Published May 18, 2006

PR purchases of HDB flats on the rise
Such transactions have more than doubled for some property firms


(SINGAPORE) Foreigners may be boosting the high-end property market but Singapore's permanent residents are helping out on the public housing front.

Sustaining the market: Interest by PRs expected to lead to more demand for resale flats

The Housing and Development Board (HDB) does not state the number of Singapore permanent residents (PRs) who own HDB flats but a check with leading property consultants show that this is on the increase, even doubling.

ERA Real Estate vice-president Eugene Lim says that looking at in-house data at the five months from January to May last year, transactions by PRs more than doubled from 540 to 1,300. And Mr Lim estimates that at least 50 per cent are from Malaysia, followed by about 30 per cent from China.

'From what I gather, the number of PRs buying does seem to be increasing and one factor could be an increase in the number of PRs from China,' he added.

PRs can only buy HDB flats sold on the resale market and Mr Lim is heartened by the numbers. He says: 'It's good as it helps to sustain the market. It means there is more demand for resale flats.'

The latest population figures from the Department of Statistics date back to the 2000 Census of Population in which PRs are said to number 290,118, up from 112,132 in 1990.

Five years can, however, change the population demographic significantly.

An analysis of in-house data by Propnex over the last six months shows that PRs from Malaysia are responsible for the majority of PR transactions and that PRs from India come in a close second.

According to Propnex, 179 PRs from Malaysia bought HDB flats since October 2005 while 170 from India also bought into public housing here. PRs from China bought 113 units.

Again, there is no definitive explanation for these numbers but as for the high number of buyers from India, Propnex CEO Mohamed Ismail believes it could be due to the influx of Indian executives into the IT industry here. Mr Mohamed also notes that rather than renting, 'from a cultural point of view, Indians prefer to buy'.

Saying that buying patterns of PRs deserve more scrutiny, his own analysis shows the breakdown of preferred housing estates by PRs from different countries. Woodlands seems to be the preferred choice of PRs from Malaysia.

Mr Mohamed also notes that buying could make more financial sense for PRs. For instance, Singaporean homeowners with a HDB three-room flat approved for rental can bring in about $750-800 per month in rent. In more central locations, this could be as high as $1,100. By Mr Mohamed's reckoning, the monthly instalment for a purchased three-room flat might only be about $600.

And PRs may have Central Provident Fund (CPF) savings. 'Their CPF would be idling otherwise,' Mr Mohamed adds.

There is also the potential for making a profit from capital appreciation. 'It makes sense for a PR to invest by buying a property because, based on previous peak prices, current prices are still 40 per cent lower.'

Propnex can rejoice in its steady stream of PR customers. It has averaged of about 100 such clients every month over the last six months. This is about 10 per cent of the company's total business.