Tag Archives: Real estate

Singapore property now less attractive to investors

While still considered a safe market, Singapore’s popularity with property investors has fallen.

Singapore’s appeal as a property investment destination for institutional investors has diminished this year, in comparison to other developed Asia Pacific cities, particularly in Australia and Japan.

This decline in popularity has been attributed to the property cooling measures, and the glut in office and logistics space amid softer consumer sentiment, said UBS in a report by The Straits Times.

In fact, property prices, as well as the volume of real estate deals and loans, would have been higher by around 33 percent if the cooling measures had not been introduced, said the central bank in November 2015.

Nevertheless, some institutional investors still view Singapore as a safe market, and there has been no exodus of property investors, according to Graham Mackie, UBS Asset Management’s Head of Global Real Estate for Asia Pacific.

Inbound investment to Singapore also surged 157 percent to US$3.4 billion in 2015 on a yearly basis, based on data from Real Capital Analytics. But this is still a far cry from the outbound capital of US$28.7 billion, which posted a growth of 49 percent.

Meanwhile, more money is being pumped into Australia and Japan’s property sectors, compared to those in Singapore, Hong Kong and China. Real estate yields in Australia are also significantly better than the risk-free rates in the market.

“Australia is a relatively efficient market with strong rule of law. The Australian dollar has depreciated significantly against the US dollar, and investors who are more swayed by currency considerations see Australia as relatively cheaper,” added Mackie.

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$1 million buys you 452 sq ft in Singapore

For US$1 million (S$1.4 million), you can purchase 452 sq ft of prime real estate in Singapore (or a small studio apartment), making it the world’s seventh most expensive place to buy luxury property, noted findings from Knight Frank’s Wealth Report 2016.

The city-state fell two places from last year’s report due to property price declines. According to the firm’s Prime International Residential Index, luxury prices here dropped by 2.1 percent in 2015. This year, Knight Frank expects prices to slide further by 3.3 percent.

“Singapore luxury property prices have dropped for several years now. The reasons for the fall are still in place – overall slowing economy, volatile financial markets, rising rates, and government cooling measures,” said Tay Kah Poh, Executive Director and Head of Residential for Knight Frank Singapore.

In the report, Singapore was named the number two Asian city, behind Hong Kong, with the most number of super-rich individuals. In 2015, there were 2,360 ultra-high net worth individuals (UHNWIs) living here, with this figure expected to grow by 48 percent over the next 10 years.

Alice Tan, Research Head at Knight Frank Singapore, said “a conducive business environment, clear regulatory framework and a progressive ecosystem of financial and business services have augmented its status amongst the wealthy as a preferred location to live and do business in Asia”.

Despite the various measures put in place to curb excessive investment by foreign buyers, property investment remains a favoured asset allocation among the super-rich. In fact, 79 percent of those surveyed would invest in Singapore and UK homes.

The report also found that the three main concerns among UHNWIs in Singapore are succession / inheritance issues, the global economic situation, and stock market volatility.

The report polled 400 private bankers, including 30 from Singapore.