SINGAPORE Reuters - Wealthy mainland Chinese have been the top foreign buyers of expensive private properties in Singapore this year, as the city-state reaps the benefits of post-pandemic reopening and a strong currency despite tax increases.
From January to August this year, Mainland Chinese buyers sold almost one-fifth of the 425 luxury units - defined as costing more than S $5 million $3.52 million. This was followed by 34 units bought by Americans and 28 units by Indonesians.
Singapore has been a magnet for the mega-rich, who have been wooed by the Southeast Asian city-state's stable politics, strong currency and reputation as a safe haven to park assets, according to analysts. Singapore's property prices have accelerated slowly, with few booms and wild busts seen in other popular markets.
China is facing a property crisis, with slumping sales and developers defaulting on debts, and consumer confidence has been soured by repeated COVID 19 lockdowns.
The number of luxury units sold to foreigners in Singapore in the first eight months of the year has more than doubled the 282 in the same period in pre-pandemic 2019 and 322 in 2018 as a whole.
The data, from the Urban Redevelopment Authority and property consultancy OrangeTee Tie, shows that Singapore property remains popular among foreigners despite the government raising taxes for purchases last December.
Stamp duties for foreigners without permanent residency were raised from 20% to 30% in a bid to cool the private property market.
From January to August this year, 143 luxury apartments were sold to these foreigners - higher than the 136 during the same period in pre-pandemic 2019.
In June a Chinese tycoon splurged over S $85 million on 20 new units in central Singapore, while another Chinese buyer snapped up four units for around S $60 million.
Singapore has also been active wooing the poor, giving tax incentives to family offices, created by wealthy families to manage their money, and issuing visas to those earning more than S30,000 a month.
The number of family offices went from 400 at the end of 2020 to 700 last year. The co-founder of Fosun International, formerly known as the billionaire Liang Xinjun, is a high profile one.
Nicholas Mak, head of research and consultancy at ERA Realty Network, said mainland Chinese and Malaysians were the two biggest buyers of Singapore property before the epidemic.
The 30% tax is a lot of money for the average buyer, but is merely part of the transaction costs for the ultra rich, according to Professor Sing Tien Foo, who analyzes real estate at the National University of Singapore.
The Singapore dollar is a stable currency with its history of being a stable currency, encouraging foreigners to park assets in Singapore, said Mak.
When you invest in foreign assets, you want to make sure that the currency doesn't depreciate 30% when you exit, he said.
Since Singapore opened its borders last year, there has been a lot of relocations to the country, including from Hong Kong, where COVID restrictions were still tight. The home rental and purchase prices have gone up because of this. Even the government subsidised flats on the resale market are passing the million dollar mark.
The government tightened loan limits for public flats last week in an effort to dampen demand.
In Singapore, one of the world's most expensive cities, home rents have risen to a seven-year high, even though its population has dipped in the past two years.