Here’s why analysts aren’t optimistic about Indonesians binging on Singapore luxury homes

Indonesians bought 30 properties valued at $5m in 1H16.

It’s easy to interpret the recent binge of Indonesians on Singapore luxury property as a sign that property prices have bottomed, but analysts think it isn’t representative of a broad market trend at all.

According to a report by Jefferies, market participants alluded that the stepped-up buying coincides with the passage of Indonesian tax amnesty scheme.

“As such, following our publication of inaugural edition of “Rates & Realty”, we fielded queries asking a) if property prices have bottomed and one should follow the Indonesians? and b) if it makes sense to prefer developers over REIT counters,” the report noted.

However, the report added that the queries are suggestive of fallacy of small numbers and shows biases resulting from availability of data sets.

“In short, we continue to believe in further soft landing of property prices. On developers over REITs, the argument is nuanced especially as the yield curve has backed up in recent times and REITs are expensive compared to developers,” the report noted.