More good signs that the property market in Singapore is on the up, comes from recent statistics showing that the number of foreign investors returning to these shores and buying property is increasing.
On average the number of transactions carried out by foreigners every year, is approximately 2,200. The number of annual transactions rose to as high as 3,600 between 2010 and 2013, but then largely due to the introduction of the 15% ABSD in 2012, that number has been falling. 2017 saw around 1,600.
Percentage wise, the number of foreign purchases last year was 5.6% compared to an average of 8.7%.
Evidence suggests that the trend is being reversed however. The URA released figures showing that the number of caveats lodged by foreigners in the first half of 2017 increased by almost 50% from the same period a year earlier. This is backed up by Eli Lee, the head of strategy at the Bank of Singapore. Mr Lee stated he expected foreign buyers to return in numbers to give a further boost to the property market that has seen definite improvement of late. Those improvements have been largely fuelled by an upturn in domestic transactions. An increase by foreign investors will help to push through that momentum, especially in the higher value end of the market.
There are several reasons why this is happening. First of all, property prices in Singapore have fallen by 12% since 2013. That is not the case with places that are alternative locations for investors’ money. In cities such as London, Tokyo, Sydney and Hong Kong, property prices have continued to rise during that period. Now that prices are starting to rise in Singapore, it represents an ideal time to purchase relatively well valued properties.
Though rent and lease prices have also fallen during that time, it is not something that is likely to derail the increase in foreign investment. The vast majority of those buying property on the island are far more interested in the capital appreciation that they get from the property, than they are in its yield.
The countries from where these foreign investors are from also makes for interesting reading. Once again according to URA statistics, the top five nationalities of those buying Singapore Condos in 2017 were:
1. Chinese
2. Malaysian
3. Indonesian
4. Indian
5. American
From 1 through to 4, the majority of those investors bought properties valued at between S$500,000 and S$1 million, though with the group from the United States, the majority bought property priced between S$1 million and S$1.5 million. The inclusion of American investors is notable for a couple of reasons. Firstly, the places where they are buying property differs from the others on the list. Whereas those from Asia tend to buy in the North East and Central regions, Americans prefer to go for properties located in Districts 9, 10 and 15 above all others.
Secondly, American investors are eligible for ABSD remission. Which brings us to a note of caution. Though many industry experts are at least cautiously optimistic that the foreign investors will continue to return, the one main reason that deterred them in the first place is still very much there – ABSD. There are some who think this prohibitive measure will prevent them coming back in the numbers seen previous to its introduction.
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