When David, an executive of a world-leading mutual fund, traded Hong Kong for Singapore that year, he was delighted to find he was able to rent a six-bedroom house with a leafy garden for two-thirds the price of the three-bedroom apartment he was used.
“The family loves the extra space,” says David, who refused to give his real name. “Now we want to buy.”
Hong Kong shoppers and other expats have moved to Singapore since the city-state lockdown ended in June. This has helped strengthen the property market despite a record-breaking economic downturn.
But it can be a secret exercise. Many companies with offices in Hong Kong are reluctant to move executives en masse or fanfare if they complicate the Chinese government by suggesting that Hong Kong has become less attractive as a financial center.
Known as the Lion City of Asia, Singapore’s strong rule of law, low taxes, and one of the most connected airports in the world have long attracted international buyers and high-flying financiers. This despite the stamp duty, which can be up to 25 percent.
For example, James Dyson, the industrial designer and entrepreneur, bought a property in the city-state last year and paid S $ 73.8 million ($ 54.8 million) for a penthouse in the Central Business District (CBD).
However, the coronavirus has decreased in connection with the decrease in Hong Kong’s appeal since the passage of the new national security law in June Singapore’s stability is valued even more.
“Singapore is in a very strong position despite the real estate pandemic,” said Ismail Gafoor, managing director of PropNex Realty, Singapore’s largest private real estate company. He points out the government’s effective handling of the virus.
Even with a government lockdown imposed in April, May and part of June combined with very strict border controls, total transactions in high-end real estate were higher than last year.
In the first nine months of 2020, according to the Singapore City Development Agency, there were 2,362 transactions in the central central region, which is where the highest priced city-state houses are located. This corresponds to 1,962 in the same period in 2019.
This despite the fact that, thanks to the pandemic, Singapore is falling into recession for the first time since the global financial crisis. In the second quarter, the economy contracted 13.2 percent year-on-year – the largest decline since independence in 1965 – the government announced in July. This was followed in the third quarter by a decrease of 7 percent compared to the previous year.
Of the total sales in the first nine months, 260 units were sold to foreigners. Although much lower than the 316 in the same period last year, it was “sizeable” as the pandemic made buying extremely difficult for much of the year, says Gafoor. He adds that 75 percent of international buyers are from mainland China or Hong Kong.
When the city desk lockdown ended in June, there was a spike in overseas sales, says Christine Li, research director for Singapore and Southeast Asia at real estate agents Cushman & Wakefield. So-called non-landed transactions – usually in apartments or condominiums – by non-Singaporeans fell in March, April and May.
This trend was reversed in June. Sales rose by more than 200 percent compared to May, while July (plus 33 percent) and August (plus 5 percent) also increased compared to the previous month.
According to official data, prices for private residential real estate in Singapore have risen 1 percent year-to-date. Prices in the central luxury market fell 3.4 percent, but this was partially offset by price growth in the city’s outskirts (0.3 percent) and in the suburbs (1.4 percent), Li says.
Ella Sherman, associate executive sales director at Knight Frank, says she recently worked for a couple who were British expats who were born and raised in Hong Kong and who just moved to the city-state.
“Revenue has increased as more Hong Kong companies move to Singapore,” she says, adding that many of her clients are in the private equity space. “The influx of Hong Kong residents can lead to an increase in asking prices,” she added.
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A commercial tenant representative for a large real estate company said anonymously that companies were making a subtle move to Singapore and opening subsidiary offices. Over time, these would replace their Hong Kong offices as headquarters.
According to Gafoor, interest from Hong Kong-based buyers has not yet been fully reflected in the data. Many, like David, choose to rent houses first.
The global tech push during the pandemic should strengthen the Singapore real estate market. The city-state markets itself as Asia Technology capital and accounts for 59 percent of the regional headquarters of multinational tech companies in Asia, according to the Economic Development Board. Alibaba, Tencent and ByteDance, one of China’s largest companies, have announced plans to expand in Singapore this year.
“Tech giants are coming to Singapore and the middle management of these companies has been heavily rewarded because of market demand and stock price performance,” says Li. “They are looking for high-end properties.”
High stamp duty costs for overseas buyers did not deter the wealthy during the pandemic. “During this time, the rich get richer,” says Simon Wong of List Sotheby’s International Realty. The demand comes from customers looking to park money in Singapore for the long term. He adds, “It is considered a safe haven.”
It also appears that Sir James is staying, even though he agreed to sell his penthouse last month with a loss of more than S $ 11 million. He still has a luxury home in Singapore’s prestigious Botanical Gardens.
Foreign buyers face restrictions on buying residential property. Non-Singaporeans and non-permanent residents can purchase most of the condos or apartments, as well as country houses, in the Sentosa area. Permanent residents have better access to land but are required to make an economic contribution to Singapore.
Foreign buyers must pay additional stamp duty charges. Stamp duty for additional buyers is an additional 25 percent tax on your home price. There is an exception for US citizens and citizens of Iceland, Liechtenstein, Norway and Switzerland.