Singapore Market Overview

Allure of Singapore real estate will continue

PUBLISHED : Tuesday, 11 December, 2012, 12:00am
UPDATED : Monday, 10 December, 2012, 9:26pm

Singapore’s economy, post global financial crisis, has recovered strongly seeing double digit growth in 2010. The economy posted positive growth in 2011 and is expected to grow despite the current uncertain global economic outlook.

With an open economy and conducive investment environment, the country has been ranked highly in the areas of business competitiveness, ease of doing business and living standards.

With the influx of liquidity in global markets from US quantitative easing, Singapore’s real estate market has drawn people from around the world who are searching for attractive investments.

Despite slowing economic growth amid macroeconomic uncertainties, the Singapore residential market has achieved robust performance with record private home sales of 17,844 units over the first 9 months this year, exceeding the full year record of 15,904 units in 2011.

The low interest rate environment and stable employment prospects have sustained strong buying interest for property.

To curb rising residential prices, the government has introduced a series of cooling measures, with the latest measures being to cap maximum loan tenure and limit loan-to-value ratios for home buyers. But buying interest remained high as developers continue to launch more projects.

Foreign investors continue to purchase private homes notwithstanding the Additional Buyer’s Stamp Duty of 10 per cent.  Transaction volumes by foreigners have declined but are still at healthy levels.

For the first three quarters of this year, a total of 5,081 private home transactions were conducted by foreigners (permanent residents and non-permanent residents), compared to 7,430 transactions for the same period last year.

Malaysian buyers overtook Chinese buyers in 2012 and once again accounted for the highest proportion of foreigners buying properties in Singapore, accounting for 25 to 30 per cent quarterly in 2012. Indonesians made up the third highest proportion of foreigner buyers, with prime District 9 remaining the top choice.

The onslaught of cooling measures on the residential market has in part diverted investors to the commercial and industrial markets.
Industrial property prices have escalated by as much as 32 per cent year-on-year for the third quarter 2012; whilst office and shop properties have seen price increases by 2 per cent and 2.3 per cent respectively.

Looking ahead, the upside factors of strong underlying demand, increasing liquidity in the financial system, low interest rates and stable income growth of home buyers will provide support to the residential prices at least for the near to medium term.

The allure of Singapore real estate, combined with the country’s stable environment and high living standards, will continue to attract investors and foreign home buyers.

In addition, the government’s impending release of the Master Plan 2013 will offer more exciting initiatives on upcoming urban planning strategies for Singapore’s real estate landscape.