Published November 24, 2010
China buyers home in on S'pore properties
Their presence is growing; more may come in as HK, China cool markets back home
By EMILYN YAP
(SINGAPORE) Home hunters from China are becoming a force to be reckoned with in Singapore, and their presence could grow further as the authorities on the mainland and in Hong Kong clamp down on real estate speculation.
Analysing the caveats lodged, property consultancy DTZ found that the Chinese accounted for 20 per cent of private home transactions involving foreigners and permanent residents (PRs) in the third quarter. This proportion is the highest since official data was available from 1995.
The Chinese became the second-largest group of non-Singaporean buyers, on a par with Indonesians. Malaysians took top spot with a 21 per cent share, and Indians ranked fourth with 14 per cent.
On the whole, foreigners and PRs accounted for 23 per cent of the 7,888 private-home transactions in the third quarter.
Singaporeans bought the majority of homes and had a 73 per cent share. Companies were involved in the remaining 3 per cent.
The presence of Chinese buyers has grown significantly since 2007, DTZ said. Just a quarter earlier in Q2, they made up 17 per cent of non-Singaporean private home buyers, coming in third behind Malaysians and Indonesians.
Their share of transactions 'may go up further as recent property market curbs in China could prompt more mainland Chinese buyers to turn their attention overseas', DTZ said.
The Chinese government has introduced a raft of rules to cool the property market in the last few months. These include a suspension of mortgages for third homes, higher interest rates, and larger down payments for homes. A property tax is now said to be on the cards.
Hong Kong has also stepped up efforts to weed out property speculators.
Just a few days ago, the authorities imposed a special stamp duty on property transactions with short holding periods - those reselling their properties within six months would be taxed as much as 15 per cent of the total transaction amount.
Chinese buyers are probably expecting limited upside from investing in property at home as more measures come into play, said Credo Real Estate executive director Ong Teck Hui. As a result, some of them could turn to Singapore.
Anecdotally, quite a number of Chinese also buy property in Hong Kong, so rule changes there would also have an effect, he added.
Savills residential director Phylicia Ang agreed that policy tightening on the mainland could lead more Chinese property buyers here. But she pointed out that many purchase homes in Singapore not so much for investment, but because they become PRs or have family members studying here.
'Singapore is one of those cities that they are comfortable with,' said Knight Frank managing director (residential services) Peter Ow.
A number of them become acquainted with the property market here through their private bankers or local developers with offices in China, such as Far East Organization, he added.
The topic of foreigners buying property in Singapore is a touchy one, especially at a time of rising home prices. Singapore has introduced several measures to keep the property market stable since September last year.
On Monday, Finance Minister Tharman Shanmugaratnam said that 'the government will continue to monitor the situation closely and take additional steps, if necessary, to ensure financial stability and sustainable asset markets'.
Most property consultants do not expect the authorities here to tighten policies as sharply as Hong Kong did - at least for the time being. The rate of price escalation for non-landed private homes has slowed in the third quarter and the government may wait to see how prices move for the rest of the year, said Credo's Mr Ong.
The market will be watching CapitaLand's launch of D'Leedon closely for signs of where private home prices are headed. A preview of the project is said to be taking place this week, with asking prices mostly above $1,600 per square foot.
Source: www.businesstimes.com.sg
