Foreign Buyers Of Residential Units In Singapore Has Risen
Residential Singapore properties have recently been a high-demand among foreigners, with China being on the top list of buyers.
Property consultancy firm JLL has released a report that there has been a total foreign transaction of 782 within the first 9 months of the current year which is 11.7 percent higher on the previous year. The report does not even count the permanent residents. China is the top buyers of the residential units, followed by Indonesia, Malaysia and the United States.
Mr. Ong Teck, the national director for research and consultancy in JLL Singapore, mentioned that the familiarity of the Chinese people of the country’s residential market has attracted the group to buy more Singapore homes, making them the top after the year 2010. The Chinese group held a total of 230 transactions, or about 29.4 percent of the foreign buyers. Although they are the largest in the first 9 months of the year, the number of transactions accounted the other year of about the same period was 243. This means that the number of buyers slightly decreased.
The Indonesians were the second largest buyers, comprising the 14.6 percent or 114 transactions over all. Next in line is the Malaysian group, taking the 10.5 percent or 82 properties bought. A total of 57 properties or 7.3 percent of the transactions were from the Americans.
JLL added that the reason behind an increased transaction from the American group was due to the free trade agreement, making them exempted from the ABSD (additional buyer’s stamp duty). The privilege allowed an increase of 1.1 per cent of American buyers since 2011.
Beginning in December 2011, foreigners who buy residential units in Singapore are obliged of additional 10 percent of the tax of the amount of property being purchased. This was increased to 15 percent last January 2013 which has caused a decrease of foreign demand for housing. The Singaporean Government will continue to maintain the ABSD to ensure that there is balance in the property market.
Mr. Ong also added that the cooling measures and favorable prices have slowly gained back more foreigners in purchasing Singapore properties.
Moreover, JLL also noted that more Chinese buyers prefer the residential units at the suburban areas, accounting to 58 percent of the total purchases. One of the reasons behind this huge purchase is due to the lower prices compared to properties in the main city.
On the other side, Malaysians and Indonesians prefer to purchase homes in the central region where most of the freehold Singapore properties are located. Overall, 68 percent of properties are bought by Indonesians while 40 percent are transactions made by Malaysians. Most of the homes they purchased are found within the Singapore prime districts.
JLL added that the Chinese and Malaysian groups prefer to buy houses within the price bracket of $750 – $1,700 per square-feet. Indonesians, on the other hand, prefer to purchase homes amounting to $1,400 and above.
Foreign demand for Singaporean homes will continue to surge by 2017, where most of the preferable houses are located in the central region. According to Mr. Ong, more foreigners will be attracted to invest in private residential properties due to long-term gains and strong fundamentals of the market.