Real estate consultancy firm Cushman and Wakefield has revealed that non-landed private home sales dropped by 62 percent to 133 transactions in Q1, from 350 transactions in the preceding quarter.

Some experts believe the data indicates that the Government’s tough property cooling measures implemented last January are taking effect.

Under the cooling measures, non-individual home buyers, such as trusts, companies and collective investment schemes, can borrow a maximum of only 50 percent of the property’s value.

This is unlike before, where they could borrow up to 70 percent of the property’s value.

Mr. Tan Kok Keong, Head of Research and Consultancy at OrangeTee, noted that while these early estimates were telling, some transactions may not have been recorded yet.

He said reviewing these first-quarter data again in June will depict the investor market more accurately.

Mr. Tan believes that the group of investors comprise primarily foreign companies.

“Previously, some local buyers would form companies to purchase property, possibly so that they could work around the seller’s stamp duty.”

“After the latest measures, there’s no compelling reason to do that. It doesn’t make sense, because you have to come up with more cash if you want to close property deals that way,” he remarked.

Mr. Ong Kah Seng, Senior Manager of Asia Pacific Research at Cushman and Wakefield, said that the smaller companies, with their limited budgets, may feel more controlled with the higher amount of cash they will have to pay upfront.

But he added that larger firms may be equally cautious, as their property purchasing appetites tend to be bigger.

Chasing larger  transactions could weaken the business cash flow and liquidity of investors, noted Mr. Ong. “But they have to seriously consider the investments and proceed with worthy deals which match their capital outlay capacity.”

Mr. Joseph Tan, Executive Director of Residential Services at CB Richard Ellis (CBRE), said it could be a “shift in focus” for corporate purchasers rather than a disappearance from the residential real estate market.

“The price gap between residential and commercial properties is closing and that makes commercial look like a more viable alternative now.”