Foreign demand for Singapore property to continue: JLL

There has been good demand from foreigners for Singapore's private residential property this year, and real estate consultancy JLL expects the recovery in foreign demand to continue into 2017.

It also expects properties in the prime city centre to be the preferred choice.

According to findings from a JLL study released on Tuesday, the number of foreign buyers, excluding Singapore permanent residents, in the first nine months of 2016 rose 11.7 per cent compared to the same period last year, driven by nationals from China, Indonesia, Malaysia and the United States.

The Chinese buyers were the most active, accounting for 29.4 per cent of all foreign purchases from January to September.

Indonesians were second, accounting for 14.6 per cent of all foreign purchases during the same period.

"Chinese buyers have overtaken Indonesians as the top foreign buyers of private homes in Singapore since 2010 and this can be attributed to the wealth growth of the Chinese and their increasing familiarity with the Singapore residential market," the study pointed out.

It noted the interesting growing prominence of buyers from the US with 57 transactions in the first three quarters of 2016.

They took fourth spot and accounted for 7.3 per cent of foreigner purchases - a significant increase in proportion, relative to the 1.1 per cent in 2011.

"US nationals are exempt from additional buyers' stamp duties under the free trade agreement, which partly explains their purchases, although the absolute number attributable to them was even higher in 2013, at 119," the study added.

Among the top foreign buyers in the first nine months of 2016, Indonesians have higher budgets, with most of their deals around S$3 million.

They have a strong preference for pricier properties above S$1,400 per square foot (psf) and located in the core central region.

In comparison, Chinese and Malaysians are more budget-conscious as a higher proportion of the properties they picked up were priced below S$1.5 million and within the range of S$750-S$1,700 psf.

In terms of geographic preference, the Chinese are more active in the suburban property market while Malaysians, like the Indonesians, prefer the core central region.

Ong Teck Hui, national director of research and consultancy at JLL Singapore, said Singapore is well-placed to tap on the foreign demand for real estate driven by the growth in local and regional wealth.

He said: "Singapore has remained a popular residential investment destination for foreigners due to its fundamentals and prospects of long-term capital gains.

The deterrent effects of the cooling measures is subsiding as the market gradually accepts them as the new norm.

"Moreover, the recent imposition of additional stamp duties on foreign purchases by other popular residential investment destinations such as London, Melbourne, Sydney and Vancouver has levelled the playing field.

To top it off, prime home prices in popular residential investment destinations such as Hong Kong, London and New York has continued to climb over the past few years, while those in Singapore have corrected, which has widened the price gap between prime residential properties in Singapore and these cities.

"This has further enhanced the attractiveness of Singapore's prime homes from the perspectives of relative pricing and capital gains potential."

This article was first published on November 30, 2016.
Get The Business Times for more stories.