View of luxury apartments in Singapore.
UOB Kay Hian believes that home purchases by foreigners, which increased by up to 20 percent in the first nine months of 2017, still has room to grow.
This comes as the figure accounted for only 22 percent of this year’s private home sales volume, compared to 30 percent in 2007 and 32 percent in 2011.
In fact, foreign purchases only comprised 29 percent of the high-end market, way lower than the 41 percent registered in 2007.
“The return of foreign buying will benefit the mid- to high-end segment in particular, as they tend to favour the prime city centres, which sees higher demand for leasing,” it said.
It noted that foreign acquisitions tapered down, especially following the introduction of the Additional Buyer’s Stamp Duty (ABSD) of 10 percent from December 2011 and 15 percent from January 2013.
But as overseas markets “caught up with harsher property cooling measures to moderate housing prices and limit foreigners’ participation, we expect buying to move up to the mid-high end segment, driven by foreign demand”, said UOB Kay Hian in a note.
“The levelling of taxation costs overseas is building up the relative appeal of Singapore real estate to foreign investors,” it added.
Hong Kong raised its stamp duties on foreign property buyers to 30 percent in November 2016, surpassing Singapore’s 15 percent.
Taipei, on the other hand, rolled out a punitive divestment gains tax of up to 45 percent in January 2016, eclipsing Singapore’s 12 percent sellers stamp duty.
Canada and Australia have also increased the transaction costs for foreigners looking to acquire property.