Lessons from Malaysian, Australian and Mainland Chinese homebuyers
By Feily Sofian
/ The Edge Property |
The number of foreign purchasers buying residential properties in Singapore may be dismal with the continued imposition of hefty additional buyer’s stamp duty on foreigners. However, some foreign nationals are making a comeback, drawn by the resiliency of the Singapore dollar against their home currencies.
More Malaysian, Australian and Chinese nationals bought Singapore properties
Drawn by the strength of the Sing dollar, resale non-landed home purchases by the three nationalities rose 14% collectively year-on-year between January and September this year.
The increase coincided with the recent deceleration of their home currencies against the Singapore dollar and the anticipation of further depreciation. Between January to date, the Malaysian ringgit have lost around 14% of its value against the Sing dollar while the Australian dollar have weakened around 6%. Meanwhile, the renminbi started its slide against the Sing dollar in August.
The missing piece of the puzzle is Indonesian purchasers. Despite the rupiah’s continuing weakness, Indonesians were not compelled to buy Singapore properties. It seems that the capital influx from Indonesia into Singapore had taken place earlier. The rupiah started its deceleration against the Singapore dollar in 2012 and in anticipation, Indonesians had snapped up Singapore properties in 2011 and 2012.
Demand continues to shift towards the high-end segment
High-end homes offer value proposition for both local and foreign buyers alike. Foreign purchases in the high-end segment inched up while those in the mass market dipped.
Based on URA’s latest estimates, prices of non-landed homes have dipped 9% from their last peak. On the other hand, mass-market home prices are now 7% off their last peak.
Malaysian nationals prefer more economical properties
Malaysians, Chinese, Indonesians and Indians were the top foreign nationalities purchasing Singapore properties. In the high-end segment, a majority 41% of Chinese nationals purchased properties above $5 million.
Malaysian nationals, on the other hand, purchased more economical properties in the high-end segment. A majority 32% purchased properties ranging from $1.5 million to $2 million and another 25% bought properties between $2 million and $3 million.
Meanwhile, purchases by Indian and Indonesian nationals were more evenly distributed across the different price ranges, starting from $2 million.
In the city-fringe areas, both Chinese and Malaysian nationals preferred economical properties between $500,000 and $1.5 million. Indonesian and Indian nationals bought higher-value properties ranging from $1 million to $2 million.
Conclusion
Two lessons can be drawn. First, investors looking to buy overseas properties should pay closer attention to currency trends, through experts’ forecasts or takes on macroeconomic indicators including inflation or current account balance. Foreign purchasers who benefited the most from the Singapore dollar resilience were those who had anticipated the depreciation of their home currencies and entered the Singapore market early.
Second, investors should buy in countries or segments where prices are not at their peak and look for projects with rare attributes such as in prime areas, waterfront locations or growth corridors.
Foreign purchasers in the study include both PRs and non-PRs. Resale volume is used as a proxy for demand. The analysis excludes new sales, as demand would partially depend on the number of launches.
Interested to search or browse condos in prime areas in Singapore? Click here
This article appeared in The Edge Property Pullout, Issue 697 (October 5, 2015) of The Edge Singapore.
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