Ever ask yourself who are the foreigners buying properties in Singapore? With high ABSD of 20%, which countries do these foreigners come from and where do they buy.

Foreigners Buying Properties in Singapore

In the top end of the condo market, foreigners buying properties in Singapore may have shown more resilience. The cooling measures introduced in July 2018 have softened overall home-buying demand.

Drawing data from the Urban Redevelopment Authority’s (URA) Realis, a report by ERA Research & Consultancy showed that the number of non-landed private residential units in the Core Central Region (CCR) bought by Singaporeans sank some 38 per cent to 2,427 units after the curbs, while that for foreigners including permanent residents declined by about 30 per cent to 1,264 units. Residential purchases by companies in the same region shrank by nearly two-thirds, going from 142 units to 49 units.

The ERA report covered transactions for non-landed units in Districts 9, 10 and 11, Sentosa Cove as well as Downtown Core.

These area is considered the Core Centre Region (CCR) and excluded both landed housing and executive condominiums. It compared data for the 18 months prior to the cooling measures (January 2017 to June 2018) and the 18 months after the curbs (July 2018 to December 2019), and included permanent residents under foreigners.

Nationwide, the volume of private housing units purchased fell about 23% from 32,866 units before the market curbs to 25,270 units after. The breakdown for Singaporean buyers was a 20 per cent dip while that for foreigners buying properties slumped 32 per cent.

Aside from tighter loan-to-value limits on private home purchases, the latest wave of measures brought higher additional buyer’s stamp duty (ABSD). The ABSD for Singaporean citizens buying their second residential property increased from 7% to 12%. While those purchasing their third and subsequent property have to fork out 15% ABSD, up from 10 per cent previously.

Permanent residents (PRs) have to stump up 15 per cent ABSD for their second and subsequent properties, while foreigners are subject to a 20 per cent ABSD rate on any residential property.

Transactions for luxury condo in SG Singapore

Luxury Residential Real Estate

Zooming in on the luxury residential real estate segment, the ERA report said “foreign buying demand was more resilient than local demand in the face of the latest cooling measures”. This suggest that some foreign buyers are only interested in luxury properties in Singapore. Moreover, they are willing to pay the higher ABSD were high net worth individuals,

The report also state that “Foreigners buying demand in the luxury high-end residential market is more resilience to the cooling measures as compared with the rest of the foreign demand in the rest of the property market. This shows that the strong demand for prime real estate from foreign homebuyers is still relatively healthy in the luxury condo segment.

In absolute terms, “Singapore citizens have always been the largest group of buyers of luxury residential properties in Singapore, even after the 2018 cooling measures”, the report said.

The proportion of local buyers of non-landed residential property units in the CCR was about 65% for July 2018-December 2019. Foreigners buying properties comprised of compared to 34% for foreigners and slightly over 1% for companies.

Separately, some analysts also pointed out that since lodging a caveat is optional. For instance, not all property transactions might be captured in a scenario where the property is paid in full cash.

In particular, the number of properties bought by citizens from seven countries actually went up, ERA’s report showed. These countries are Cambodia, Vanuatu, Cyprus, Dominica, Thailand, Denmark and Spain.

Other Groups of Foreigners

The largest jump in the number of foreigners buying properties came from Cambodia. The total volumes went up nearly 113% from 8 homes to 17 homes. In percentage terms, the number of transactions from buyers from Dominica in the West Indies was the highest, going from one unit to five units, or up 400 per cent.

Christine Li, Cushman & Wakefield’s head of research (Singapore and Southeast Asia), suggested that some China-born new citizens in those territories could be behind these transactions, “as quite a number of countries offer citizen by investment schemes”.

For instance, The Business Times reported in October 2019 that Vanuatu citizen Xie Zhijing was buying a penthouse at TwentyOne Angullia Park for S$32 million.

The Cyprus passport was ranked the eighth most powerful passport in the most recent Passport Index. This may account for which “could have attracted some Chinese investors”, Ms Li went on to add.

Meanwhile, the ERA report showed that the ranking of the biggest group of foreigners buying properties was largely unchanged. These foreigners buying Singapore properties are specifically looking at high-end Singapore luxury non-landed residential private property.  Even as the number of units purchased by buyers from those territories decreased following the cooling measures.

Post-curbs, China nationals bought 380 non-landed units in the CCR. Down about 30 per cent – making them the largest group of buyers of high-end residential units after Singaporeans.

Buyers from Indonesia leapfrogged Malaysia to clinch second spot as they purchased 149 non-landed homes in the CCR. American citizens remained in fourth place, and buyers from Taiwan and Hong Kong rounded off the top five. Buyers from India slid down the rankings from fifth spot previously to 10th. The report noted that they “beat a surprisingly rapid retreat from the CCR market”.

Faced with a heftier ABSD, India nationals might have turned to other emerging markets. They may look at other investment destination, such as Sri Lanka, said Ms Li.

Source: https://www.businesstimes.com.sg/real-estate/citizens-from-new-markets-among-buyers-of-top-condos-here

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