The changing profile of foreign players in the Singapore residential market

September 8, 2014 / By  

Be it foreign property developers hunting for development opportunities, funds eyeing properties to acquire, or foreign individuals wanting to invest in a residential unit in Singapore, the local scene was abuzz with foreign investors over the last decade. However all that changed with the myriad of government policies introduced to stop the residential market in Singapore from getting too hot.

Percentage of foreign buyers in the private residential market has fallen

The proportion of property purchases by foreigners to all private residential purchases rose over three times between 2000 and 2011.

In 2000 foreigners made up only 4.1% of the market, representing 27 different nationalities with the majority from neighbouring countries such as Malaysia and Indonesia. By 2011, Singapore had progressed and solidified its position as a global financial hub, investment interest rose and foreign capital grew. The percentage of foreign buying also expanded to an all-time high of 17.5% of total private residential property purchases. However this had tapered down to 6-8% by 2012-14 given the higher stamp duty introduced by the government. While the proportion of foreign buyers to local has declined, the base of foreign nationals has widened. Today over 50 different nationalities are active in the local property scene, cementing Singapore’s status as a global city with an attractive investment environment in Asia.

Participation from foreign developers

Likewise, in the past, foreign developers’ participation in land development in Singapore was limited to a handful from neighbouring countries such as Malaysia and Hong Kong. As Singapore’s business and property markets moved up in transparency, the greater ease of doing business, and positive investment mood attracted a greater number of foreign developers into the residential market, especially those from China.

According to JLL data, foreign participation in the Government Land Sales (GLS) programme (the only regular source of public land for development on the island) post the global financial crisis stood at 5.5%.This percentage jumped to an all-time high of over 20% by 2013, before softening to 13.1% in 2014 as a result of the cut back in land supply.

In the past, many foreign developers partnered with locals in the development of residential land. Increasingly, these same foreign developers have embarked on such projects on their own, after having gained sufficient confidence and familiarity with the local market. However given the property cooling measures currently in place, these developers are likely to take a more cautionary stance going forward.

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