In a bid to lure overseas investors, the government halved the S$2 million ($9.2 million) minimum requirement for foreigners to invest in residential properties in order to become a Singapore permanent resident.

It will also allow foreigners to buy apartments in non-condominium developments of less than six storeys. However, they will still need special approval to buy landed properties - individual houses.

Analysts said the new measures would raise Singapore's competitiveness, but they were sceptical about whether the measures could revive property prices, which have been languishing 36 per cent below their peak in 1996.

'There will definitely be a boost to the property market by bringing in some marginal buyers who previously could not afford the 20 per cent down payment,' said Jeremy Choy, manager of DTZ Debenham Tie Leung's research department in Singapore.

'However, I don't think prices will go up significantly overnight. Price movements are dependent on demand and supply factors, and economic fundamentals like job security and income growth.'

Property prices in Singapore have been lagging behind major markets in the region. They rose about 2.4 per cent year on year in the first half, compared with about 19 per cent growth in Hong Kong.

'Let me stress that the purpose of the changes is neither to boost nor depress the property market,' Minister for National Development Mah Bow Tan told parliament yesterday. 'We believe that with prudent and realistic decisions, the market will find a new equilibrium that will be based on economic fundamentals.'

Thanks to the growing manufacturing and services sectors, Singapore's economy expanded at an annualised rate of 12.3 per cent in the second quarter - its best performance since the third quarter of 2003.

Singapore has been aggressively attracting investment, with proposals to build two casinos in the city by 2009 among the bolder initiatives.

The brighter outlook has also prompted more foreign developers to expand in the city. Cheung Kong (Holdings) and its partners recently secured a prime business site in the central business district with a winning bid of S$1.8 billion.

'The policy changes are positive for the overall property market in Singapore in the long run, but it is still too early to say whether we will accelerate our expansion pace here,' said Francis Wong, senior sales manager with Cheung Kong.

Kwek Leng Beng, executive chairman of City Developments, one of the biggest developers in Singapore, said: 'These measures will provide a greater attraction for foreign investors and further enhance Singapore's position as a competitive global city.'

The measures sparked a rally in property and related stocks that saw the Straits Times Index surge 1.99 per cent to a 5?-year high of 2,292.92 yesterday.