Foreigners back in private home market

Source : Straits Times – 5 Nov 2009

FOREIGN buyers are streaming back into the private homes market in growing numbers, especially those from China.

New research from property consultancy Savills Singapore shows foreigners accounted for 22.7 per cent of private home sales in the third quarter – above the 19.7 per cent average since the start of 2000.

Buyers from China have dislodged those from India for the No. 3 spot in the rankings this year with a contribution of nearly 15 per cent of total foreign purchases. This puts China just behind Indonesia in the second spot and Malaysia at No. 1

In the past two years, India had been in third spot, but it has slipped to fourth.

Last year, buyers from China had moved up to the No. 4 spot, dislodging buyers from Britain.

Buyers from Myanmar featured more strongly, coming in at No. 8. They did not make it to the top 10 last year, and were 10th in 2007.

In the July to September period, foreign buyers – including permanent residents – lodged 2,448 private home caveats, a key step to buying a home.

This is up from 1,807 caveats in the second quarter and just 498 in the first, according to data compiled by Savills.

In all, permanent residents bought 1,389 homes in the third quarter.

DTZ said its preliminary data for the third quarter showed that foreigners accounted for about 25 per cent of total sales, compared with about 33 per cent during the boom of 2007.

The most popular project sought by foreigners was Sophia Residence, a project launched in July. Then came Caribbean at Keppel Bay, Ascentia Sky, One Devonshire and Viva.

Permanent residents preferred Melville Park, a 99-year leasehold condominium in Simei, the recently launched Trevista, followed by Caribbean at Keppel Bay.

About 54 per cent of the purchases by China buyers were for resale homes, said DTZ head of South-east Asia research Chua Chor Hoon.

Like Malaysian buyers, buyers from China tend to prefer homes priced between $500,000 and $1 million.

One-fifth of them bought homes costing $1.5 million to as much as $5 million.

Indonesians, however, tended to go for higher priced projects, particularly those priced $1.5 million to $5 million.

They like properties located at Novena, River Valley and the Singapore River.

They had been the biggest group of foreign buyers, taking first place from 2004 to 2007, only to lose the spot to Malaysia during the recent economic crisis, said Ms Christine Sun, Savills Singapore’s senior research & consultancy manager.

The latest figures featured a substantial rise in the number of foreign transactions for higher-priced properties.

A total of 86 properties priced above $5 million were sold in the quarter, up from 27 in the second and a mere six in the first.

Also, there was a 60 per cent rise in deals for projects costing between $1.5 million and $5 million. Demand from foreigners for mass market homes was little changed from the second quarter.

Savills said recent data showed that foreigners who are not permanent residents tend to buy more pricey projects.

This group was also more likely to buy homes in prime districts than permanent residents, said Ms Sun. ‘We are hearing that more of these super-rich mainland Chinese buyers have come in recent weeks to buy prime properties like the bungalows in Sentosa Cove.’

But the big influx of foreigners to the luxury market in the 2006-2007 boom has not quite returned, consultants said.

Still, support from regional buyers could rise further. Jones Lang LaSalle’s head of residential, Ms Jacqueline Wong, said the firm has had rising interest from new potential buyers from India, China and Russia in the past four months.

‘We are one of the places they are considering. They see Singapore as a safe haven,’ said Ms Wong.

A senior private banker at a foreign bank said: ‘We are seeing some clients consider buying a Singapore property as one of a string of homes they have around the world. Luxury homes have come down 30 per cent from the peak, so they are better value now.’

DTZ’s Ms Chua said foreign buyers see the growing attraction of Singapore as a global city and expect prices to keep rising as the economy strengthens.

‘Prices of prime and luxurious units have not reached 2007 levels and there is still the potential of capital appreciation depending on the rate of economic recovery,’ she said.