Wary of a bubble at home, Chinese diversify by buying in Singapore

April 9, 2010
Singapore Democrats

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Sonia Kolesnikov-Jessop

The New York Times

For some time now, China’s property market has looked like a bubble about to pop. As a result, many Chinese have been putting their wealth into real estate markets further afield, notably in Singapore.

The Chinese ranked No. 3 among foreign buyers here in 2009, making 15 percent of all foreign purchases, according to Chua Chor Hoon, head of Southeast Asia research at the property consultancy DTZ Debenham Tie Leung.

That share of foreign purchases, which totaled only 8 percent as recently as 2005, put the Chinese just behind Indonesian buyers, who held the No. 2 spot. Malaysians led the rankings.

And China’s rising impact on the market looks set to continue this year.

Tay Huey Ying, director of research at the local Colliers International agency, estimates that Chinese buyers accounted for almost 16 percent of the foreign sales in the first two months of this year.

Ong Choon Fah, DTZ executive director, says Singapore is attracting the Chinese because its prices have not recovered “to the extent seen in gateway Chinese cities and Hong Kong.” According to DTZ, Singapore luxury condominium prices averaged 1,456 Singapore dollars, or $1,140, per square foot for prime units in the first quarter of this year, while luxury unit prices in Hong Kong in January averaged 11,863 Hong Kong dollars, or $1,527, per square foot.

While the Lion City’s market began to recover from the global downturn during the third quarter, 2009 prices were up only 1.9 percent year on year, according to the Urban Redevelopment Authority. The property consultancy Savills said the high-end residential sector outperformed expectations last year, with prices rising 3.9 percent year on year.

But data show the majority of Chinese buyers actually are buying from Singapore’s mass market sector rather than the luxury end.

“Compared to other foreign buyers, Chinese buyers generally have a lower preferred price band of 500,000 Singapore dollars to 1 million dollars, and in terms of unit price, they are also more conservative,” said Chua Yang Liang, head of research for South East Asia at the Jones Lang LaSalle real estate agency.

As an example, he said some of the projects that might interest this group included The Vision at West Coast, a new 255-unit development, and the 765-unit Waterfront Gold.

According to detailed data by Savills, more than half the homes bought by Chinese in 2009 ranged from 500,000 dollars to 1 million dollars, while about 20 percent were 1 million to 1.5 million, and less than 20 percent were 1.5 million to 5 million.

Brokers say the Chinese are buying properties to live in while they seek employment. “Singapore is an easy place to settle in, in terms of culture and distance from China,” said Mrs. Ong of DTZ. “Many are also buying for their children who are, or will be, studying here before they head west for further studies.”

And while mainland Chinese buyers remain rare at the top end of the market, meaning properties valued at more than 5 million dollars, some have bought prime properties like the bungalows in Sentosa Cove, the only location where foreigners who are not permanent residents are allowed to buy property with land.