More foreign demand for S'pore homes

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More foreign demand for S'pore homes

Nov 30, 2016

Such transactions rose 11.7% to 782 this year, with buyers from China accounting for most

Wong Siew Ying


Foreigners are jumping back into the private residential property market here in greater numbers, with buyers from China consolidating their position as the top buying group.

In a new report, property consultancy JLL said there were 782 transactions by foreigners in the first nine months of this year, an 11.7 per cent surge year on year. The figure excludes permanent residents.

The largest numbers of buyers came from China, Indonesia, Malaysia and the United States, based on caveats lodged.

"The wealth growth of the Chinese and their increasing familiarity with the Singapore residential market led to them being the top foreign buyers after 2010, overtaking the Indonesians," Mr Ong Teck Hui, JLL Singapore's national director for research and consultancy, said in the report.

Chinese buyers maintained pole position with 230 transactions or 29.4 per cent of all foreign transactions in the first nine months of the year, but their purchases fell slightly from 243 in the same period last year.

They were followed by 114 transactions by Indonesians, or 14.6 per cent of foreign transactions.

Malaysians accounted for 10.5 per cent of foreign transactions with 82 properties, and the Americans were at 7.3 per cent with 57 properties.

JLL noted that the significant increase in the proportion of US buyers - up sharply from 1.1 per cent in 2011 - was attributed partly to their being exempted from the additional buyer's stamp duty (ABSD) under a free trade agreement.

Since December 2011, foreign buyers have been subjected to an additional levy of 10 per cent of the purchase price of the property. The levy was raised to 15 per cent in January 2013, further crimping foreign demand for homes here.

The Government has maintained that the ABSD and other cooling measures continue to be necessary to stabilise the property market.

"This has led to more buyers, including foreigners, becoming decisive and going ahead with their purchases... As they become more accepting of the cooling measures and prices remain favourable, we may expect to see the gradual return of foreign buyers," noted Mr Ong.

JLL found that Chinese buyers preferred homes in the suburban areas, owing to the more affordable price tag, with such apartments making up 58 per cent of their transactions.

Buyers from Indonesia and Malaysia favoured units in the core central region, where many homes are on freehold tenure.

JLL said 68 per cent of transactions by Indonesian buyers and 40 per cent by those from Malaysia were for homes in prime districts.

In terms of unit sale price, purchases by the Chinese and Malaysians ranged from $750 to $1,700 per sq ft (psf), while the higher-budget Indonesians tended to buy above $1,400 psf, with a significant proportion above $2,000 psf, JLL added.

JLL expects the recovery in foreign demand seen this year to continue into next year, and homes in the core central region to remain the preferred choice of foreigners.

"Foreigners are still interested in investing in Singapore's private residential market due to its fundamentals and prospects of long-term capital gains. At the heart of demand is both local and regional wealth growth," said Mr Ong.

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Foreign demand for Singapore property to continue: JLL

By Lee Meixian

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@LeeMeixianBT

Nov 30, 2016


THERE has been good demand from foreigners for Singapore's private residential property this year, and real estate consultancy JLL expects the recovery in foreign demand to continue into 2017. It also expects properties in the prime city centre to be the preferred choice.

According to findings from a JLL study released on Tuesday, the number of foreign buyers, excluding Singapore permanent residents, in the first nine months of 2016 rose 11.7 per cent compared to the same period last year, driven by nationals from China, Indonesia, Malaysia and the United States.

The Chinese buyers were the most active, accounting for 29.4 per cent of all foreign purchases from January to September.

Indonesians were second, accounting for 14.6 per cent of all foreign purchases during the same period.

"Chinese buyers have overtaken Indonesians as the top foreign buyers of private homes in Singapore since 2010 and this can be attributed to the wealth growth of the Chinese and their increasing familiarity with the Singapore residential market," the study pointed out.

It noted the interesting growing prominence of buyers from the US with 57 transactions in the first three quarters of 2016. They took fourth spot and accounted for 7.3 per cent of foreigner purchases - a significant increase in proportion, relative to the 1.1 per cent in 2011.

"US nationals are exempt from additional buyers' stamp duties under the free trade agreement, which partly explains their purchases, although the absolute number attributable to them was even higher in 2013, at 119," the study added.

Among the top foreign buyers in the first nine months of 2016, Indonesians have higher budgets, with most of their deals around S$3 million. They have a strong preference for pricier properties above S$1,400 per square foot (psf) and located in the core central region.

In comparison, Chinese and Malaysians are more budget-conscious as a higher proportion of the properties they picked up were priced below S$1.5 million and within the range of S$750-S$1,700 psf.

In terms of geographic preference, the Chinese are more active in the suburban property market while Malaysians, like the Indonesians, prefer the core central region.

Ong Teck Hui, national director of research and consultancy at JLL Singapore, said Singapore is well-placed to tap on the foreign demand for real estate driven by the growth in local and regional wealth.

He said: "Singapore has remained a popular residential investment destination for foreigners due to its fundamentals and prospects of long-term capital gains. The deterrent effects of the cooling measures is subsiding as the market gradually accepts them as the new norm.

"Moreover, the recent imposition of additional stamp duties on foreign purchases by other popular residential investment destinations such as London, Melbourne, Sydney and Vancouver has levelled the playing field. To top it off, prime home prices in popular residential investment destinations such as Hong Kong, London and New York has continued to climb over the past few years, while those in Singapore have corrected, which has widened the price gap between prime residential properties in Singapore and these cities.

"This has further enhanced the attractiveness of Singapore's prime homes from the perspectives of relative pricing and capital gains potential."