Foreigner Factor In Property Here To Stay

Source : The Business Times, March 27, 2008

Rising rents, influx of foreign talent set to spur demand for homes, say analysts

THE attraction to foreigners of buying a non-landed home in Singapore isn't expected to wane in the mid- to longer-term, say property experts.

Jones Lang LaSalle's head of research (SE Asia) Chua Yang Liang expects the ratio of foreign buying to be maintained in the short term - because of sub-prime uncertainty - but to increase moderately in the medium to longer term.

'A key factor is that residential rents have moved up quite a fair bit, and the low interest rate environment will encourage more foreigners and PRs (living here) to consider taking up home ownership,' he added. This, of course, is assuming that they can get loans.

Another factor that will contribute to the trend is the government's policy of encouraging more immigration into Singapore to power the Republic's economic growth, say market watchers.

Knight Frank executive director (residential) Peter Ow notes that non-PR foreign investors were last year a major buying force especially in the Core Central Region (CCR), drawn by the story of Singapore's transformation into a global city and its ambitions to be a hub in many fields - including financial, healthcare, education, R&D.

'The implication is that Singapore's property prices, especially in CCR, will be more affected by events in the rest of the world such as the sub-prime crisis which is now unfolding.

'But that's not necessarily a bad thing. If the situation worsens overseas and international investors view Singapore as a safe haven, that could draw more foreign funds to the local property market, especially in the CCR,' Mr Ow reckons.

'Increasingly, we may see more foreigners who will be able to afford properties in CCR. That also explains why some high-end residential developers are feeling pretty confident that prices will not slide in the luxury tier, as demand is being supported by foreign investors looking for a place to park their monies,' Mr Ow said.

A 12 percentage-point slide in Singaporean buyers' share of private apartments/condo purchases in the Outside Central Region - which covers mass-market suburban locations, the staple of Singaporean upgraders - between 2000 and 2007 revealed in JLL's study may have implications on that perpetual Singaporean dream - of upgrading to a private condo.

'The authorities may have to ramp up supply of the high-end of public housing, like the Design, Build and Sell Scheme (DBSS), and executive condos (ECs) to cater to local home buyers,' Mr Ow suggests.

ECs are condominium housing that have resale and other restrictions in the first 10 years, while DBSS are public housing flats designed, built and sold by private sector developers.

DTZ executive director Ong Choon Fah also says these housing types will help meet the aspirations of Singaporeans who feel priced out of private housing. 'There's a right product for everybody. We must understand that in a global economy, there is open competition. We must embrace meritocracy. Anybody can buy the product if they can pay. To survive, Singapore must keep attracting the best.'