From New York to Sydney – Investing in Foreign properties

While the number of new properties coming up in Singapore may tilt the scale towards supply and give buyers an upper hand, in other major cities around the world, a decline in supply has moved property prices up the charts.

MelbourneProperty_CollinsStreetIn New York, the number of available properties, especially those in popular districts, have been on the decline. There has reportedly been a 20 per cent fall in the number of available listings, now standing at 5,654 which is much lower than the 10-year average of 7,047. This has placed the median selling price for a Manhattan apartment to just below the record-setting US$1 million (S$1.4 million) mark. Though that may not seem much, considering Singapore condominium apartments are selling at similar prices, the amount of space you get is much lesser. If it’s space you’re looking at, buyers may have to look outside of New York and into the suburbs. Needless to say, the lack of available properties below the US$1 million mark has made competition all the more heated, and buyers now find themselves having to stretch their budget to get the apartment they want. Landlords and sellers now have the upper hand.


At the opposite end of the globe in Sydney, Australia, property prices have been climbing steadily for the past quarters and now stand at an average of A$785,000. But prices in Sydney may have reached its peak as prices only grew 0.1 % last month. Over in Melbourne, the average prices stand at A$580,000 and prices have rise 2.4 %.

Are there opportunities in both cities for investment and is the time now?

Should the ABSD be removed?

ABSD – Additional Buyer’s Stamp Duty. Though mentioned less this year as other property cooling measures take over in significance, this nevertheless is a rather big hump investors have to get over should they wish to purchase properties for investment purposes.

Implemented in 2011 by the Monetary Authority of Singapore (MAS), it applies to foreign investors, Singapore PRs (permanent residents) purchasing their second and subsequent properties and Singaporeans purchasing their third and subsequent properties. This and other property cooling measures have successfully curbed the blossoming of a potential housing bubble which threatened to grow in 2009 and 2010. Combined with the Seller’s Stamp Duty (SSD), of up to 16 per cent, property speculation is significantly lower than before. The highly affluent are rarely affected but it has helped keep individuals relatively debt-free.

SantoriniAnother positive that came out of the previous couple of years of policy adjustments is more transparent industry practices. Developers are now required to submit weekly transaction data to the Controller of Housing, including incentives provided to buyers such as furniture vouchers, cash rebates, stamp fee or legal fees absorption and sales volume. That will help project a truer image of how the industry is fairing and what are the actual market prices and keep pricing more realistic.

The restrictive loan-to-value limit has perhaps affected the industry a tad more as it has brought prices down and maintained a level playing field. Whether the government has brought property prices to a level affordable for majority of Singaporeans is yet to be seen clearly, but with the recent election just over, all eyes could be on the new government to see what else they can or will do.

Rising property market – Vietnam

With a communist government, most would not have considered Vietnam potential ground for a thriving real estate market. Their property market suffered a severe blow about 4 years ago when property bubble burst, leaving banks in debt and buyers and developers defaulting on their loans.


Photo Credit: Phuoc Thanh Construction

But 4 years on, the government has injected stimulus into the real estate sector of up to US$1.4 million and has also restructured their banking sector to ensure history does not repeat itself. In fact, they have gone even further to relax rules on foreign investment money coming through their borders. Foreign firms, individual buyers as well as Vietnamese who have left the country during the war in 1975 – the Viet Kieu, are now able to purchase properties in Hanoi. And response has been overwhelming. One developer, Vingroup, reported a whooping 112 deposits on apartments within 2 hours of their launches specifically targeting foreigners and Viet Kieu.

Most foreign firms are keen to purchase properties to house their foreign staff. Intel and Samsung, which are situated in the Saigon Hi-Tech Park, are just a couple of the many international firms snapping up properties. Average prices of high-end apartments in the southern commercial hub go up to as much as US$1,800 per sq m. In the capital, prices are around $1,600, a number familiar to the property players before the last housing crisis. With a market value of US$21 billion, Vietnam’s real estate sector still has a way to go compared to Singapore’s US$241 billion, but that difference could be what most attracts investors.

London home prices rising

If you’re looking for London properties marketed overseas, you may not be seeing the whole picture as there has been an increasing number of properties which are marketed strictly in the United Kingdom alone. The number of foreign buyers of London property has been on the rise, and Londoners are getting a little agitated by the recent influx, which is not aided by rising home prices.

WestfieldHouse_Wandsworth_LOndonRecent additions to the London property market include luxury homes in the Nine Elms district in London. Lauded to have luxury fittings by Versace, they join the ranks of highly-priced and prized properties in the exclusive and expensive districts of Knightsbridge, Kensington and Chelsea. Situated in the borough of Wandsworth, prices of the luxury apartments here are twice the average of properties in the area, ranging from £1,600 to £2,000. Developments in this district include the Battersea Power Station, with 20% of the buyers coming from Singapore. Singaporeans have also made up 5.3 per cent of overseas buyers of prime properties in London.


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Despite an increased stamp duty this quarter, home prices in London which have dipped slightly, are still high as demand for properties in less expensive suburbs continue to rise. But locals are becoming disgruntled as London faces a housing crunch with simultaneously rising property prices. Would this indicate possible changes in policies and regulations in the year ahead? How would that affect foreign property investors?

Buying a property in Australia?

Properties in Australia or any city outside of home have always been a little of a mystery to local investors, though more are moving to these territories especially with the number of students studying overseas increasing. Rules and regulations for foreign ownership of properties in Australia are subject to change thus it would be prudent to keep up-to-date with movements in the industry.

BeliseApartmentsMelbourne_1The most recent change include a levy of A$5,000 on homes up to A$1 million and A$100,000 for every subsequent A$1 million. Foreign buyers are only able to purchase new properties and not resale ones and are required to adhere to regulations set by the Foreign Investment Review Board. Enforcement of these laws have been a little lax in the past, with some buyers getting away with purchasing resale properties by using cash. But checks may be stricter now, with jail terms of up to 3 years or a fine up to A$127,500 for foreigners found to breach the rules. Firms aiding them will also be fined up to A$637,500.

Despite these new levies and restrictions, Singaporean investors may not feel the effect as the levies are merely a fraction of the cost of properties there. Australian cities popular with Singaporean buyers include Melbourne, Sydney and Perth. For investors interested to make their initial foray into the Australian markets, there are avenues to secure advice and assistance, especially with upcoming International property investment exhibitions and estate agencies out there specialising in foreign investments in specific regions. As always, doing your homework will ensure a safe and stable journey ahead.


Lowering property prices in Iskandar

Overseas property investment has never been easy, but for those with insight and who keep a close eye on the ebb and flow of the property market in specific cities, it may pay off in the long run.

In the Iskandar region for example, there is said to be an imminent price war as Chinese developers aggressively purchase and develop land banks in the Iskandar regions. The most recent bid was by Shanghai’s Greenland Group who bought a 52 hectare waterfront are in Tebrau Bay.

PuteriCoverIskandarMost Malaysian developers are now holding back on their launches in order not to be cannibalised by launches helmed by these Chinese companies. Especially since these Chinese firms themselves are already offering discounts of up to 15 per cent. Property analysts have taken these to signify a possible supply glut in the region. But does this mean it could be the best time to invest, depending on the outlook of the specific region, district and development? How can you best get the most out of your investment buck?

Property seminars and talks are some of the best ways to get started and of course, keeping track of global economics and country-specific policy shifts would only help in making a determined decision. The ability to withstand temporary setbacks in wait of a bigger pot of gold in the long term would no doubt be useful as well.


Making timely overseas property investments

The strengthening Singapore Dollar, in particular against the Japanese Yen and Malaysian Ringgit, may be just the incentive to look outside of the country for possible property investment opportunities. So what new launches lurk in these 2 countries, ripe for the picking?


Photo credit: CBRE

In Tokyo, a 883-unit high-rise Global Front Tower in the Minato ward is calling out to investors with their 4.5 to 5.1 per cent yield. With prices starting at $740,000 for a 780 sq ft unit and going up to $1.04 million for bigger units in the 912 sq ft range, it might be quite a steal considering its prime location near the city’s main Yamanote Line. Situated within the development itself are amenities such as a childcare centre and convenience store, pluses for rental.


A little outside the Iskandar region, in the much-loved tourist spot of Malacca, a new mixed-use development made up of a hotel, mall and theme park, could be just the thing for those looking for investment properties somewhere closer to home. The Harbour City development, which off the coast of the new off-shore man-made islands of the Melaka Gateway development, is targeted to open by 2018 and will attract new tourists to the already popular city. Securing a unit in one of its 780 suites may give buyers the opportunity to own a holiday home of sorts which earns you cash even while you are away.

In short, property investment opportunities outside of Singapore are there, it is simply a matter of research and keeping an eye on property trends, and striking while the iron is hot.

2015 – Outlook for Asia’s property market?

2015 is nearly here, and there has been talk that come next year, the property scene in Asia might experience some changes.  Investment interest in Asia property looks to be on the rise as portfolios which have yet to establish a presence in this continent consider it time to do just that.

ScottsSkyParkIt is probable that some governments might ease up on property cooling measures, thus making it easier for foreign investors. China-based investors have already been buying properties within and out of Asia. And as sellers lower their expectations and prices, they look set to continue doing so, if not more voraciously.

In Singapore alone, the outlook for office space looks extremely positive as supply remains low. With many more developmental and redevelopment opportunities arising within the next few years, the demand for office space is likely to rise, thus supporting commercial property prices and rents.

On the residential front, property prices are expected to see a drop of up to 10 per cent as the full impact of the large and fast increase of new properties finally hit the market. However, the luxury home market may see an influx of new investment money, especially properties will good long-term value.