{"id":20298,"date":"2018-09-29T06:43:08","date_gmt":"2018-09-28T22:43:08","guid":{"rendered":"https:\/\/www.99.co\/blog\/singapore\/?p=20298"},"modified":"2022-07-01T05:00:22","modified_gmt":"2022-06-30T21:00:22","slug":"foreign-property-investors-reasons-singapore","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/foreign-property-investors-reasons-singapore\/","title":{"rendered":"3 reasons why foreign property investors still prefer Singapore"},"content":{"rendered":"
<\/div>

With the Singapore government’s additional cooling measures imposed in July 2018, the commonly raised fear is that foreign property investors get driven away. The chief worry is that these investors \u2014 mainly from China \u2014 would then put their money into properties in Hong Kong and Australia instead. (FYI: the 2007 Singapore property boom was largely induced by foreign buyers. In particular, sales to foreign home buyers in Singapore rose around 63% last year<\/a>.) <\/span><\/p>\n

On the other hand, a September 2018 report by investment bank UBS claimed that properties in Singapore are currently “fairly valued”<\/a> compared to other cities in the world, even with our government’s cooling measures. So, are we or are we not still competitive as an city for property investment? By bringing in Singapore’s closest competitors in the property markets, Hong Kong and Australia, we discovered some compelling arguments that should be good news to developers, buyers, agents and \u2014 most importantly \u2014 Singaporeans.<\/span><\/p>\n

Reason #1: Singapore is expensive, but it\u2019s still cheaper than Hong Kong<\/b><\/h3>\n

You may think Singapore’s properties are crazy expensive, and you wouldn\u2019t be wrong \u2014 except in the context of places like Hong Kong. Consider, for example, the housing price to income ratio: this is a basic affordability measure that compares median housing prices to disposable income. The lower it is, the more attainable the housing.\u00a0<\/span>As of <\/span>September this year<\/span><\/a>, Hong Kong\u2019s ratio stands at around 47.4, while Singapore is less than half that at 21.1. <\/span><\/p>\n

Also, we need to consider the price drops that we\u2019ve seen in Singapore, since the last peak in 2013. The most affected property segment was Singapore\u2019s luxury market, which saw an overall drop of over 15% (more than the 11% overall, for the entire market). You may remember reports of properties like this Sentosa Cove penthouse, which sold at a <\/span>loss of $2.4 million<\/span><\/a>. <\/span><\/p>\n

The luxury segment was further ravaged by a weakness in oil and gas industries, as affluent expatriates were the primary renters. <\/span><\/p>\n

We\u2019ve yet to see a full recovery from this segment\u2019s decline. For example, 99.co has <\/span>over 200 listings<\/span><\/a> of Orchard area properties that are under $2,000 per square foot. For the record, $2,000 per square foot wouldn\u2019t even be considered luxury, in markets like Hong Kong.<\/span><\/p>\n

The last we checked (September 2018), $2 million Singapore dollars could get you a modest, 448 square foot apartment in Kennedy Town \u2014 a city-fringe neighbourhood \u2014 in Hong Kong. By contrast, that same price could get you a 1000 square foot apartment in Singapore\u2026\u00a0<\/span>at Cairnhill<\/a>\u00a0in Prime District 9<\/span><\/i>. <\/span><\/i>It doesn\u2019t matter whether you\u2019re an investor or home buyer, it\u2019s obvious that Singapore is much cheaper than Hong Kong right now, and has been for a while (especially for the luxury market).<\/span><\/p>\n

And if you\u2019re thinking of the Additional Buyers Stamp Duty (ABSD), we should point out that Hong Kong also has a 15% tax.<\/span><\/p>\n

Finally, consider how staggeringly far ahead Hong Kong’s property price indexes are ahead of their respective inflation indexes (421.40 – 145.12 = 276.28<\/strong> vs. Singapore’s 177.24 – 129.7 = 47.54<\/strong>) in Q1 2018.<\/p>\n

\"foreign<\/p>\n

\"foreign
The difference is night and day. Credits: David Grimes<\/figcaption><\/figure>\n

 <\/p>\n

Reason #2: Australia has a lot more restrictions on foreign buyers, and an invasion of Chinese investors <\/b><\/h3>\n

If you think Chinese buyers distorted Singapore\u2019s property market, you\u2019d be right; but compared to Australia we had it easy. Australia was the target of the Chinese spending spree, to the point where in 2017, Chinese buyers bought <\/span>a quarter of the new housing supply in New South Wales<\/span><\/a> (followed by 17% in Victoria, and 8% in Queensland). <\/span><\/p>\n

And even before last year, Australian market watchers were sounding alarms over the influx of cash from foreign property investors. This has led to Australian rolling out a series of controls, such as:<\/span><\/p>\n