S'pore properties stay on firm ground

Published November 25, 2010

S'pore properties stay on firm ground


YESTERDAY's report by DTZ Research provided yet another confirmation as to why the private property market in Singapore is likely to stay firm. In the report, which detailed Singapore's residential demand for the third quarter, the property consultancy highlighted that mainland Chinese buyers, who have grown significantly in numbers from 2007, recorded their highest share of 20 per cent among non-Singaporean buyers. This puts them on a par with Indonesians as the second largest group of non-Singaporean buyers, after Malaysians who top the list with 21 per cent. Meanwhile, Indian nationals have also expanded their presence significantly from 14 per cent in 2009 to 17 per cent.


Meanwhile, companies too are returning to the market. They accounted for 3 per cent of all transactions in the third quarter, up from 2 per cent in the previous quarter. This is still some way off from their 10 per cent or more share registered in the third quarter of 2007. Overall, the number of private property transactions for the first nine months of this year is about 28,000, and has a high likelihood of exceeding last year's total transactions of some 32,000.

A number of factors could spell continued demand for Singapore private properties. One, the huge wave of liquidity flowing into this part of the world, arising primarily from the quantitative easing in the United States and the poor economic outlook in the West. Meanwhile, other Asian economies, namely China and Hong Kong, in a bid to stop a property bubble from further inflating in their own markets, have introduced numerous cooling measures. That, in turn, will redirect some of the liquidity into Singapore, unless even harsher measures are put in place by the Singapore government. Two, the growing number of rich Asians. According to the World Wealth Report 2010, published by Merrill Lynch Global Wealth Management and Capgemini SA, the number of people with investable assets of US$1 million in the Asia-Pacific region rose 26 per cent to three million, catching up with Europe for the first time. Wealth in the region surged 31 per cent to US$9.7 trillion. China's millionaire club grew by 31 per cent from 2008 to 477,000 people, while India's expanded by 51 per cent to 126,700 people. This trend looks set to continue. This growing group will increasingly want to diversify its investment portfolios. Singapore, with its stable government and socio-economic backdrop and rising 'hipness' quotient, will attract its fair share of funds.

So, should the Singapore government come down hard to stem the inflow of foreign funds? Such a move doesn't quite make sense, given that the government has worked hard for many years to make Singapore what it is today - an appealing place to live in. So, more likely moves include measures to ensure abundance, affordability and desirability of public housing, and perhaps at the same time penalising the inflow and outflow of short-term capital. Properties, it would appear, remain on firm ground in Singapore.

Source:www.businesstimes.com.sg