In March, one of the wealthiest families in Taiwan snapped up all 20 units at a new ultra-luxury condominium complex in Singapore for S$293m ($217m). Many locals saw it as evidence of the city’s comeback after its cautious handling of the pandemic.
While certainly a lavish example, the sale confirmed that foreign buyers were trickling back into the small but wealthy Asian city-state’s prime property market.
The purchase of the Eden complex by the Tsai family, which is behind the Asian snack food giant Want Want, helped drive the 119 sales above $10m in the first half of 2021. This is more than four times the 28 sales recorded in the first half of 2020, and the 29 sales recorded in the same period in 2019, according to global estate agency Knight Frank.
With a stable currency, strong rule of law and low taxes, Singapore has always been a magnet for those looking to park money in overseas property. But a strict approach to containing the virus — the city’s death rate from Covid-19 is still in the double digits — for much of 2020 and part of 2021 hindered foreign buying.
Last year, the government made it more difficult for international workers to get visas. Companies with foreign employees, already dealing with lengthy approval times, were required to lift their minimum salaries to in some cases as high as S$10,000 per month.
At the same time, many foreign residents who had lived in the city for years found themselves stuck overseas and barred from entering the country due to rapidly imposed travel restrictions.
An employee at one global cryptocurrency company — who asked to be identified only as “Henry” in case it affects his chances of gaining re-entry — was stuck in the US for two months this summer. Despite leaving Singapore while travel was allowed, Henry, who is a US citizen, was caught out when the city suddenly changed travel rules in May due to a spike in Covid-19 cases. In July, he decided to remain in the US indefinitely, given the reopening of its economy has been faster and broader.
“I may come back [to Singapore] later in the year when things look more certain,” he says.
Growing uncertainty contributed to foreign buying of Singapore apartments plummeting to a 17-year low in 2020, with just 742 apartments sold, according to real estate consultancy OrangeTee & Tie.
Now Singapore is attempting to reverse course. The Asian business hub has abandoned chasing zero Covid-19 cases and is slowly preparing to live with the virus “as endemic” thanks to a vaccination rate of more than 80 per cent.
The approach contrasts with other cities such as Sydney, Hong Kong and Tokyo, which are still largely shut to travellers.
“The borders are not fully open yet but I do feel that the market is gaining strength,” says Elson Chia, who specialises in high-end property at OrangeTee & Tie.
Singapore has announced quarantine-free travel with Germany and Brunei, lifted quarantine from countries including China, Hong Kong and Taiwan, and allowed travellers from lower-risk nations such as Australia to quarantine at home.
Group sizes and dining out numbers are still tightly controlled and masks are mandatory, but cinemas, art galleries, shopping malls and restaurants are open. Many hoped the Singapore government would announce further reopening measures for September, but it has yet to do so.
Singapore’s property market started its rebound at the beginning of the year. The average property price jumped 6.1 per cent in the 12 months to March 2021, compared with the first half of 2020, according to data from Knight Frank. At the same time, the average price in Hong Kong, Asia’s other financial hub, the average property price rose 2.1 per cent.
“Singapore started rolling out the vaccination programme in January and immediately there was rising confidence things would improve,” says Nicholas Mak, ERA Realty’s head of research and consultancy.
Between January and August this year, private residential property sales totalled $45bn, the highest volume for the first eight months of the year for the past decade — and more than any full-year total since 2012 — according to data compiled by ERA.
The number of Chinese nationals buying, typically the most active overseas buyers of Singapore real estate, has increased, says Christine Sun, head of research at OrangeTee & Tie. And she expects it to rise even further, due to potential new taxes aimed at China’s wealthiest citizens. Last month, President Xi Jinping called for curbs on “excessive” income and a focus on moderating wealth for all, not just a few.
In the second quarter of this year there were also significantly more buyers from the US, UK, Australia and France, according to OrangeTee & Tie data. American investors snapped up 67 units in the second quarter, higher than the quarterly average of 44 units recorded between the second quarter of 2019 and the first quarter of 2021. UK buyers acquired 42 units, above the two-year average of 19.
The city’s Sentosa Cove, a man-made island known for its waterfront villas and private berths for yachts, is the only place foreigners can buy “landed properties”, such as bungalows or terraced and semi-detached houses. In the first half of 2021, there were 79 landed and non-landed property sales in the area, according to consultancy ERA Realty. Throughout the whole of 2020, there were just 56 sales.
“A lot of foreigners flock to Sentosa,” says Dominic Lee, who leads the luxury team at PropNex Realty, and describes it as having a “Miami Beach feel”. The rise in remote working has made the area more attractive, he adds.
One British national, a lawyer who declined to give his name, bought a three-bedroom apartment in Sentosa in August to live in with his family, after renting in the central business district for years. “It is actually cheaper to buy an apartment in a prime location in Singapore than in London,” he says.
But many international buyers are still struggling with life in Singapore post-pandemic. Aside from tightening visa control, many expats report growing resentment for foreign work pass holders. Last month, Singapore’s leader Lee Hsien Loong said in a National Day speech that Singapore would “gradually and progressively” harden standards to make sure local workers were not missing out on jobs.
“Singapore was already tightening criteria for employment passes and that has only increased during Covid,” says TY Shao, founder of local consulting firm Seekout, which focuses on hiring strategies. “Visa renewals and approvals are taking longer, up to two months compared to three or four weeks [pre-pandemic].”
The approach is “frustrating for a lot of companies and individuals,” says Shao, who fears it will probably to become the norm.
In Singapore, buyers from overseas face restrictions on what homes they can purchase. Non-permanent residents can buy most condos or apartments, and landed houses in the Sentosa area. Permanent residents enjoy greater access to landed properties but must demonstrate an economic contribution to the city-state.
Foreign buyers must pay an additional stamp duty (ABSD) of 20 per cent when buying property in Singapore — though exemptions apply.
In the second quarter of 2020, the proportion of non-landed homes bought by foreigners rose to 4.1 per cent.
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