Huttons Asia: Singapore residential market to see gradual increase of Chinese buyers in 2023

January 20, 2023

The local property market was abuzz when the Chinese government announced the end of its strict international travel requirements and pandemic-related quarantine rules from Jan 8. The expectation is that Chinese property buyers will return to Singapore en masse to reinvest in real estate again. However, a report by real estate agency Huttons Asia shows that the rebound in Chinese-based property investors could be more gradual than initially anticipated.

With the reopening of borders and removing quarantine restrictions in China, hotels and travel agencies have reported a surge in enquiries from of China-based travellers, as international travel is expected to boom over the coming Lunar New Year festive period, which officially starts on Jan 22. Some popular destinations in the Asia Pacific region for Chinese travellers include Thailand, South Korea, Singapore, Malaysia and Australia.

Still, Huttons Asia says the economic environment is more unfavourable as global interest rates continue to climb. Singapore’s headline inflation has increased by about 6.7% y-o-y as of November 2022, and property prices have similarly climbed by 8.4% y-o-y for 2022, while the three-month Sora rate was 3.0019% as of Jan 9. Sora refers to the Singapore Overnight Rate Average, the interest rate benchmark.

This year’s buying sentiment among foreign buyers — including those from China — is expected to remain cautious amid economic uncertainties and the “prohibitive” 30% ABSD, which will likely cap overall foreign buying demand this year, adds Huttons.

Transaction data compiled by the company shows that Chinese buyers’ residential property purchases in Singapore stood at 1,637 in 2011. This dropped 62.2% y-o-y to 618 units sold in 2012 as the government introduced an additional buyer’s stamp duty (ABSD) of 10% on foreign buyers as part of the property cooling measures in December 2011 to moderate demand among foreign home buyers. Subsequent property cooling measures raised the foreign buyers’ ABSD from 15% in 2013 to 20% in 2018. In 2021, the ABSD rose to 30%.

This transactional stamp duty has not kept some deep-pocketed Chinese buyers from investing heavily in prime Singapore residential properties. In June 2022, EdgeProp Singapore reported that an unnamed Chinese buyer purchased 20 units at the new luxury condominium Canninghill Piers at Clarke Quay. The bulk deal is more than $85 million, or an average price of approximately $2,773 psf, and the units are mostly three- and four-bedroom units across several stacks.

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