Singapore: a Haven of Stability
Aerial view of Singaporeâs ever-changing skyline.Despite the sluggish market and weak economic outlook, Singapore is still considered a safe bet by foreign investors, according to analysts.By Michelle YeeAlthough the property cooling measures such as the Additional Buyerâs Stamp Duty (ABSD), imposed by the government in 2011 to calm a heated market and avert an asset bubble caused foreign buyers to stay away since 2012, resulting in a a slowdown in the countryâs residential market, analysts feel that foreigners are starting to shift their focus back to Singapore, as many of them view the city-state as a safer investment destination as compared to other countries.âIn recent years, transaction volumes have been picking up, rising 16 percent year-on-year in 2016, and continuing to be active in 2017. New sales launches are generally doing well, enjoying keen response from buyers. The perception that prices could be bottoming also led many buyers back to the market. In 2016, residential property purchases by foreigners accounted for 6.7 percent of total residential transactions, while in the first five months of 2017, the proportion was slightly higher at 6.9 percent,â shared Ong Teck Hui, National Director, Research and Consultancy at JLL.Last year, Chinese developer Qingjian Realty made headlines when it paid $638 million for Shunfu Ville via a collective sale in May. They also won the tender for a mixed-use development site in Bukit Batok West for $301 million that same month.Similarly, in the commercial sector, sales transactions have also been on an uphill trend.âActivity in Singaporeâs office investment sales market (comprising private sector deals above $5 million and all public sector deals) picked up momentum in 2016, following two years of contraction in 2014 and 2015. The overall sales volume hit a nine-year high of $ 9.06 billion in 2016, driven by mega deals such as Qatar Investment Authorityâs acquisition of Asia Square Tower 1 for some $3.4 billion, and IOI Propertiesâ purchase of the Central Boulevard Government Land Sales site for $2.57 billion. Foreign interest in Singaporeâs office properties also continued into 2017 with Hong Kong Land, Fullshare Holdings, Simply Swift Limited â a wholly-owned subsidiary of HK-listed Shun Tak Holdings and Lei Shing Hong Properties (Singapore) amongst those who made purchases in the first six months of the year,â added Tay Huey Ying, Head of Research and Consultancy at JLL.Sharing her thoughts on the increase in foreign funds into Singapore, Christine Li, Research Director at Cushman & Wakefield said: âDue to global market volatility as a result of Brexit and the continued deterioration in the oil and gas industry, foreign investors see Singapore as a safer investment destination where investment is fairly protected due to the strength of the Sing dollar.âWhy invest in Singapore?Many people from all over the world know Singapore to be a place that is not only stable and effective, but the country also has a strong economy and boasts a world-class education system. That said, another big pull factor for foreign investors is that as compared to other countries in the world dealing with Brexit, an unpredictable Trump presidency in the US, political unrest in the Middle East, as well as terror plots in Europe and some parts of Asia, Singapore is considered to be a very safe place to invest and even live in.âSingapore has strong fundamentals including political stability, economic growth and progress, market transparency and an effective legal system. The residential property market, on the other hand, has a track record of long term capital appreciation. Investors from some nearby countries see Singapore as a safe haven to invest some of their wealth, taking into account the appreciation of the Sing dollar against their currencies,â Ong said.Echoing similar sentiments, Shaun Poh, Executive Director of capital markets at Cushman & Wakefield said, âAlthough the market is sluggish, Singapore is still a safe bet compared with other developing economies, which may pose more risk and have greater uncertainty.âLuxury apartments with sea views are becoming more popular among buyers.Still a buyerâs marketFor those who are looking to invest in Singaporeâs property market, analysts share that now is a good time to buy as it is still a buyerâs market.âThe residential market appears close to the bottom of the cycle, and prices are expected to recover after that. Currently, it is still a buyerâs market as purchasers are still price sensitive. Therefore, sellers have been realistic in pricing â for example developers who are trying to move sales in their launches have to price the units realistically to attract buyers. There are numerous projects in good locations such as the prime districts and near MRT stations which could meet the needs of investors,â Ong shared.Analysts point out that foreign investorsâ interest for commercial properties have also remained strong as the price gap between buyers and sellers in Singapore has narrowed, following recent price corrections.According to the Urban Redevelopment Authorityâs price index, office prices dipped 0.6 percent in the fourth quarter of 2016 from the preceding quarter, marking a sixth straight quarter of decline, caused by financial and business services consolidating, while the completion of large projects also caused a short-term supply overhang.Overall, the total price decline in 2016 for office space stood at 2.8 percent, which is much steeper than the 0.1 percent dip reported in 2015.As such, discerning investors who are adopting a mid- to longterm view (about five to 10 years or more), are seizing opportunities to purchase assets in the office sector at lower prices.âInvestors continue to be keen on Singaporeâs prime office and suburban retail assets, which are closely held and rare to access,â Tay Huey Ying, Research Head at JLL said.Property hotspotsTo get a better idea on which areas and what type of properties foreign buyers favour, we spoke to analysts who shared that foreign investors are currently leaning towards condominiums in the prime districts or city fringe area, as these tend to be more in demand by tenants and could be more competitive for leasing. Developments near MRT stations and amenities are also popular with investors.âThe preference is still the prime areas â Districts 9, 10, 11, and District 4 (Sentosa, Keppel Bay) for non-Asian foreigners. That said, Asian foreigners are open to other areas like Queenstown, the Redhill cluster, Buona Vista and Paya Lebar. Most of the draw comes from availability of good quality stock in these areas,â shared Tay Kay Poh, Executive Director and Head of Residential Services, Knight Frank Singapore.Ong from JLL, on the other hand, said that new developments with good attributes generally tend to attract more buyers. âInvestors and buyers are usually drawn to developments with good attributes, for example, Seaside Residences in the East Coast area, which is situated near an array of amenities, a future MRT station, and enjoys sea views, found strong demand from buyers. Another example of a project that sold well is Park Place Residences at Paya Lebar Quarter, which is part of a prestigious mixed-use development at Paya Lebar, and is located near an MRT station served by two MRT lines.âWhat to look out forFor investors who are not sure which areas in Singapore they should invest in, analysts noted that they can begin by looking for properties that are situated close to amenities and are well served by transportation links. âI would recommend locations close to the MRT or transport nodes. For the purpose of investment, investors might wish to consider smaller developments with unique features as this would translate to lesser competition when seeking rental. Lastly, pick developers with brand reputation and have a good track record,â Tay said.NATIONAL HIGHLIGHTSSingapore is home to various high quality residential projects. We highlight two properties that are attracting keen interest from local and foreign buyers.NEW PROJECTSCluny Park ResidenceCluny Park RoadType: Luxury condominiumDeveloper: Tuan Sing HoldingsFacilities: Gymnasium, swimming pools, outdoor grill and lounge, JacuzziNearby Key Amenities: Botanic Gardens, Cold Storage supermarket, banks, specialty stores, clinics, cafes, pubs, bistrosNearest Transport: Botanic Gardens MRT stationStarting Price: S$2,310,000Cluny Park Residence is situated in Cluny Park Road, directly opposite the Botanic Gardens. This 52-unit project is surrounded by lush gardens and tranquil water features.In addition to being surrounded by verdant greenery, Cluny Park Residence is also flanked by a slew of exclusive good class bungalows and foreign embassies.Cluny Park Residenceâs unique location also provides easy access to various amenities.For families with young children, they will be pleased to know that there is a string of reputable schools nearby including Nanyang Primary School, Singapore Chinese Girlsâ School and Hwa Chong Institution. Hundred Palms ResidencesYio Chu Kang RoadType: Executive condominiumDeveloper: Hoi Hup RealtyFacilities: Gymnasium, swimming pool, clubhouse, barbecue pitsNearby Key Amenities: Heartland Mall, Hougang Mall, MyVillage at SerangoonNearest Transport: Kovan MRT stationStarting Price: S$715,000Hundred Palms Residences by Hoi Hup Realty is strategically located in the Yio Chu Kang area. This 531- unit project is unlike other executive condominiums as it only features spacious three- to five-bedroom units from 883 sq ft to 1,528 sq ft.Another notable feature is that it is equipped with a slew of smart features such as a digital door lock, an IP camera, and the lights and air-conditioners can be controlled via an app.For entertainment and shopping pursuits, residents can head over to Hougang Mall, Heartland Mall and MyVillage at Serangoon, which are located nearby.