Business Times: Mon, Dec 05
(SINGAPORE) Transactions in Singapore's high-end residential market, such as upmarket apartments/condos in choice districts and bungalows on Sentosa Cove, have fallen this year, but non-permanent resident foreigners' share has gone up for both categories of properties, according to Savills Singapore.
Analysts attribute the increase partly to mainland Chinese fleeing restrictions on property buying in their home market and instead parking their monies in Singapore's property market. As well, some investors may be inclined to escape the economic gloom in Western economies and to favour the relatively healthier economies in Asia. Singapore stands out as a property buying destination in Asia for its transparency, political stability and relative safety.
Savills' analysis found that in the first 11 months of this year, 1,285 caveats were lodged for apartments and condos in districts 1, 4, 9, 10 and 11 priced at least $2,000 per square foot of strata area - down 33 per cent from the same year-ago period. The figure for full-year 2010 was 2,156.
However, non-PRs' share of purchases of non-landed homes in these five districts priced at over $1,951 psf (or $21,000 per square metre) has increased from 28.4 per cent last year to 37.8 per cent in the first 11 months of 2011.
The latest figure surpasses the 31.1 per cent in 2007 and 33.2 per cent in 2008 - during the earlier foreign buying frenzy. Savills' analysis, which was based on URA Realis caveats data as of Nov 30, also showed that on the total foreign buying pool (PRs and non-PRs combined), Indonesians have been the top buyers since 2007.
Their share of the total number of caveats (including purchases by Singaporeans and companies) edged up from 15.4 per cent in full-year 2010 to 16.4 per cent during Jan-Nov 2011. However, the 236 upmarket apartments/condos they have bought this year is about 35 per cent shy of the 363 units they acquired in full-year 2010.
On the other hand, the number of upmarket apartments picked up by mainland Chinese has risen from 136 for full-year 2010 to 170 in Jan-Nov 2011. Their share of total buying also doubled from 5.8 per cent to 11.8 per cent.
A longer-term comparison reflects a similar picture. The number of high-end apartments bought by Indonesians has roughly halved from 438 in 2007 to 236 in Jan-Nov 2011, while the number of caveats lodged by mainland Chinese has quadrupled from 43 to 170.
Indians - who did not even feature among the top five nationalities of foreign buyers in 2007 - were the fourth largest foreign buyers of high-end apartments in Jan-Nov 2011, with 31 caveats or a 2.2 per cent share of total purchases.
Credo Real Estate executive director Ong Teck Hui observed that traditionally Indonesians have been the predominant buyers of high-end apartments in Singapore. But recently, the Chinese and Indians have increased their presence in this segment, as wealth levels rise on the back of strong economic growth.
As well, property buying curbs in China are driving some mainland Chinese to park monies in Singapore, he added. 'Overseas Chinese buyers are also finding that they fit hand-in-glove in Singapore because of the ethnic similarity. When they walk into a showflat here, they find sales people speaking to them in Mandarin, and sometimes even entertaining them with a nice Chilli crab dinner,' he quipped.
Over at Sentosa Cove (where foreigners don't need to be PRs to qualify to buy landed homes), the Chinese are the biggest foreign buyers (PRs and non-PRs combined) of bungalows. They purchased five of the total 20 bungalows transacted in Jan-Nov this year. Singaporeans bought eight bungalows.
As a whole, non-PR foreigners picked up seven bungalows in the upscale waterfront housing district in January-November 2011, giving them a 35 per cent share of total purchases, up from their 33.3 per cent share in full-year 2010.
Savills' analysis found that the average price of bungalows transacted on Sentosa Cove has risen 11.1 per cent from $1,910 psf on land area for full-year 2010 to $2,122 psf for January-November 2011. In absolute dollar quantum, the average price per bungalow transaction has appreciated 7.7 per cent from $17.1 million to $18.4 million. The total number of Sentosa Cove bungalows transacted has slipped from 54 last year to 20 in Jan-Nov 2011.
Steven Ming, executive director of Savills Prestige Homes, expects transaction activity in Singapore's high-end residential sector to remain subdued in the next few quarters against the backdrop of a turbulent global economy.
'But the market should continue to attract regional and global high net worth clientele interest, as they look for safe havens to store their wealth. Singapore is one of the two AAA-rated countries in Asia,' he added.
Source: Business Times © Singapore Press Holdings Ltd.
Martin Koh/ Sherry Tang