Wednesday, October 31, 2012

China nationals' private home purchases down 48%


The Business Times
Wednesday, Oct 31, 2012

SINGAPORE - The number of private homes in Singapore bought by Chinese citizens in the first nine months of this year has fallen to half the figure for the same period last year. Malaysians and Indonesians - the other two major groups of foreign home buyers - have seen smaller declines.

Knight Frank's analysis, based on URA Realis caveats data on Oct 19, shows that, in all, Chinese citizens picked up 1,066 private homes in Singapore in the first nine months of 2012, down 48 per cent from 2,046 units in the same period last year.

Along with the smaller Chinese contingent in the Singapore property market, their buying patterns have also changed.

"Chinese buyers used to be more active in the prime districts 9, 10 and 11 prior to the introduction of the additional buyer's stamp duty (ABSD) - with 17 per cent of the total number of homes picked up by China buyers (comprising both Singapore permanent residents and non-PRs) in 2009 located in these three districts.

"The proportion declined to 15 per cent in 2010, 12 per cent last year and only 10 per cent in the first nine months of 2012," said Knight Frank's research head Png Poh Soon.

Similarly, Chinese buyers were much more active in District 15 (which covers the Katong and Meyer Road areas) prior to 2012. In 2009, 2010 and 2011, 11 per cent, 14 per cent and 11 per cent respectively of the number of private homes they bought in Singapore were in District 15.

This figure dropped to 7 per cent in the first nine months of 2012.

And taking the mid-market Districts 14, 15 and 16 together, Knight Frank found that, prior to 2012, they accounted for a higher proportion of purchases by Chinese buyers compared with Districts 18, 19 and 23, which are mass-market locations. District 18 includes Tampines and Pasir Ris. District 19 covers Serangoon, Hougang and Punggol, and District 23 Hillview, Bukit Panjang and Choa Chu Kang.

However, the situation reversed in the first nine months of this year, when a higher proportion of properties bought by Chinese citizens were in Districts 18, 19 and 23 (33 per cent) than in Districts 14, 15 and 16 (21 per cent).

District 14 includes locations such as Geylang and Eunos; District 16 includes places such as Bedok, Upper East Coast Road and Kew Drive.

Chinese buyers have been drawn to new launches that have been progressively released this year in Districts 18, 19 and 23, particularly those near MRT stations and amenities.

International Property Advisor CEO Ku Swee Yong notes that some developers have been aggressively marketing suburban project launches in China and this could also have drawn Chinese investors to diversify from the mid and prime segments.
Adding weight to this trend, says Mr Png, is the increased total buying cost arising from the hefty ABSD introduced last December on foreign buyers.

Foreigners who're not Singapore PRs pay 10 per cent ABSD on any residential property purchase here.

PRs pay 3 per cent ABSD on their second and subsequent home purchase. Singaporeans pay the same rate but only for their third and subsequent property. Those on tighter budgets moved their interest to lower-priced homes in mass-market areas as the investment quantum is lower.

Some high net-worth Chinese may have decided against investing in Singapore's high-end property sector following the abolition of the Financial Investor Scheme (which facilitated securing PR status) this year, as well as tighter immigration rules in Singapore, Mr Png suggests. China's slowing economy would also have contributed to an overall slowdown in their property-buying sprees in Singapore.

This decline sent Chinese buyers to second spot in terms of the major foreign buyers of Singapore private residential properties in the first nine months of 2012. In 2011, Chinese were the top buyers.

Conversely, Malaysians moved up from the No 2 to the No 1 spot. They snapped up 1,394 private homes here in Jan-Sept 2012, down 7.5 per cent year-on-year.

"Singapore remains a preferred destination to buy properties among Malaysians due to the two countries' geographical proximity and cultural similarity," said Mr Png. "Malaysian investors also view Singapore as a safe bet for long-term investment."

Districts 19 and 18 were the two most popular locations among Malaysians in Q3 this year.

Indonesians remained the third largest foreign buyers in Jan-Sept 2012, although the 942 private homes they bought was down 25 per cent y-on-y.

As always, their top pick was District 9. They bought more homes in District 9 than any other nationality in the first nine months of 2012.

However, since Q4 last year, Indonesians have also turned their attention to District 19 due mainly to a surge in new condo launches in Punggol, said Knight Frank.

Indians remained the fourth biggest foreign buyers, despite the 685 homes they picked up in Jan-Sept 2012 being 22 per cent lower y-on-y.

Since the start of this year, US citizens have surfaced as the fifth largest group of foreign buyers, replacing UK citizens.

They acquired 122 homes in Jan-Sept 2012, up 15 per cent from 106 units in the same year-ago period.

This is most likely because US citizens - along with nationals and PRs of Switzerland, Liechtenstein, Norway and Iceland - are accorded the same treatment as Singapore citizens for the ABSD due to their respective countries' FTAs with Singapore.

In Q3 2012 alone, Americans picked up 43 private homes in Singapore, or 2.7 per cent of the 1,610 units purchased by foreigners (comprising Singapore PRs and non-PRs).

Malaysians were in top spot, with a 25.3 per cent share, followed by Chinese citizens (21.7 per cent), Indonesians (17.8 per cent) and Indians (15.2 per cent).



Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
Email: marshe_inc@yahoo.com.sg
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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