In Focus
| Staff Reporter, Singapore

What have foreign homebuyers been snagging in Singapore this year?

Amongst the units purchased by non-Singaporean buyers so far, half were completed units and half were uncompleted.

The private residential market was surprisingly resilient, despite the circuit breaker from 7 April to 1 June 2020 and the economy only able to reopen in phases, chalking up 3,862 primary sales and 3,071 secondary sales with prices falling by a slight 0.7% in the first six months of 2020, according to Knight Frank. In addition, it was a testament to the strength of the market when the URA Private Residential Price Index rose by 0.3% in Q2 2020, in a time when viewings were not allowed and showflats were closed for more than two months. During this period, most of the buyers were Singaporean. So where have the foreign homebuyers gone? 

Nowhere really... Leonard Tay, Head of Research, Knight Frank Singapore, says foreign homebuyers comprising both Singapore permanent residents and foreigners made up 18.3% of purchases in Q2 2020, a marginal drop of 1.9 percentage points over a 20.2% composition in Q1 2020. And this, at a time when hardly any cross-border travel was allowed. Taking into consideration that the proportion of foreign homebuyers made up 19.9% of all private home sales in all of 2019, Q2 2020’s 18.3% is also not too far off when compared to a year where market conditions were considered normal.

Here’s more from Knight Frank:

So in 2020, a year characterised by an unprecedented pandemic, where are these foreign homebuyers from and what are they purchasing? From January to about mid-August 2020, based on data from URA’s Realis (as at 18 August 2020), unspecified foreign nationalities accounted for a 6.4% share of all private residential transactions. This was followed by identified nationalities constituting active buyers from China (4.5%), Malaysia (2.1%), India (1.8%), Indonesia (0.9%) and the USA (0.7%). While the number of transactions by foreign homebuyers fell during April and May, sales volume picked up from June onwards due to pent-up demand despite most travel restrictions still being in place (Exhibit 1).

Amongst the units purchased by non-Singaporean buyers in 2020 to-date, half were completed units and half were uncompleted. Nevertheless, within the top five identified nationalities from China, India, Malaysia, Indonesia and the USA, some 75% preferred completed units. These buyers of completed units likely hold the traditional view that Singapore provides a safe haven for foreign investment with stable recurring income even in times of crisis (Exhibit 2). In the first six months of 2020, the overall occupancy rate for private residential homes stood steady at 94.6% in a time of pandemic-led economic recession.

In spite of mounting recessionary pressures, the higher price brackets also witnessed activity. Among the top five foreign nationalities, 30 buyers from China acquired homes of above S$5 million, while those from Indonesia and the USA accounted for 15 and 7 units respectively (Exhibit 3).

Homebuyers from China generally preferred locations in postal Districts 1 (Raffles Place, Cecil, Marina, People’s Park), 9 (Orchard, Cairnhill, River Valley) and 10 (Ardmore, Bukit Timah, Holland Road, Tanglin) for centrally located homes, while they looked to Districts 18 (Tampines, Pasir Ris) and 19 (Serangoon Gardens, Hougang, Ponggol) for suburban units. Buyers from India bought a larger proportion in the East and North-East of the island, from District 18 as well as Districts 15 (Marine Parade, Katong, Joo Chiat, Amber Road) and 19. At the same time, the prime Districts of 9 and 10 were the focus of buyers from Indonesia. 

Despite the advent of a global pandemic, the private residential market in Singapore has exhibited resilience in the face of the circuit breaker measures and travel restrictions. Although most buyers in 2020 were Singaporeans, foreigners actively participated with their proportion of involvement fairly similar to that of 2019, an ordinary year not afflicted by the COVID-19 outbreak or an economic crisis. For the rest of 2020 and in 2021, foreigners are expected to continue to constitute a support level of around 18% to 20% of private homebuyers in Singapore, and this might even increase moderately as travel restrictions are lifted over time.

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