Will Indonesians return to prime?

January 20, 2015 8:41 AM SGT
SINGAPORE:Indonesia’s wealthy were once the leading foreign buyers of Singapore’s luxury private apartments, but the trend has reversed in the last four years. Property experts ponder when the big money will come back.
Sim Mong Teck, a private client lawyer who has been in practice for 20 years, has started to encounter a new breed of Indonesian buyers in the Singapore property scene.
Indonesians form the biggest group of foreign client base in his firm, Sim Mong Teck & Partners.
“For the longest time, my Indonesian clients have been the traditional ‘old money’,” he says.
“The typical profile is someone who already has a collection of properties in Singapore at the top end [of the residential market] in the likes of Four Seasons, Ardmore Park.
So, for years, I never expected Indonesian buyers to venture outside the Core Central Region [CCR].” Instead of luxury penthouses costing upwards of $10 million, the last 36 months saw Sim handling transactions of 99-year leasehold condominiums beyond the traditional prime districts, in the suburbs of Ang Mo Kio and Jurong where the ticket size was in the range of $1 million to $2 million.
“It’s what I call ‘new money’, first-time buyers in Singapore,” he explains.
“In the course of interaction, you can tell that they have made their first pot of gold in just the last three to five years.
So, this is a new trend.
And they don’t mind the 15% ABSD [additional buyer’s stamp duty].” Sim was speaking at the inaugural SMTP Forum held on Dec 2 entitled “Courting the Indonesian Buyers” organised by his firm and where he was the moderator that afternoon.
His observations have been borne out by URA statistics, which showed that from 1995 to 2010, transactions by Indonesians in the prime CCR surpassed the rest of Singapore.
Post-2010, buying in the mid-tier segment denoted by the Rest of Central Region (RCR) and the suburbs or the Outside Central Region (OCR) has not just caught up, but soared above purchases in the prime districts.
Since 2010, most of the new launches in Singapore have been of 99-year leasehold properties outside the CCR, Ku points out.
The CCR tends to have more freehold property than 99-year leasehold, while the sites purchased at government land sales in the RCR and OCR which have dominated the new launch landscape have largely been 99-year leasehold.
“It could be a function...