Foreign purchasers prefer mid-tier city-fringe residences

In Singapore, foreign purchasing of private residences increased in Q2, but has not regained full force with regard to its share in higher-priced transactions, based on DTZ’s caveats analysis. The quarter predicts a revitalisation of buys by Indonesians, who are the leading purchasers in the upper-level segments.

Foreigners, except for permanent residents in Singapore, only consist of 15% of those who purchased private houses, amounting to more than $1,110 per square foot in Q2 2009, lower than the share of 29% in 2006 as the property market started to heat up.

As for absolute price quantums, transactions of non-permanent foreigner residents make up of 14% of total purchases at more than $1.5 million in Q2 2009, which is significantly below the 20% total in 2006.

“The profile of foreigners has changed gradually over time. They are increasingly moving to mid-tier homes located at the city fringes,” DTZ said.

Peter Ow, executive director at Knight Frank, stated that the trend is due to some city-fringe projects recently launched in several sites such as Holland Road and Novena at prices which foreign purchasers find attractive.

”Their prices are about 30-40 per cent lower than prime Orchard Road properties with similar-quality finishes. And most of these projects are near MRT stations and often 10 minutes' drive to Orchard Road,” he added.

DTZ's analysis reveals that houses in the main districts of 9, 10 and 11, and district 15 as well, accounted for 47% of the entire private homes purchased by non-PR foreign buyers in Q2, which is lower than the 62% share in 2006.

The total of private homes acquired by both permanent residents and non-permanent foreign residents tripled from Q1’s 497 units to Q2’s 1,678 units.

The most preferred projects among the non-permanent foreign residents in Q2 are: Rivergate with a total of 33 purchases, The Arte with 31 purchases, Martin Place Residences with 26 units, and The Lakeshore with 23 units.

Permanent residents preferred Martin Place Residences, The Arte, The Lakeshore, Melville Park, and Mi Casa.

A huge resurgence has occurred in the second quarter in Indonesian purchasing. They picked 349 units in Q2, about five times the 70 homes they purchased in Q1. Because of this, Indonesians accounted for 21% of private units bought by PRs and foreigners, significantly up from the 14% share in Q1.

However, they ranked 2nd to Malaysians, who acquired the lion's share or 29% of buys by PRs and foreigners. In addition, Indian citizens accounted for 12% while the Chinese accounted for 15%.

Even if Indonesians acquired almost one-fifth of the entire private residential buys by non-PR foreigners and PRs, they purchased one-third of units costing more than $1,110 psf that were preferred by PRs and foreigners in Q2.

As regards absolute price quantum, Indonesians acquired a one-third share of the total buys by non-PR foreigners and PRs done at more than $1.5 million in Q2.