The recent unwinding of government measures is possibly one of many in the pipeline to stoke buyer confidence in Singapore’s property market scene. And like many locals, many foreigners are turning their attention to private residential properties here.
As it is, buyer interest among foreigners have already picked up, even though very subtly. According to information from Urban Redevelopment Authority (URA), foreign buyers in the private residential market grew from 6.7% to 6.9% in the first quarter of the year. This indicates the second consecutive year-on-year growth.
What are foreigners buying?
Based on caveats lodged last year, Chinese nationals accounted for most foreign transactions. Indonesians, Malaysians and Americans took the subsequent spots. Among these nationalities, it is worth noting that Malaysian’s buying interest is perhaps the most stable given the proximity of Singapore to the home country, and the availability of the High Speed Rail (HSR) line in the near future.
With private property prices seemingly bottoming, foreign investors buying is focused on potential price upside. In 2016, about 61% of 1,078 purchases were located in the Core Central Region (CCR). Transactions were predominantly in prime districts 9 and 10, with addresses like Cairnhill Nine, OUE Twin Peaks and Sophia Hills being more popular.
It was observed Indonesians and Malaysians preferred prime districts. For OUE Twin Peaks in Orchard Road, Indonesians made up the bulk of foreign buyers, with purchases amounting to about S$4 million in the first phase of sales.
It also helped that developers offered discounts and initiatives such as additional buyer’s stamp duty (ABSD) absorption to incentivise foreign buyers.
Apart from prime districts, foreigners also took an interest in private properties near MRT stations and the Jurong Lake District. Comprising mostly Chinese buyers, suburban homes are preferred as they are more affordable.
In terms of unit sale price, Chinese buyers paid from S$750 psf to S$1,700 psf. Indonesians, on the other hand, had a higher budget. Their purchases were mostly above S$1,400 psf. A significant portion even purchased at above S$2,000 psf.
Interest in luxury private properties
Late last year, a spokesperson from JP Morgan cited that Singapore’s extremely high-end properties are cheap compared with similar luxury properties in other major capital cities. And this is an attractive proposition among foreigners who have a genuine interest to invest in high-end properties.
One of the reasons why Indonesians are buying Singapore properties is confidence in Singapore’s sound infrastructure, as well as social and economic stability. On the whole, Singapore possesses a good investment climate.
He also noted that paying S$2,000 psf for a freehold luxury property is a far cry from luxury property prices in cities like London.
Following the imposition of the ABSD, foreigners have taken a step back from Singapore private properties. But there is no doubt that there is pent-up foreign demand for attractive investment opportunities here. Whether the government will fan foreign buying sentiment by further relaxing measures is something to watch.