The Impact of Hong Kong’s Stamp Duty on Singapore’s Real Estate Market


The Impact of Hong Kong’s Stamp Duty on Singapore’s Real Estate Market

Impact of HK's Stamp Duty on Singapore Real Estate Market

Singapore has been experiencing a housing slump for the past 3 years with steady home prices dropping and a real problem for the real estate market. The dwindling equity in its real estate has created some problems for retail rentals, office space rentals, as well as homes.


But fear not, there is a shining beacon of light at the end of what has been a dark tunnel. And the one holding the light is Hong Kong.


The reason being is that Hong Kong recently implemented a higher stamp duty for overseas buyers. Foreign investors have shown a negative reaction to this increase and are on the lookout for investment opportunities elsewhere. Singaporeans can now look forward to foreign investors returning to Singapore in favor of preserving their capitol and investments on their shores which boast a lower levy.


Hong Kong’s loss may be Singapore’s gain. But before we can make that conclusion, read on to explore what exactly the stamp duty is.


What is the Stamp Duty?

Hong Kong recently increased their stamp duty to a whopping 30%. Like any sudden increase in price, it will affect the demand even when it comes to investments.


Compare Hong Kong’s new stamp duty to Singapore’s, which is only 18%, and this creates an attractive discrepancy for foreign investors. Overseas buyers will likely see this as a viable alternative to protect their investments from the continuing weakening of the Chinese yuan by investing it into Singapore.


This is great news for Singapore’s weakening real estate market!


What is going on with Singapore’s real estate market?

For the past 4 years, home prices in Singapore have been steadily dropping. Some estimated that houses have dropped a huge 11% since 2013. The great hope is for foreign investors to bring their assets over which may help bolster Singapore’s housing market and limit what has been a steady decline.


It’s not a complete saving grace but will lower the negative impact on the Singapore Property market and get Singapore closer to turning the market around. Tentative projections about the real estate market range from a dip of 1 to 2% with some optimistic projections tout a possible slight increase!


There seems to be comforting news on the horizon.


What’s going to happen?

We can’t be sure what exactly will happen but there are some obvious speculations that may prove true. Currently in Hong Kong, rental prices for top tier office space are expected to continue going up as limited space is in high demand. For the next year, rent is expected to increase as much as 5%.


Conversely, Singapore suffers from the opposite problem of having too much office space and not enough demand for rentals. As Hong Kong office space continues to increase, people who can’t afford to keep up may be looking for a viable alternative. In the meantime, Singapore’s sluggish economy isn’t showing strong promising signs for growth so this aspect is unlikely to change.


In the retail market space, rental demands are expected to remain challenging for both Singapore and Hong Kong. They’re likely to remain the same due to uncertain economic growth in this sector and there is no foreseeable change with less domestic demand and a weakening flow of tourism.


With Hong Kong’s stamp duty offering a lifeline to Singapore’s sluggish and worrisome real estate market, this gives Singapore’s real estate market something to lean on.






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