Record buying of Singapore properties by foreigners

Foreigners snap up 16% more private homes in Singapore.

DTZ reports that this 16% increase is the highest quarterly percentage by their reckoning. The last one was a 15% increase in the last quarter of 2007.

According to DTZ, the research report is based on caveats lodged for both new and secondary sales. Caveats lodged are used as a proxy for sales transactions, thus the terms 'transactions' and 'caveats' are used interchangeably in this report.

Among non-Singaporean buyers which comprise foreigners and Permanent Residents (PRs), a new record high was also reached in Q1 2011 by the mainland Chinese. They made up 24% of purchases among non-Singaporeans in the quarter, overtaking the Malaysians who have held the top position since Q2 2008. The Malaysians’ share amongst non-Singaporeans dipped from 24% in Q4 2010 to 21% in Q1 2011.

The government measures implemented on 14 January to ensure a stable and sustainable residential market affected mostly demand in the secondary sales market and particularly in the month of February. 745 caveats were recorded in the secondary market in February compared to 1,664 in January 2011 and 1,890 in December 2010.

Besides the cooling measures, another factor could be due to February being a shorter month with the Lunar New Year public holiday. Nevertheless, the secondary sales volume rebounded to 1,592 caveats in March, close to the January level, as the knee-jerk reaction to the cooling measures appeared to wear off.

Small units below 1,000 sq ft continue to be popular, especially among purchasers with HDB addresses. The proportion of buyers with HDB addresses who bought units below 1,000 sq ft
increased from 41% in 2010 to 46% in Q1 2011. Among buyers with private addresses, the proportion who bought small units increased from 27% in 2010 to 29% in Q1 2011.
DTZ’s analysis also shows that a higher proportion of foreigners bought into the high-end market in 1Q 2011.

For transactions costing $1.5 million and above, the proportion of purchases made by foreigners increased from 17% in Q4 2010 to 21% in the quarter. On the other hand, the proportion of transactions made by Singaporeans for purchases below $500,000 was higher at 80% in 1Q 2011, compared to 72% a quarter earlier, reflecting the smaller budget amongst Singaporean buyers.

Ms Chua Chor Hoon, Head of DTZ South East Asia Research commented: “The residential market appears to have taken the January 2011 cooling measures in its stride. However, local concerns about high housing prices and the influx of foreigners that were magnified during the recent General Election will be a catalyst for the review of immigration and housing policies, which could dampen demand in the residential market in the coming months.”