Hong Kong investors take advantage of a correction in Singapore’s property prices

HONG KONG — Hong Kong investors are renewing their interest in Singapore, betting property prices will recover in the second half of this year, according to property consultants.

Just 29 homes were sold to Hong Kong buyers in 2018, some 42 per cent fewer than the previous year, after the Singaporean government introduced cooling measures to curb foreign buying demand.

The Additional Buyer’s Stamp Duty for foreign buyers was increased to 20 per cent from 15 per cent in July last year, while the loan-to-value limit was reduced by five percentage points for all housing loans. Individual borrowers’ loan limit on first housing loans was reduced to 75 per cent from 80 per cent, dropping to 45 per cent from 50 per cent for a second loan.

“We expect by the end of the second quarter of this year, property prices in Singapore will increase by 5 per cent, mainly due to an increase in prices of new developments and collective “en bloc” property sales,” said Mr Terence Law, senior principal project director at Centaline Property Agency.

Singapore’s property prices have continued to fall since the last quarter of 2018, declining 0.7 per cent between the final quarter of 2018 and the first quarter of 2019, but Colliers International estimates home prices will stabilise in the second half of 2019 and grow 1 per cent overall.

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Hong Kong buyers are likely to flock to the Singapore market while prices were still low, Mr Law said.

Meanwhile, Colliers International estimates Singapore home prices will stabilise by the second half of this year as it expects the market to have digested the cooling measures.

The announcement of an additional S$9 billion in investment from the city’s two integrated resorts could boost gross domestic product growth and employment, spurring confidence in the property market and attracting foreign interest, it said.

In comparison Hong Kong property prices have rallied since a 9 per cent price dip between August and December last year, with median home prices rising 5 per cent in the first quarter of 2019.

The Swiss bank UBS has since said Hong Kong’s property bull market has another 10 years to run.

“Notwithstanding the cooling measures that may be prohibitive for foreigners, we believe the similarities between Singapore and Hong Kong ... will still attract more Hongkongers to Singapore,” said Ms Tricia Song, director and head of research at Colliers International Singapore.

Centaline said currently about 15 per cent of foreign buyers in Singapore were from Hong Kong and China and expects these numbers to remain stable.

Hong Kong buyers are the sixth largest group of buyers of Singaporean property, after China, Indonesia, the US, Malaysia and India, according to data from Colliers International

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“In the medium to long term, our outlook for the Singaporean property market is largely positive, especially considering that property prices are still reasonable for Hongkongers,” said Mr Law.

Homes in the affluent Bukit Timah area and Marina Bay along the financial district are the most popular among Hong Kong and mainland Chinese buyers, he added.

On Saturday, Centaline began marketing 30 units at Aurum Land’s The Hyde development on Balmoral Road, Bukit Timah, ranging from 496 square feet to 1,798 sq ft at prices averaging at S$3,000 per sq ft. The smallest unit costs S$1.5 million.

For a similar budget, Hongkongers can buy a 320 sq ft unit at The Avenue next to Wan Chai MTR station.

“There are a limited number of new units available in Bukit Timah, even on the second-hand market, so we expect the Hong Kong sale will do well,” said Mr David Hui, Centaline’s general manager in Singapore.

Foreign buyers made up 18 per cent of first hand sales in Singapore last year and the numbers have stayed the same in the first quarter of this year, he said.

The Hyde is built on freehold land, which is another draw for foreign buyers. Freehold property is inheritable and there are no restrictions on the right of the property owner to further transfer the property.

In Singapore, 80 per cent of land is leasehold, held under 99-year or 999-year leases, after which ownership reverts back to the government. SOUTH CHINA MORNING POST

CLARIFICATION: This story has been amended with the correct prices for Aurum Land’s The Hyde development, following clarification from the developer.