Tag Archives: Malaysia

Govt: Beware oversupply in Iskandar

Real estate investments in other countries could suffer losses and it would be hard to find tenants if there is a flood of properties, according to Minister for Culture, Community and Youth Lawrence Wong, who was speaking on behalf of Deputy Prime Minister and MAS Chairman Tharman Shanmugaratnam during a parliamentary session on Monday.

He was responding to reports about the aggressive construction activity in Johor and Iskandar, and also fielded questions from MP Lee Bee Wah on how many Singaporeans have purchased properties in Iskandar and how are local banks protected if many of these individuals default on their mortgages.

“There is indeed a real concern about future oversupply in the property market there and hence the potential decline in value of homes.

“Based on data from Malaysia’s National Property Information Centre (NAPIC), there are around 336,000 new private residential units in the pipeline — more than the total number of private homes in Singapore,” he said.

This number excludes the planned properties for the 1,400ha reclaimed land near Tuas Second Link that are expected to enter the market by 2020, Wong noted.

Given the situation, buyers have become more cautious and the number of Malaysian properties purchased through local property agencies has plummeted to 838 in 2014 from 2,609 in the previous year.

However, not all Singaporeans are aware of this, so the central bank and the Council for Estate Agencies (CEA) will continue to warn them about the risks involved in foreign property purchases.

Mr Wong also said the exposure of Singapore banks to overseas real estate is very small as they are strict on granting mortgages for such properties. In fact, such loans account for only two percent of the mortgage portfolios of major financial institutions in Singapore.

“In addition, the Total Debt Servicing Ratio (TDSR) framework introduced by MAS in June 2013 requires lenders to assess the debt servicing ability of their customers for all new property loans, regardless of whether the property is in Singapore or overseas,” he added.


Indonesians are among top buyers of S’pore property

Indonesians were the third largest group of overseas property buyers in Singapore during the first quarter of 2013, accounting for 24 percent of all foreign deals.

“Indonesia’s purchase position rose one percent from 2012,” said Novriyanto Lius, a property sales manager executive at Far East Organization, who predicted that purchases by Indonesians will grow to 30 percent by 2014.

Meanwhile, mainland Chinese remained the largest group of foreign buyers at 30 percent, followed closely by Malaysians at 27 percent.

According to Lius, robust interest from Indonesian buyers was attributed to the government’s property policy which makes it easier for foreigners to acquire property.

Back in 2012, Singaporeans owned 80 percent of homes in the country, 13 percent were owned by property agents, while foreigners accounted for the remaining seven percent.

However, foreign homeownership jumped to 12 percent in Q1 this year. This despite the fact that property in the city-state is considered expensive, with the most affordable private property priced at around S$600,000.

The government has been trying to cool the property market as near-record low interest rates and immigration fuel a surge in demand. It raised stamp duties for foreign buyers in January while introducing new loan borrowing limits.

Furthermore, an additional stamp duty was placed on Singaporeans looking to buy their second property and permanent residents (PRs) buying their first home.

Source – PropGuru – 22 May 2013