to just 13 in the first quarter.

From January to last month, foreign buyers bought 33 units in this category. This works out to just 7 per cent of the 489 units sold in total over the five months.

A similar picture emerged for factories, including landed and strata-titled ones. Foreigners bought 22 units in last year's final quarter and 29 in the past quarter.

In this year's first five months, foreigners bought 41 units, just 4 per cent of the 930 units of total purchases in this category.

Mr Ong said the proportion bought by foreigners is still small.

'Singaporeans and companies still made up the bulk of buyers, which has always been the case.'

One exception was strata offices. From January to last month, foreigners picked up about 43 units - or 16 per cent - of a total of 266 that were bought. In the fourth quarter of last year, they bought 12 units, which rose to 30 units in the first quarter.

As well as the 10 per cent ABSD applying to foreigners, PRs now pay an additional 3 per cent on a second home purchase.

The new impost took a toll. In last year's fourth quarter, 2,234 private homes were bought by foreigners, including PRs. This fell to just 1,317 in the first quarter.

Mr Ong said many foreigners know little of the technical aspects of non-residential sectors.

'(This is) unlike private residential properties which foreigners buy in the hope of long-term capital appreciation, investment, or as a holiday home... As commercial and industrial properties don't offer the possibility of owner-occupation, it remains unpopular with foreigners,' he added.

Still, among the non-residential property choices, strata offices saw the most obvious increase in interest from foreign buyers on the back of several key launches, such as Eon Shenton.

'Strata offices are perceived to have higher investment potential through Singapore's tested commercial viability. (They) also match the price range of deep-pocketed foreign property investors,' Mr Ong said.

He pointed out that some buyers may have bought the units in the hope of expanding their business operations to Singapore.

In comparison, industrial units have not stood out because of the 'general perception that manufacturing here is among the least competitive in the region compared with lower-cost Asian countries'.

Also, Mr Ong noted that the bulk of end-users for strata shops tends to be local and smaller establishments, rather than foreigners.

Strata offices are likely to hold their own compared with shops and factory units.

'Foreign buyers who find it hard to enter the private residential market here will continue to be on the sidelines instead of hastily jumping into a non-residential property purchase,' Mr Ong said.

'(Some might have) turned from Singapore to a slew of attractive properties in cities like London and Melbourne, as these places have generally attractive homes on offer,' he said.

AMANDA TAN