Foreigners are jumping back into the private residential property market here in greater numbers, with buyers from China consolidating their position as the top buying group.
In a new report, property consultancy JLL said there were 782 transactions by foreigners in the first nine months of this year, an 11.7 per cent surge year on year. The figure excludes permanent residents.
The largest numbers of buyers came from China, Indonesia, Malaysia and the United States, based on caveats lodged.
“The wealth growth of the Chinese and their increasing familiarity with the Singapore residential market led to them being the top foreign buyers after 2010, overtaking the Indonesians,” Mr Ong Teck Hui, JLL Singapore’s national director for research and consultancy, said in the report.
Chinese buyers maintained pole position with 230 transactions or 29.4 per cent of all foreign transactions in the first nine months of the year, but their purchases fell slightly from 243 in the same period last year.
They were followed by 114 transactions by Indonesians, or 14.6 per cent of foreign transactions.
Malaysians accounted for 10.5 per cent of foreign transactions with 82 properties, and the Americans were at 7.3 per cent with 57 properties.
JLL noted that the significant increase in the proportion of US buyers – up sharply from 1.1 per cent in 2011 – was attributed partly to their being exempted from the additional buyer’s stamp duty (ABSD) under a free trade agreement.
Since December 2011, foreign buyers have been subjected to an additional levy of 10 per cent of the purchase price of the property. The levy was raised to 15 per cent in January 2013, further crimping foreign demand for homes here.
The Government has maintained that the ABSD and other cooling measures continue to be necessary to stabilise the property market.
“This has led to more buyers, including foreigners, becoming decisive and going ahead with their purchases… As they become more accepting of the cooling measures and prices remain favourable, we may expect to see the gradual return of foreign buyers,” noted Mr Ong.
JLL found that Chinese buyers preferred homes in the suburban areas, owing to the more affordable price tag, with such apartments making up 58 per cent of their transactions.
Buyers from Indonesia and Malaysia favoured units in the core central region, where many homes are on freehold tenure.
JLL said 68 per cent of transactions by Indonesian buyers and 40 per cent by those from Malaysia were for homes in prime districts.
In terms of unit sale price, purchases by the Chinese and Malaysians ranged from $750 to $1,700 per sq ft (psf), while the higher-budget Indonesians tended to buy above $1,400 psf, with a significant proportion above $2,000 psf, JLL added.
JLL expects the recovery in foreign demand seen this year to continue into next year, and homes in the core central region to remain the preferred choice of foreigners.
“Foreigners are still interested in investing in Singapore’s private residential market due to its fundamentals and prospects of long-term capital gains. At the heart of demand is both local and regional wealth growth,” said Mr Ong.