Are foreign buyers shying away from Singapore properties?

Foreign buyers seem to be holding back from buying homes here in Singapore. The largest fall were from Indonesian buyers, from 112 down to 39 units in the last quarter. Chinese, Malaysian and Indian buyers make up the rest of the buying clout, though there has also been a decline in all segments.

Private home prices have fallen 1.3 per cent in all regions – 1.3 per cent in the central regions, 1.5 per cent in the city fringes and 1.6 per cent in the suburbs. An accumulation of various factors could have impacted the market:

White Sand HKPhoto credit:

Singapore is often compared with Hong Kong, for its size, population and infrastructure. Why then are property prices in Hong Kong skyrocketing while Singapore properties fight to garner foreign buying interest? One of the main factors could be the proximity of the country to China. Mainland Chinese buyers make up the bulk of the foreign buying pool here and Hong Kong is inevitably closer. Should they wish to travel far out, they often look at countries such as Australia, New Zealand or even the United Kingdom and United States. The yuan has also weakened and with the Chinese economy slowing down, Chinese buyers may also be more selective about their choices.

The Indonesian property market is flourishing and in fact, more buyers, even Singaporeans have been buying into the market. Jakarta and Bali are a few of the cities where buyers’ interest have peaked.

How then can Singapore continue to attract foreign buyers and will mere policy changes affect a change?

Marina Bay home sales show positive signs

Private home sales in the suburbs have been showing sign of strain as the increasing number of new completed condominium units compete for the increasingly limited number of buyers, which could be further limited due to loan limits, a downtown project seemed to be bucking the trend and pulling in sales in the luxury apartment sector.

Marina One Residences in the Marina Bay precinct secured half of the total number of home sales in October alone. But that could also be due to the fact that it was the only new launch in the month. 334 units of the 1,042-unit condominium were sold at the average selling price of $2,228 psf. However, sales were still lagging behind its initial preview launch when earlybird discounts were given, and sale prices hovered between $1,960 and $3,100 psf.

Marina ONe iprop watermarkDevelopers are finding it harder to attract the buying crowd and have found they are now more sensitive to pricing as it became more difficult to secure bank loans. Though the price fight is not evident yet, as buyers are still willing to fork out a considerable amount for properties in good locations, it may only be a matter of time before the cracks show. Especially since 2015 and 2016 will see an even bigger influx of completed private homes in the market.

For now, developers are focusing their efforts on selling remaining units at previously launched projects such as DUO Residences, Coco Palms and Lakeville condominium, thus holding back on new launches. Will this drive consumers towards other property types such as executive condominiums (ECs) and resale HDB flats or will they continue to seek better deals with the existing private property market?

London’s new real estate investment opportunity

Singapore’s recent property cooling measures may be drawing potential real estate investors overseas, and where’s better than London, often considered a safe haven outside of Asia.

Photo by the Battersea Power Station Development Company

Photo by the Battersea Power Station Development Company

From the historic Battersea Power Station, will soon rise an all-new mixed-use development comprising of 3,400 homes, offices, hotels, shops, restaurants and a cinema. The fact that it was a landmark in pop culture, having been featured on Pink Floyd’s 1977 Album Animals’ cover and its cameo role in The Beatle’s 1965 movie Help, may be a draw for the creative types of businesses and professionals the 15.8 ha place hopes to target.

Developerd by a Malaysia consortium of SP Setia, Sime Darby and its national provident fund, the Employees Provident Fund, prices for residential units there will range from £338,000 for a studio apartment and £894, 000 for a three-bedder. In Phase one, 800 units will already be offered, with studios, one-, two- and three-bedroom thrown in the mix.


Photo by the Battersea Power Station Development Company.

Photo by the Battersea Power Station Development Company.

Just as with real estate investment in most parts of the world, proximity places a big part. The Battersea Power Station is close to the upmarket Chelsea and new tube stations are planned just nearby. Compared to its neighbouring Chelsea where property prices are three times higher, this may be an opportune time for those who have investment money to spare or simply good timing.

Mr Tincknell, chief executive of Battersea Power Station Development Company is expecting to welcome residents into its midst as early as 2015 and future rapid development within the following 2 to 4 years. It may soon be a bustling enclave where you wished you had gotten a piece of the action earlier on.

Are homes in Singapore truly affordable?

If you have always wanted to ask the authorities this question, will now hear what they have to say. In a grassroot dialogue on Sunday night, National Development Minister Mr. Khaw Boon Wan emphasized the Government’s commitment to providing affordable homes for Singapore’s future generations.

Do you think Singapore’s homes are truly affordable for the average Singaporean?

On the one hand, the nation is hoping to improve birth rates and push up the population numbers, but on the other, housing prices have been soaring above the capability of the average Singaporean. But Mr. Khaw says that the 25, 000 new HDB flats built per year over the past couple of years have more than provided for the 15, 000 marriages per year. He also said that “Pricing is within my control”, further taking up the responsibility of making it possible for citizens to own a roof over their heads.

With the rate at which property prices are rising and the constant increment quarter by quarter, are you positive that affordability is true of the current situation? And what about in five years’ time? Will homes be more or less affordable then as compared to now? How should affordability be measured, or what other factors should it be measured against? What about inflation and other living expenses such as education, transport, or simply the overall livability of the nation?

Buying a home across the causeway

Interest in homes away from this red dot, mostly just across the causeway in Malaysia, have been growing stronger. Not that Singapore has run out of homes to buy though. So what exactly is drawing attention there?

When Ms June Chan first went to Johor Baru to scout for potential properties in February, she spotted a villa going for a pretty price. Built on a sprawling 16,000 sq ft compound was a single-storey bungalow with three rooms and a swimming pool. It was in the Leisure Farm development, in Johor’s Iskandar region. The price: RM3.8 million ($1.52 million). Within two months, Ms Chan, 52, decided it was a good deal and plunged in. ‘It’s a second home for living in while my Singapore house is for rental,’ said Ms Chan, who is single and retired from a multinational corporation two years ago. She is now doing humanitarian work. With property prices rising in Singapore, more Singaporeans have begun looking to Malaysia for investment or to buy their second homes. The weakening Malaysian ringgit, the lure of owning landed property and familiarity with the country are reasons they cite for looking north. The Malaysian property market has been heating up in recent years, much like in the rest of Asia.

Silverscape condominium in Melaka, Malaysia.

Official figures from Malaysia Property Inc – an agency that promotes Malaysia’s real estate internationally – the total transaction value of real estate in Malaysia was RM137.8 billion last year, up 28 per cent from RM107.4 billion in 2010. About 2 per cent of that figure is foreign investment. Johor has seen the strongest surge in interest from foreign investors in the past year, according to the agency. In the first half of 2010, foreigners made up only 4 per cent of Johor property transactions, for properties priced above RM1 million. In the corresponding period last year, however, that figure shot up to 25 per cent. Much of the demand has been generated by the buzz over the Iskandar region, earmarked by the Malaysian government as a major growth area for the country. There are also now big Singapore companies investing in Iskandar.

Temasek Holdings has a joint-venture project with Malaysia’s sovereign wealth fund Khazanah Nasional to develop land in Iskandar. CapitaLand has been appointed project manager for a 2ha urban wellness project in Medini North, a region in Iskandar.  Property agents have also been pulling out the stops to get Singaporeans interested by advertising, conducting roadshows and taking busloads of potential investors on property tours. Ms Donna Lim, property agency HSR’s overseas department head, said the number attending its property exhibitions has risen sharply from last year.

SENI condominium in Kuala Lumpur.

Agents say the number of transactions by Singaporeans has also risen. While there is no official data, agents like Propnex say that Singaporeans bought 50 units in the second quarter of the year, compared to around 25 units in the first three months. It is marketing five projects there in total, located in Johor, Kuala Lumpur and Cyberjaya. Mr Peter Lim, head of Leisure Farm Singapore, which arranges free trips for buyers, said Singaporeans had bought 35 units in the development over the past two months, compared to about a dozen in the first two months of the year. Mr Edwin Tan, director of the Paragon Residences @ Straits View Malaysia project, also in Iskandar, said Singaporeans booked 116 units at a roadshow earlier this month, compared with 54 bookings from Malaysians.

Apart from Singaporeans, Malaysians living in Singapore have also been buying property there. Lecturer Jude Nesa Rajah, 51, bought his first JB property on impulse eight years ago after seeing the developer’s promotional booth at a shopping centre. He paid RM100,000 for the 1,016 sq ft unit in Bukit Indah. It is now worth RM220,000. A Singapore permanent resident and father of two, he said: ‘My investment is literally paying for itself… we’ve been renting out the place for seven years now, for RM1,000 a month.’ He said he is looking to invest in more properties when the market cools, adding that he hopes to retire there with his 48-year-old wife, a teacher. While Johor properties have always seen demand, now Singaporeans are also heading further north, scouting for potential investments in Kuala Lumpur, Penang and Malacca.Ms Lily Tan, senior marketing and sales manager at Hunza Properties, said Singaporeans were the top buyers of Hunza’s newest condominium Gurney Paragon in Penang, making up about 15 per cent of total unit sales.

Boulevard condominium in Penang.

But unlike those who buy property in Johor as their second or retirement homes, Singaporeans who buy in Kuala Lumpur and Penang tend to view purchases as investments, said PropNex chief executive Mohamed Ismail. Ms Goh Yu Ming, 32, bought a 4,000 sq ft condominium unit in Kuala Lumpur’s main shopping district, Jalan Bukit Bintang, last year for RM2 million. Ms Goh, who works in investor relations, believes she can get a rental yield of 6 to 8 per cent. Rental yields in commercial hubs like Kuala Lumpur and Penang range from 5 per cent to 6 per cent, while in Johor they are typically 4 per cent to 6 per cent. In contrast, Singapore residential properties generally yield 2 per cent to 3per cent, consultants said. The weakening of the ringgit against the Singapore dollar is expected to further stimulate demand. It has fallen by 2.7 per cent in the past year to reach a 14-year low against the Singapore dollar.

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
Kuala Lumper, Penang, Malacca, Johor Bahru. These are the top spots for property buyers looking to secure a home outside of Singapore. Whether as a holiday home or for future investment, properties in these Malaysian states are certainly forces to be reckoned with.