Singapore's real estate investment in Australia ballooned 141% to US$3.5b

Singaporean investors are attracted to the country's proximity, lease structures, and market transparency that investments quadrupled in the last 7 years.

Despite skyrocketing property prices, Singapore’s real estate investment to Australia has soared by 141% in over a year to US$3.5b, Real Capital Analytics latest data revealed. 

Cushman & Wakefield regional director for capital markets in Asia Pacific Priyaranjan Kumar told Singapore Business Review that since the Global Financial Crisis, investments into Australia from Singapore have quadrupled from about $1b in 2010 to in excess of $4b in 2017 with an annual compounded growth rate of 20%.

In an interview, Knight Frank Singapore director of consultancy and research Alice Tan added that “Australia has been a popular overseas property destination for Singaporeans, especially for the recent two generations. It continues to maintain its appeal as evident from recent survey findings from Knight Frank’s 2018 Wealth Report, where Australia ranked second on the list of top five destinations where Singapore Ultra High Net Worth Individuals (UHNWIs) plan to buy prime property in 2018.”

Kumar added that the composition of the property type has also evolved dramatically; hotels accounted for on an average of 40% of total investments in the previous decade whereas office now accounts for in excess of 40% of total investments and reached a peak of 60% of all investments last year. Industrial, hotels, and development land continue to find favour with Singapore investors over the last decade.

“Outside of Singapore, Australia and UK boast two of the most transparent and stable property markets globally for Singapore investors who are largely very institutional in their approach to investments," he explained.

Tan concurred with Kumar, “Australia’s economic resilience, adaptability and 26-year record of steady growth provide a safe, low-risk environment in which to invest and do business.”

Moreover, according to Knight Frank’s 2017 Wealth Report, an extra 4,000 high-net-worth individuals emerged in Sydney over the last year – the highest net migration of all cities, globally.

Why is migration to the land down under so high? “Australia is a favoured investment destination for more reasons than one. Language, high quality of developments, long tenured lease structures, high degree of market transparency, property laws, freehold land titles, and historically very liquid secondary markets are some of the factors which make investing down under very attractive," Kumar said.

Moreover, Tan noted that in the case of Sydney, over the last five years, Sydney’s luxury property market has consistently outperformed global peers. "The city has seen 10 consecutive quarters of consistent price growth in Knight Frank’s Prime Cities Index, which compares the price movement of luxury properties globally," she said.

Part of the country's attractiveness to Singapore is its shorter proximity to the lion city, compared to European and US cities for a similar enviable lifestyle. "The 5- to 8-hour flight distance from Singapore to many Australian cities makes travelling easier for business, vacations, multi-home ownership and education," Tan said.

Overall, she added that there is strong long-term capital appreciation potential for investors.

On the topic of the best Australian cities to invest in for Singaporeans, Kumar noted that Sydney remains the top city for Singaporeans to invest in. However, investments into Melbourne have gained substantially since 2013.

"Outside of these two cities, Brisbane and Perth are the other cities favoured by Singapore investors. Total investments in these four cities account for 80-85% of total investments into Australia. This is also generally true for retail investors. All four cities boast top universities whilst the quality and pace of life in Perth have also made the city attractive for those looking to emigrate," he added.

Tan observed that Perth and Melbourne are popular cities for retirement whilst Sydney is popular as an investment and business hub as many multinationals are headquartered there.

“Singapore investors could possibly expand beyond residential property investment to other property types in Australia, such as office, suburban retail and student accommodation,” she concluded. “However, investors need to be cognisant of the differing tax jurisdictions and related costs for each city, state and property type, and seek professional advice.”

Photo by Paul Holloway CC BY-SA 2.0