Fewer luxury homes sold to foreign buyers

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http://www.straitstimes.com/archive/...uyers-20130524

Fewer luxury homes sold to foreign buyers

Indian, Chinese and Indonesian buyers retreated in first quarter

Published on May 24, 2013

By Melissa Tan


INDONESIANS retreated from the luxury home market in the first quarter to a much greater extent than buyers from China, India and the United States.

DTZ Research said Indonesian buyers bought 11 resold homes costing over $5 million in the three months to March 31, down from the 22 purchases made in the last quarter of last year - a fall of 50 per cent.

Chinese buyers, who were the most represented foreign nationality in this segment, made 14 transactions, down 12.5 per cent from the preceding quarter.

Buyers from India bought two resale homes worth over $5 million in the quarter, down 60 per cent from five purchases in the preceding three months.

American buyers bought five properties, up from just two in the previous three months - a rise of 150 per cent.

US buyers do not have to pay the 15 per cent additional buyer's stamp duty (ABSD) imposed on foreigners buying private property, due to clauses in the free trade deal that the country has with Singapore.

Overall, the absolute number of resale transactions shrank in January through March, but the drop was the smallest for foreign buyers.

Foreign purchases in the resale market dropped 19.8 per cent from the preceding quarter while transactions by Singaporeans declined 44.4 per cent and those by permanent residents (PRs) fell 40.5 per cent.

If new sales were included, the number of foreign purchases slid 6.6 per cent from the preceding quarter to 562 units, while purchases by Singaporeans plunged by a sharper 37 per cent to 4,129 units. Deals by PRs tumbled 33.4 per cent to 963 units.

As a result, the proportion of total purchases by foreigners rose moderately from 6.9 per cent in the final quarter of last year to 9.9 per cent in the first quarter of this year, which is higher than last year's quarterly average of 6.4 per cent.

"This could be due to foreigners getting accustomed to the ABSD which was already imposed on any purchase by them after December 2011," DTZ said.

Singaporean and PR buyers have been deterred by the January cooling measures.

Singaporean demand fell the most as these buyers now have to pay ABSD upon buying their second and subsequent properties, DTZ noted.

Also, PRs who own a Housing Board flat must sell the unit within six months of buying a private home.

However, the proportion of foreign buyers is still below the quarterly average of 17.5 per cent in 2011 before the ABSD was introduced.

Popular projects among foreign buyers for new sales included d'Leedon, where they snapped up 85 units, Echelon with 26 sales, Eco Sanctuary, where they picked up 21 apartments, and Q Bay Residences, which sold 15 homes to foreign buyers.

DTZ expects investment demand from individuals to fall this year due to higher stamp duties, stricter financing restrictions and slower rental growth.

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http://www.businesstimes.com.sg/arch...deals-20130521

Published May 21, 2013

Foreigners' share slips in private home deals

April's fall to 20.8% follows recovery to 26.7% in March from Feb's 23.3%

By Kalpana Rashiwala


THE proportion of private home transactions involving foreign buyers (including Singapore permanent residents, or PRs) slipped to 20.8 per cent in April, after recovering to 26.7 per cent in March.

In February, their share dived to 23.3 per cent following the seventh round of property cooling measures that took effect on Jan 12.

In January, foreigners had accounted for 28 per cent of caveats lodged for private homes purchased in Singapore, shows Knight Frank's analysis.

Conversely, Singaporean buyers' share increased, from 72.5 per cent in March to 78.3 per cent in April - highest monthly share in a year.

These trends are due to the number of caveats for private homes lodged by Singaporeans rising at a faster clip than purchases by foreigners.

In April, Singaporeans lodged 1,528 caveats, up 62 per cent from March. The number of caveats lodged by foreign buyers rose 16.4 per cent month on month to 405 in April.

Alice Tan, Knight Frank's head of consultancy and research, attributes the bigger jump in caveats lodged by Singaporeans last month to a slew of private residential launches in March especially in the suburban mass-market segment.

Such projects appealed relatively more to Singaporeans, particularly first-time buyers who have been left unscathed by the cooling measures.

As some of the options granted by developers in March would have been exercised by buyers in the following month and caveats lodged shortly thereafter, this could have accounted for the spike in caveats lodged by Singaporeans in April.

On a quarterly basis, the total number of caveats lodged for private home purchases fell 34.4 per cent, from 8,725 in Q4 last year to 5,721 in Q1.

Caveats by Singaporean buyers declined 36.6 per cent quarter on quarter to 4,153 in the first quarter - a bigger percentage drop compared with the 25.3 per cent fall in purchases by foreigners.

Hence the foreign buying share increased to 26.8 per cent in Q1, from 23.5 per cent in Q4 last year and 22.2 per cent for the whole of last year.

Giving a further split of foreign buyers, Knight Frank said the increase was mainly attributed to a rise in proportion of non-PR foreigners, who accounted for 9.9 per cent of total caveats lodged in Q1 2013, compared with 6.9 per cent in Q4 2012 and 6.4 per cent for the whole of 2012.

Ms Tan predicts that the proportion of Singaporean buyers is likely to increase for the second and third quarters of 2013 as they seek new homes from the upcoming projects slated for launch over this period.

"Conversely, the share of foreign buyers is projected to decline, as they are affected by the higher purchasing cost (higher additional buyer's stamp duty rates) and would adopt a more measured approach before investing in the Singapore residential property market.

"Nonetheless, foreigners remain attracted to Singapore's stable fundamentals and their interest for private homes would stay," she added.

International Property Advisor's CEO, Ku Swee Yong, when asked what is currently at the topmost in the minds of potential foreign buyers, said: "Some still can't get over the fact that they have to pay 18 per cent in total buyer's stamp duty to make a residential property purchase in Singapore. And they are still waiting for a more across-the-board price correction, especially in the luxury sector."

Providing a split of foreign buyers by nationality, Knight Frank noted that China buyers retained their No 1 position.

Their share of the foreign buyer pie climbed from 25 per cent in Q4 last year to 29.6 per cent in Q1.

"The recent curbs imposed on the property market in China, compared with the stable fundamentals and the low interest rate environment in Singapore, might have rekindled the Chinese interest in Singapore properties," said Knight Frank.

Malysians remained the second-biggest group of foreign buyers. Their share increased from 22.6 per cent in Q4 last year to 23 per cent in Q1 2013.

Over the same period, Indonesians saw their share among foreign buyers slipping from 21.5 per cent to 19.9 per cent, though they still held on to their third position.

Knight Frank also said that China buyers' share of caveats lodged by foreign buyers, which had spiked from 26.7 per cent in February to 36.2 per cent in March, fell to 28.1 per cent in April. The number of caveats lodged by Chinese citizens fell from 126 in March to 114 in April.

Meanwhile, interest from Malaysian buyers fell initially following the January 2013 cooling measures. Malaysians accounted for 21.5 per cent of total caveats lodged by foreigners in February and 13.8 per cent in March - which are markedly lower than 26.9 per cent in January 2013.

"However, the proportion of Malaysian buyers jumped to 25.2 per cent last month and they contributed 102 caveats, more than twice the 48 caveats in March 2013. This indicates the return of Malysians to secure private homes on the back of a higher number of new project launches with price discounts to offset ABSD (additional buyer's stamp duty) costs," said Ms Tan.