Fewer luxury homes sold to foreign buyers

SINGAPORE - Indonesians retreated from the luxury home market in the first quarter to a much greater extent than buyers from China, India and the United States.

DTZ Research said Indonesian buyers bought 11 resold homes costing over $5 million in the three months to March 31, down from the 22 purchases made in the last quarter of last year - a fall of 50 per cent.

Chinese buyers, who were the most represented foreign nationality in this segment, made 14 transactions, down 12.5 per cent from the preceding quarter.

Buyers from India bought two resale homes worth over $5 million in the quarter, down 60 per cent from five purchases in the preceding three months.

American buyers bought five properties, up from just two in the previous three months - a rise of 150 per cent.

US buyers do not have to pay the 15 per cent additional buyer's stamp duty (ABSD) imposed on foreigners buying private property, due to clauses in the free trade deal that the country has with Singapore.

Overall, the absolute number of resale transactions shrank in January through March, but the drop was the smallest for foreign buyers.

Foreign purchases in the resale market dropped 19.8 per cent from the preceding quarter while transactions by Singaporeans declined 44.4 per cent and those by permanent residents (PRs) fell 40.5 per cent.

If new sales were included, the number of foreign purchases slid 6.6 per cent from the preceding quarter to 562 units, while purchases by Singaporeans plunged by a sharper 37 per cent to 4,129 units. Deals by PRs tumbled 33.4 per cent to 963 units.

As a result, the proportion of total purchases by foreigners rose moderately from 6.9 per cent in the final quarter of last year to 9.9 per cent in the first quarter of this year, which is higher than last year's quarterly average of 6.4 per cent.

"This could be due to foreigners getting accustomed to the ABSD which was already imposed on any purchase by them after December 2011," DTZ said.

Singaporean and PR buyers have been deterred by the January cooling measures.

Singaporean demand fell the most as these buyers now have to pay ABSD upon buying their second and subsequent properties, DTZ noted.

Also, PRs who own a Housing Board flat must sell the unit within six months of buying a private home.

However, the proportion of foreign buyers is still below the quarterly average of 17.5 per cent in 2011 before the ABSD was introduced.

Popular projects among foreign buyers for new sales included d'Leedon, where they snapped up 85 units, Echelon with 26 sales, Eco Sanctuary, where they picked up 21 apartments, and Q Bay Residences, which sold 15 homes to foreign buyers.

DTZ expects investment demand from individuals to fall this year due to higher stamp duties, stricter financing restrictions and slower rental growth.

melissat@sph.com.sg

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