Locals Dwarf Home-Buying Spree By Foreigners In Q2

Source : The Business Times, September 19, 2007

Koreans become major players; foreign buying hits record 2,864 units

(SINGAPORE) Foreigners, including permanent residents, bought a record 2,864 private homes in Singapore in the second quarter, up 34 per cent from the preceding quarter and more than twice the 1,221 private homes that they invested in during the same period a year ago.

But even this brisk buying was dwarfed by Singaporeans, who accounted for 68 per cent of caveats lodged for private home purchases in Q2 this year, up from 65 per cent in Q1.

In contrast, foreign buyers' and PRs' share of total private home purchases slipped to 25 per cent in Q2 2007, from 27 per cent in Q1 2007.

Companies, meanwhile, accounted for the remaining 7 per cent of private home buyers in Q2 2007, reflecting strong collective sales as well as acquisitions by numerous funds investing in residential property, according to DTZ Debenham Tie Leung's analysis of caveats captured by Urban Redevelopment Authority's Realis system.

DTZ's report also showed Koreans are growing in prominence and accounted for 6 per cent of foreign buyers in Q2, their highest share ever. Koreans' share among foreign buyers has been growing steadily over the past year.

The figure used to be around one to 2 per cent in 2004 and 2005, but rose to 2 to 4 per cent in various quarters last year. Koreans hardly featured as buyers in the 1990s.

The 185 private homes Koreans bought here during April to June 2007 reflected a 76 per cent quarter-on-quarter increase.

Growing purchases by Koreans reflect not only acquisitions by Korean nationals residing here, some drawn to Singapore by their children's education, but also efforts by major Singapore developers to market their projects in Korea, DTZ executive director Ong Choon Fah observed.

Indonesians and Malaysians continued to be the largest groups of foreign buyers, accounting for 22 and 18 per cent respectively of overall private home purchases by foreigners in April to June 2007. This was followed by buyers from India, United Kingdom and China.

Nearly 96 per cent of the 2,864 private homes foreigners picked up in Q2 were private apartments/ condos, with landed homes making up the remaining 5 per cent.

The 2,743 apartments/ condos foreigners bought in Q2 comprised 2,062 units purchased in the secondary market - up 44 per cent from Q1 and a record quarterly figure - and 681 units acquired from developers in the primary market.

A further split of the secondary market purchases showed that 455 units were acquired in the subsale market and 1,607 units in the resale market. The latter figure was up 37 per cent from the preceding three months and a fresh high.

Resale deals are secondary market deals in developments that have received their Certificates of Statutory Completion, while subsales involve projects that have yet to do so.

DTZ attributed the strong foreign interest in resale properties to the current buoyant leasing market. Given the tight supply of rental properties in the prime districts, many expats are choosing to buy homes. Their preference is for completed properties that they seek to occupy themselves.

The 455 subsale apartments and condos that foreigners bought in Q2 represented a 32 per cent quarter-on-quarter increase and was the second highest quarterly figure ever - trailing only the 485 units snapped up in Q4 1995.

The Sail @ Marina Bay, Sky@eleven and Icon were among the projects popular with foreign buyers in the subsale market in Q2.

In the resale market, the most highly-sought after developments among foreigners included Sanctuary Green, Pebble Bay and Water Place (all in the Tanjong Rhu area), Queens and Valley Park. In the primary market (units purchased directly from developers), Casa Merah, RiverGate, One-north Residences and The Solitaire were among foreign buyers' favourite projects.

Mrs Ong predicts that foreign buying will continue to be steady in the second half of 2007.

'Sub-prime has taken some froth out of the market; but this affects more the specuvestors (who buy for capital gains but don't mind holding on to the property, waiting for its price to rise). Foreign buyers, however, are purchasing more for owner occupation or long-term investment, drawn by Singapore's success in reinventing itself. Property prices here are higher than two years ago, but then Singapore today is very different. It is a very desirable place to invest and live in,' she said.