PETALING JAYA: Malaysians continue to be the second-largest group of buyers of Singapore’s non-landed residential properties by nationality year-to-date, after the Chinese.
Quoting Singapore’s Urban Redevelopment Authority (URA), Singapore-based property consultancies Cushman & Wakefield and Savills said Malaysians were the second-largest group after the Chinese for the first half of 2019.
Cushman’s research head Christine Li said the top-five nationalities buying into Singapore’s private housing were the Chinese (440 units), Malaysians (283 units), Indians (152 units), Indonesians (116 units) and Americans (65 units) for the first six months of 2019.
Savills research and consultancy executive director Alan Cheong said: “Buyers from China, Malaysia, India and Indonesia remained at the top of the list in the April-June quarter.
“Interestingly, foreigners who did not specify their nationalities topped the overseas charts for the first time in history, ” said Cheong in his August residential sales report.
The report said price growth in the second quarter suggested that the market had stabilised a year after buyers across the board were hit with additional stamp duties, with foreigners having to pay an additional 20% stamp duty from July 2018 onwards.
Foreigners whose nationalities were not specified topped the overseas charts for the first time in history, with a total of 260 non-landed private residential transactions in the second quarter of 2019.
This represented a sharp increase of 128.1% quarter-on-quarter (q-o-q).
For the July-August period, unspecificed foreign buyers rose even further to a total of 331 units.
This unspecified foreign category, said Cheong, refers to those who buy new uncompleted units from developers.
“They are all lumped under this category called ‘foreign unspecified’, ” he said.
He reckoned that Chinese, Malaysian, Indonesian and Indian buyers would feature strongly in this category.
Breaking down the non-landed residential market into prime districts, mid-tier districts and mass market districts, Cheong said Malaysians came out second in all three segments after the Chinese.
The Indonesians and Indians are also strong buyers of Singapore’s non-landed housing, followed by the Americans and the British, URA statistics showed.
Interestingly, the Vietnamese are also making their way to the city state. They are buying into the mass market districts, according to URA records.
Mass market can be loosely defined as properties that the masses can afford. This definition would, therefore, include the Housing Development Board (HDB) units, where about 80% of Singaporeans stay.
To avoid confusion, this article refers only to the private housing mass market and not HDB units.
Cheong said in contrast to the second quarter’s overall increasing transaction volume, the number of units bought by Chinese buyers dipped 0.5% q-o-q, which, he said “does not quite square with feedback from agents on the ground who opined that Chinese nationals were active in the market”.
“We believe that a high proportion of the unspecified foreigner category could be from China, ” he said in his report.
SLP International Property Consultants Pte Ltd said at its peak in 2011,6, 000 foreigners had bought into Singapore versus 1,200 in 2018.
Sales director David Neubronner said up to 16% of all transactions were by foreigners in 2011, compared to only 4% in 2018.
He said the high-end segment that sells for S$3,000 per square foot (psf) upwards in Orchard and Sentosa has not fully recovered since the collapse of Lehman Brothers around 2008.
Many who had bought then are still bleeding today, a generally unknown fact.
Also, because up to 80% of buyers of luxury residential units are foreigners, measures to curb foreign buying have taken the shine off this segment, he said.
Based on Savills’ latest sales report for August, this may change. According to the report, non-landed private housing, priced at S$3,000 psf, rose to 137 units in the April-June quarter, the highest figure since the last quarter of 2007.
Li said hedging against currency depreciation was the main reason for Chinese and Indonesian buyers.
“For some, their children might be studying in Singapore, or they may be flying to Singapore for routine medical check-ups.
“Singapore properties are still more affordable than those in Hong Kong, thus lower investment capital is required, ” Li said.
On whether she saw a rise or drop in Malaysians buying into Singapore after the change in government since May 2018, Li said: “There was not much change in the number of Malaysians buying Singapore property post-May 9,2018.
“Due to the hefty price tag of Singapore properties, those who can afford are usually of high net worth and government policies will usually not affect their investment decisions.
“However, in view of the weakening private consumption growth in Malaysia after the change in government, demand for mass market properties in Singapore might drop, ” she said in an email.
Malaysians generally prefer to buy housing below S$1.5mil, which is more mass market projects, she said.
As for Singaporeans buying into Malaysian properties, Li said Johor was among their favourites, due to its proximity to Singapore.
These purchases are regarded as vacation or weekend homes.
However, although these properties are much more affordable, quality-wise, they may not be comparable to (properties) in Singapore.
Johor had unsold completed residential units totalling 15,130, valued at RM11.89bil as at March 31,2019, according to the latest National Property Information Centre figures.
This includes commercial properties like serviced apartments and small offices, home offices (SoHos) which have a residential element in them. Unsold under construction units are excluded. If work-in-progress were to be included, the numbers would balloon considerably, especially for serviced apartments.
On Singaporeans’ perception of the large stock of unsold completed units in Malaysia, and specifically Johor, Li said “the investment haven portrayed is now irrelevant to many Singaporean investors.
“The low rentability leading to low yields, a weak currency and growing uncertainty have certainly drove Singapore investors elsewhere in the region.”
During the initial marketing period of Iskandar Malaysia, an economic corridor three times the size of Singapore, Singaporeans were persuaded by attractive promises that Iskandar Malaysia would be the next Shenzhen of South-East Asia. This did not materialise.
The uncertainty revolving around the high-speed rail project between Malaysia and Singapore, currently under review, has also dampened sentiment.