15 Holland Hill

The question of whether Singaporean real estate is still appealing to international buyers is one that will continue to be discussed. Stamp duties have been raised by a staggering 10%, according to some, while others refer to the developing situation in Ukraine and the prospect for a flight to safety as a reason to assume the answer is no. Is it still possible to make a good sell to a foreigner, regardless of who is correct? What you need to know:

The Additional Buyers Stamp Duty (ABSD) on residential properties was increased in December 2021 as a result of new cooling measures. With a rise of 30% in price or value, foreigners and developers faced the burden (whichever is higher). As previously stated, this is a 10% increase above the prior prices.

 

Global Instability

Currently, Russia is on sanctions for its actions in Ukraine. Thus, oil prices have risen to levels not seen since the OPEC embargo of 1973. We’ve already seen this in Singapore, where corporate expenses and consumer numbers have been impacted by rising energy prices.

As a result, a foreigner who is willing to put up with both growing costs and higher ABSD would be purchasing an extremely costly ticket to safety.

When it comes to international ties, how certain can we be at this point that there is any?

The following are some of the most important considerations:

  • The current rise in the ABSD is twice as great as the previous one.
  • Now, our stamp duties are more expensive than those in our neighboring regions.
  • The amount of transactions on the CCR has decreased.
  • Foreign purchasers aren’t limited to residential homes while looking for a new home.

 

Current ABSD is twice as high as the last increment

Cooling measures in January 2013 only increased the ABSD on immigrants by 5%. (10 per cent to 15 per cent). In July of this year, additional measures pushed the rate up by 5%. (15 per cent to 20 per cent).

Increased by 10% in December 2021; double the previous round’s rise.

Agents for real estate have already spoken about a drop in enquiries and a potential downturn in the market. There is no more underplaying the impact of ABSD on foreigners, according to a realtor we talked to.

If I have a foreign buyer, they’ll only be interested in it as a high-end residence.” Last time I sold to a foreign buyer, they didn’t care about profit. This is just for enjoyment; there is no way to earn money off of it.’ “All the foreign purchasers I meet now are searching for houses, not investments,” says one buyer.

 

Singapore stamp fees are currently more expensive than those of our regional neighbors

According to several realtors, a popular 2017 sales pitch is no longer relevant. According to popular belief during the time of ABSD, Singapore was still less expensive than its regional competitors Australia and Hong Kong (the rate back then was just 10 per cent).

Australian and Hong Kong vendors now are able to make the same argument against us as before. Foreigners in Australia pay an extra 7% stamp duty, while those in Hong Kong pay an additional 15%.

We may lose a significant number of international purchasers to our neighbors if the supply of new launches declines and cooling measures take effect.

 

The amount of transactions in the CCR has decreased

Foreigner Chart

Examining the Core Central Region might help you predict the level of interest from international purchasers (CCR). This is where the majority of buyers from outside the country make their purchases.

CCR VolumeFor the time being, don’t worry about the price (which is rising owing to a lack of supply in response to rising demand). The CCR has seen a decline in transaction volume since the first and second quarters of last year, when traffic spiked. In Q4 of last year, the CCR recorded 764 resale transactions, but just 437 in Q1 of this year.

 

Foreign purchasers aren’t limited to residential properties while looking for a home

Keep in mind that commercial properties do not have ABSD, even though they make up the majority of the Singapore property market.

Investors are rushing to get out before the GST increases in 2023 and 2024, which would force them to pay GST on their commercial buildings. We can’t rule out the chance that investors would seek outside residential markets in 2021, when commercial assets are expected to return sharply.

Commercial assets, including non-residential REITs, are expected to attract some international investors in the next year.. The current conflict between Russia and Ukraine will have a significant impact on how this crisis unfolds.

 

Is this a sign that affluent overseas buyers will not be interested in purchasing your home this year?

Foreign investors may be scared off by the rise in stamp duty rates. There is hope for sellers, though, in the shape of a well-heeled overseas buyer.

For most investors, a 30% price increase is difficult to explain, particularly in uncertain times like the current one. However, this does not diminish Singapore’s desirability as a location to reside. At this point, wealthy foreigners who aren’t concerned with things like cash-on-cash returns or rental yields are more likely to be purchasers, and their purchases are more likely to be pleasures than investments.

Although the number of international purchasers may decline, the level of foreign demand is not expected to plummet dramatically.