For the last decade, Singapore’s property market has attracted numerous foreign investors,
including notable names like inventor James Dyson, Facebook co-founder Eduardo Saverin,
and actors Jet Li and Jackie Chan.
And now, one report has named Singapore the top real estate investment prospect in Asia Pacific.
So what makes this city-state, which is smaller than Hong Kong, so attractive to investors?
Singapore has long been considered one of Asia’s biggest financial hubs, ranking 4th
in the Global Financial Centres Index in 2019, just below New York, London and Hong Kong.
It has also ranked as the world’s best business environment for nearly a decade.
Its competitive workforce, low corruption and developed infrastructure also make the
country appealing to investors.
In fact, demand for office space across Asia Pacific countries was is expected to go up by 2.4% in 2019.
And Singapore is predicted to outperform.
To learn more, I caught up with Yeow Chee Keong, a real estate analyst, to discuss emerging
trends in the property market.
Singapore is ranked number one as the investment city of choice.
We are compared to places like Sydney, Melbourne, Ho Chi Minh, Thailand, Beijing, Tokyo and
so on and so forth.
So when we look at the cities in terms of trends would be, the core assets would be your commercial.
Then you look at the major asset classes, would be things like your retail, your hospitality and your logistics.
So if you’re ranked number one, is it a good or bad thing?
I will say that it’s good, because it reflects that the policies that we have, the stable
environment, the legal structure is good. Investors like Singapore assets.
The availability of office spaces in Singapore is at an all- time low, with conglomerates
like Dyson joining the likes of Microsoft and Unilever in establishing headquarters in Singapore.
The stable political climate in Singapore makes it a haven for investors too.
A decade ago, Hong Kong was 2nd in the same report ranking investment prospects for real estate
in the Asia Pacific region.
It has since dropped 12 spots in 2019, and is expected to decline further to rank 22 in 2020.
Just three years ago, Singapore took 21st place, but it's now jumped straight to the top spot.
So is capital flowing from Hong Kong to Singapore?
The simple answer is yes, based on the banking reports, you can see that it’s flowing through
Singapore and investing in the region.
Will it be sustainable?
I do not know because this market is small and we came in first because there’s quite
a bit of capital inflows. Notwithstanding that there’s uncertainty in the market, like the trade tension.
But buyers aren’t just focusing on retail and office spaces.
The residential sector remains appealing for international investors as well. This is
despite the government’s abrupt decision in 2018 to raise stamp duty rates for foreign buyers to 20%,
among other property cooling measures.
To find out more about the different kinds of properties one can purchase, I’m meeting
up with property agent Melvin Lim from Singapore.
How much is this home going for?
Alright, so this home, we’re putting it up for sale at $11 million dollars.
So landed properties, they fall under this portion called the restricted properties.
For foreigners, if you want to buy a restricted property, you will need to have special approval
from Singapore Land Authority.
You need to be a permanent resident.
The key determinant point will be whether you have economic contribution to Singapore,
usually approved on a case-by-case basis.
HDB flats are meant for Singaporeans.
Of course, Permanent Residents, they can buy as well.
The fact that Singapore has zero inheritance tax is one of the key reasons that foreigners
want to park their funds here to own property assets here, so that in future they can pass on to their children.
So this house is classified as what property?
This is classified as a condominium.
Price tag is about $3 million.
So, condominiums fall into the category that everybody can buy.
It’s spread across different types of citizenship status.
So, Singaporeans can buy, PRs can buy, foreigners can buy as well.
The only key thing to note is that the taxes are different.
There are a few countries that fall within the Free Trade Agreement.
So they technically do not have to pay the Additional Buyer’s Stamp Duty of 20%.
This includes citizens and permanent residents of Iceland, Lichtenstein, Norway and Switzerland,
as well as United States nationals.
But generally, there is no limit on the number of private apartments or condos that a foreigner
may buy in Singapore.
It’s no surprise that even public figures and notable names have properties here.
The most expensive was a record-setting penthouse bought by British billionaire James Dyson
for a cool $54.2 million.
Despite the high prices, opulent houses remain attractive in Singapore.
From the “billionaire haven” of Sentosa Cove to the high-rise suites in the Orchard
Road neighborhood, the average residential property price in Singapore is more than $870,000,
below Hong Kong, which hits more than $1.2 million.
That makes Singapore the world’s second priciest city to buy a home.
Nonetheless, big investors are undeterred.
Christine Sun, a property analyst, explains to me why.
For the past few months, there seems to be more and more foreigners coming in to buy
private properties, especially the luxury properties.
They are termed as prized assets.
Perhaps they see that this is a golden opportunity.
We are looking at people who are buying right now, they are the ones who can really afford to buy.
So I don’t think they are over-leveraging or there is a high risk that the property bubble will fall.
But I also wanted an investor’s perspective.
So I met up with famed financier Jim Rogers at his Singapore home.
Property throughout much of Asia is very expensive.
And that’s partly because interest rates are very low.
Interest rates have never been this low.
Worldwide, interest rates will be going higher, and that’s going to affect most property.
Five years ago, if people were thinking of moving to Asia, or opening in Asia, Hong Kong
was on the list. Hong Kong’s not on the list anymore.
Maybe people won’t leave Hong Kong, but new people are not going to go to Hong Kong,
because they say, well, who knows what might happen?
So what’s happening in Hong Kong is good for Shenzhen, it’s good for Singapore.
Singapore has many things going for it anyway.
The currency’s convertible, easy place to do business, easy place to start a business.
The regulations are good in Singapore.
Quality is very, extremely important in any investment, especially property.
Price of course, and location.
Unless you have enough money and time to rebuild something, there’s a lot of quality property in Singapore.
As a heavily export-driven country, Singapore is vulnerable to geopolitical and trade tensions.
And as Singapore heads toward its next general election, it is likely that property prices
would be a big talking point. This could affect domestic policies. And as the cloud
of uncertainty continues into 2020, it remains to be seen if the investment prospects
in the Republic can be maintained.