Aerial view of Singapore’s ever-changing skyline.
Despite the sluggish market and weak economic outlook, Singapore is still considered a safe bet by foreign investors, according to analysts.
By Michelle Yee
Although the property cooling measures such as the Additional Buyer’s Stamp Duty (ABSD), imposed by the government in 2011 to calm a heated market and avert an asset bubble caused foreign buyers to stay away since 2012, resulting in a a slowdown in the country’s residential market, analysts feel that foreigners are starting to shift their focus back to Singapore, as many of them view the city-state as a safer investment destination as compared to other countries.
“In recent years, transaction volumes have been picking up, rising 16 percent year-on-year in 2016, and continuing to be active in 2017. New sales launches are generally doing well, enjoying keen response from buyers. The perception that prices could be bottoming also led many buyers back to the market. In 2016, residential property purchases by foreigners accounted for 6.7 percent of total residential transactions, while in the first five months of 2017, the proportion was slightly higher at 6.9 percent,” shared Ong Teck Hui, National Director, Research and Consultancy at JLL.
Last year, Chinese developer Qingjian Realty made headlines when it paid $638 million for Shunfu Ville via a collective sale in May. They also won the tender for a mixed-use development site in Bukit Batok West for $301 million that same month.
Similarly, in the commercial sector, sales transactions have also been on an uphill trend.
“Activity in Singapore’s office investment sales market (comprising private sector deals above $5 million and all public sector deals) picked up momentum in 2016, following two years of contraction in 2014 and 2015. The overall sales volume hit a nine-year high of $ 9.06 billion in 2016, driven by mega deals such as Qatar Investment Authority’s acquisition of Asia Square Tower 1 for some $3.4 billion, and IOI Properties’ purchase of the Central Boulevard Government Land Sales site for $2.57 billion. Foreign interest in Singapore’s office properties also continued into 2017 with Hong Kong Land, Fullshare Holdings, Simply Swift Limited – a wholly-owned subsidiary of HK-listed Shun Tak Holdings and Lei Shing Hong Properties (Singapore) amongst those who made purchases in the first six months of the year,” added Tay Huey Ying, Head of Research and Consultancy at JLL.
Sharing her thoughts on the increase in foreign funds into Singapore, Christine Li, Research Director at Cushman & Wakefield said: “Due to global market volatility as a result of Brexit and the continued deterioration in the oil and gas industry, foreign investors see Singapore as a safer investment destination where investment is fairly protected due to the strength of the Sing dollar.”
Why invest in Singapore?
Many people from all over the world know Singapore to be a place that is not only stable and effective, but the country also has a strong economy and boasts a world-class education system. That said, another big pull factor for foreign investors is that as compared to other countries in the world dealing with Brexit, an unpredictable Trump presidency in the US, political unrest in the Middle East, as well as terror plots in Europe and some parts of Asia, Singapore is considered to be a very safe place to invest and even live in.
“Singapore has strong fundamentals including political stability, economic growth and progress, market transparency and an effective legal system. The residential property market, on the other hand, has a track record of long term capital appreciation. Investors from some nearby countries see Singapore as a safe haven to invest some of their wealth, taking into account the appreciation of the Sing dollar against their currencies,” Ong said.
Echoing similar sentiments, Shaun Poh, Executive Director of capital markets at Cushman & Wakefield said, “Although the market is sluggish, Singapore is still a safe bet compared with other developing economies, which may pose more risk and have greater uncertainty.”
Still a buyer’s market
For those who are looking to invest in Singapore’s property market, analysts share that now is a good time to buy as it is still a buyer’s market.
“The residential market appears close to the bottom of the cycle, and prices are expected to recover after that. Currently, it is still a buyer’s market as purchasers are still price sensitive. Therefore, sellers have been realistic in pricing – for example developers who are trying to move sales in their launches have to price the units realistically to attract buyers. There are numerous projects in good locations such as the prime districts and near MRT stations which could meet the needs of investors,” Ong shared.
Analysts point out that foreign investors’ interest for commercial properties have also remained strong as the price gap between buyers and sellers in Singapore has narrowed, following recent price corrections.
According to the Urban Redevelopment Authority’s price index, office prices dipped 0.6 percent in the fourth quarter of 2016 from the preceding quarter, marking a sixth straight quarter of decline, caused by financial and business services consolidating, while the completion of large projects also caused a short-term supply overhang.
Overall, the total price decline in 2016 for office space stood at 2.8 percent, which is much steeper than the 0.1 percent dip reported in 2015.
As such, discerning investors who are adopting a mid- to longterm view (about five to 10 years or more), are seizing opportunities to purchase assets in the office sector at lower prices.
“Investors continue to be keen on Singapore’s prime office and suburban retail assets, which are closely held and rare to access,” Tay Huey Ying, Research Head at JLL said.
To get a better idea on which areas and what type of properties foreign buyers favour, we spoke to analysts who shared that foreign investors are currently leaning towards condominiums in the prime districts or city fringe area, as these tend to be more in demand by tenants and could be more competitive for leasing. Developments near MRT stations and amenities are also popular with investors.
“The preference is still the prime areas – Districts 9, 10, 11, and District 4 (Sentosa, Keppel Bay) for non-Asian foreigners. That said, Asian foreigners are open to other areas like Queenstown, the Redhill cluster, Buona Vista and Paya Lebar. Most of the draw comes from availability of good quality stock in these areas,” shared Tay Kay Poh, Executive Director and Head of Residential Services, Knight Frank Singapore.
Ong from JLL, on the other hand, said that new developments with good attributes generally tend to attract more buyers. “Investors and buyers are usually drawn to developments with good attributes, for example, Seaside Residences in the East Coast area, which is situated near an array of amenities, a future MRT station, and enjoys sea views, found strong demand from buyers. Another example of a project that sold well is Park Place Residences at Paya Lebar Quarter, which is part of a prestigious mixed-use development at Paya Lebar, and is located near an MRT station served by two MRT lines.”
What to look out for
For investors who are not sure which areas in Singapore they should invest in, analysts noted that they can begin by looking for properties that are situated close to amenities and are well served by transportation links.
“I would recommend locations close to the MRT or transport nodes. For the purpose of investment, investors might wish to consider smaller developments with unique features as this would translate to lesser competition when seeking rental. Lastly, pick developers with brand reputation and have a good track record,” Tay said.
Singapore is home to various high quality residential projects. We highlight two properties that are attracting keen interest from local and foreign buyers.
Cluny Park Residence
Cluny Park Road
Type: Luxury condominium
Developer: Tuan Sing Holdings
Facilities: Gymnasium, swimming pools, outdoor grill and lounge, Jacuzzi
Nearby Key Amenities: Botanic Gardens, Cold Storage supermarket, banks, specialty stores, clinics, cafes, pubs, bistros
Nearest Transport: Botanic Gardens MRT station
Starting Price: S$2,310,000
Cluny Park Residence is situated in Cluny Park Road, directly opposite the Botanic Gardens. This 52-unit project is surrounded by lush gardens and tranquil water features.
In addition to being surrounded by verdant greenery, Cluny Park Residence is also flanked by a slew of exclusive good class bungalows and foreign embassies.
Cluny Park Residence’s unique location also provides easy access to various amenities.
For families with young children, they will be pleased to know that there is a string of reputable schools nearby including Nanyang Primary School, Singapore Chinese Girls’ School and Hwa Chong Institution.
Hundred Palms Residences
Yio Chu Kang Road
Type: Executive condominium
Developer: Hoi Hup Realty
Facilities: Gymnasium, swimming pool, clubhouse, barbecue pits
Nearby Key Amenities: Heartland Mall, Hougang Mall, MyVillage at Serangoon
Nearest Transport: Kovan MRT station
Starting Price: S$715,000
Hundred Palms Residences by Hoi Hup Realty is strategically located in the Yio Chu Kang area. This 531- unit project is unlike other executive condominiums as it only features spacious three- to five-bedroom units from 883 sq ft to 1,528 sq ft.
Another notable feature is that it is equipped with a slew of smart features such as a digital door lock, an IP camera, and the lights and air-conditioners can be controlled via an app.
For entertainment and shopping pursuits, residents can head over to Hougang Mall, Heartland Mall and MyVillage at Serangoon, which are located nearby.
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