Foreign buyers in Singapore hit new high

KUALA LUMPUR: The proportion of foreign buyers for both new and secondary private homes in Singapore has reached a new high of 16% in 1Q11 to overtake the previous high of 15% recorded in 4Q07, according to DTZ Research.

Malaysia, Indonesia, China and India made up 75% of the total transactions by foreigners and permanent residents in 1Q11. Purchases by Indian nationals grew the fastest from 10% in 4Q10 to 14% in 1Q11.

DTZ Research reported that buyers from China in 1Q11 made up 24% of purchases surpassing Malaysian buyers who have held the top position since 2Q08. Malaysians’ share dipped from 24% in 4Q10 to 21% in 1Q11.

“It is the first quarter that they (China) have become the top foreign purchasers of residential properties in Singapore,” DTZ said in a statement on Wednesday.

The research house noted that the transactions of private homes in 1Q11, proxied by caveats, amounted to 6,368. This is 25% lower than the 8,455 transactions recorded in 4Q10 as government measures implemented on Jan 14 to ensure a stable and sustainable residential market had affected demand.

The government measures affected mostly demand in the secondary sales market and particularly in February, which was also a shorter month with the Lunar New Year public holiday. Nevertheless, said DTZ, secondary sales volume rebounded in March, as the knee-jerk reaction to the cooling measures appeared to wear off.

The research note also showed that small units of below 1,000 sq ft continued to be popular, especially among purchasers of the Housing Development Board (HDB) units. The proportion of buyers with HDB addresses who bought units below 1,000 sq ft increased from 41% in 2010 to 46% in 1Q11.

Among buyers with private addresses, the proportion who bought small units increased from 27% in 2010 to 29% in 1Q11.

“The strong take-up for small units in developments of the smaller niche developers in 2010 has prompted even the larger market players to incorporate a higher percentage of such units in their new launches. This has continued to sway the pattern of purchases towards units smaller than 1,000 sq ft in 1Q11,” DTZ said in the report.

It added that small-unit homes is likely to continue to be popular among purchasers, especially Singaporeans, due to affordability and the trend of singles moving out to stay and foreigners on non-expatriate packages.

“However, investors who are looking to rent out these units can expect stiff competition in a few years when there will be a sharp increase in the number of small units that will be completed,” it added.

The research also showed that a higher proportion of foreigners bought into the high-end market in 1Q11, with transactions costing S$1.5 million (RM3.7 million) and above increasing from 17% in 4Q10 to 21% in 1Q11.

“On the other hand, the proportion of transactions made by Singaporeans for purchases below S$500,000 was higher at 80% in 1Q11, compared with 72% a quarter earlier, reflecting the smaller budget amongst Singaporean buyers,” it added.

According to DTZ Research, compared with 2010, a bigger proportion of foreigners in 1Q11 purchased homes in District 16 (Bedok, Upper East Coast), which could be due to new launches such as Waterfront Isle.

On the outlook of the property market in Singapore, head of DTZ South East Asia Research Chua Chor Hoon said the residential market appears to have taken the January cooling measures in its stride. Demand remains healthy due to strong economic performance and low interest rate environment.

“However, local concerns about high housing prices and the influx of foreigners that were magnified during the recent general election will be a catalyst for the review of immigration and housing policies, which could dampen demand in the residential market in the coming months,” she said.

The Ministry of National Development has indicated that the income ceiling of new public housing flats would be reviewed in the next six months. This could possibly lead to a reduction in resale HDB transactions, which would then affect HDB upgraders and the mass market private residential segment, DTZ said.

This article appeared on the Property page, The Edge Financial Daily, May 27, 2011.

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