As China reopens, analysts expect renewed interest in Singapore’s property market, but limited impact on overall prices.
SINGAPORE: The easing of COVID-19 measures in China is likely to see a renewed interest from its nationals in buying property in Singapore, but not in such numbers that prices here will be significantly affected, property analysts said.
With China abandoning its COVID-zero stance and the easing of all pandemic restrictions in Singapore, foreign buyers, particularly from China, are expected to return to the local property market.
“We expect more foreign buyers and permanent residents to return to Singapore’s property market, especially with the reopening of China’s international borders,” said Ms Christine Sun, senior vice president of research & analytics at OrangeTee & Tie.
“Many mainland Chinese buyers may start travelling here after the Chinese New Year holidays. Some may come to work, study, or conduct business. Some may rent while they take time to settle down in Singapore.”
Mr Lee Sze Teck, senior director of research at Huttons, also noted that foreign buyers have “returned in force” in January, with transactions increasing by 58.3% compared to the previous month.
For the past decade, mainland Chinese buyers have made up the largest group of foreign property buyers in Singapore. However, recent trends suggest that their numbers have not reached levels that would drastically affect the overall market.
In 2022, foreign Chinese buyers accounted for 26.5% of all foreign purchases in Singapore. However, their transactions made up only about 1.3% of the total private condominium sales. Despite being the largest group of foreign buyers, their impact on total sales remains minimal, said PropNex CEO Ismail Gafoor.
In 2022, foreign Chinese buyers purchased 241 non-landed private homes, marking the lowest number of transactions in over a decade.
Shifting Demand in Singapore’s Luxury Market
Despite the low impact on the broader market, analysts predict that the luxury property market may see a boost in 2023 as China’s reopening sparks renewed interest from super-wealthy buyers.
Mr Lee pointed out that super-wealthy Chinese buyers have been involved in several high-profile purchases, such as at Klimt Cairnhill, where 14 out of 17 units sold in January went to foreigners.
While foreign interest is expected to increase in the luxury segment, analysts agree that Singaporean buyers will continue to dominate this space.
However, foreign interest, especially from Chinese buyers, may contribute to headline-grabbing transactions in the luxury market, leading to some media-driven perceptions of an influx, even though data does not show a significant upward trend in foreign Chinese purchases.
Guardrails for Singapore’s Property Market
Despite the increase in foreign interest, property analysts are confident that Singapore’s property market will not see a drastic rise in prices. The government has put in place enough measures, including the high Additional Buyer’s Stamp Duty (ABSD), to limit speculative buying by foreigners.
Mr Nicholas Mak, head of research and consultancy at ERA Realty Network, noted that the uncertain economic environment, with Singapore’s growth forecast pegged at 0.5% to 2.5% for 2023, may further temper demand from foreign buyers.
Moreover, Mr Gafoor pointed out that the ABSD, which stands at 30% for foreign buyers, is a significant deterrent to foreign property purchases.
“The majority of Singaporeans buy HDB flats, and the Government has implemented enough safeguards to ensure foreigners are not able to speculate in the market,” Mr Gafoor said.
In summary, while the reopening of China may spark some renewed interest in the Singapore property market, particularly in the luxury segment, the overall impact on property prices is expected to be minimal, with Singaporean buyers continuing to dominate the market.
