Here’s what’s fueling luxury transactions in Singapore’s property market

It’s not just the impetus from Indonesia’s tax amnesty.

The impetus from the Indonesian tax amnesty may not be the only thing fueling sales in the Singapore luxury home sector.

Jefferies reported that based on an informal discussion with private bankers, real estate agents and corporate lawyers, two other factors are also driving the growth in high end transactions in the local property market.

Firstly, businesses are morphing into family offices or investment hold companies.

“Companies which are not involved in real estate are closing down or merging because of various reasons including lack of growth, cost pressures, thin margins due to competition, succession planning issues and/or outright bankruptcy. Such business owners are partly investing the cash proceeds into investment property to seek rental income,” Jefferies noted.

Secondly, transaction of luxury spaces seem to also be fueled by the introduction of stamp duties in Australia and UK, as well as concerns around Brexit.

“As of quarter ending March, Singapore had the weakest luxury market for 7 consecutive quarters according to Knight Frank. Combined with this, tax regimes have changed in other cities. For example, stamp duties have been introduced in London for second homes and application fees have been introduced for foreign property buyers in Australia,” Jefferies stated.

“Thus the ABSD regime in Singapore is finding parallels in other places too and Singapore is attracting some of the investment dollars,” it added.