To buy or not to buy, that is the question. If Shakespeare was writing a play on the Singapore property market today, Prince Hamlet would be the avid buyer, and it would be a tale of hope instead of tragedy.
None of this optimism is staged, though COVID-19 is expected to shrink Singapore’s economy by a record 5 to 7 per cent. The slight dip in housing prices in early 2020 also raised concern about its property outlook in 2021.
However, there are encouraging signs pointing to a swift recovery. One of these is a surge in demand following the country’s gradual reopening, particularly from overseas investors and especially those from China.
New private home sales dropped by 58 per cent month-on-month in April 2020, but it was a blip as the market saw an impressive rebound. Private home prices rose 2.1 per cent in the fourth quarter of 2020, according to flash estimates by the Urban Redevelopment Authority (URA).
The arrival of COVID-19 vaccines on Singapore shores is also likely to improve buyer sentiments. Demand for luxury homes and big resale units spiked in late 2020, and resale prices are predicted to rise around 1 to 4 per cent in 2021.
Mainland Chinese buyers remain Singapore’s biggest foreign customers in 2020, said URA. This trend is likely to stay. A recent Business Times article revealed that Chinese buyers have overtaken the Indonesians as the largest group of foreigners buying homes in Singapore since 2011, except in 2012 and 2015.
Among those who have made their nest in Singapore, there has also been a shift in property buying behaviour – catalysed by work-from-home arrangements.
With more time spent at home, buyers have prioritised more spacious homes in suburban districts that are well-ventilated and have natural lighting. These are also near amenities like shopping malls and train stations.
What’s more, the spending habits of a stellar cast of wealthy foreign investors have generally been unaffected by border closures. Singapore’s partial lockdown caused only a brief interruption, as sales activity picked up via online platforms.
As the Singapore Business Review noted in a September 2020 report, foreigners are expected to continue forming about of private home buyers in the city-state in 2021. Many have trained their sights on luxury homes in choice locations.
“The prime districts have continued to see 30 per cent foreign buyer ship,” said Dr Tan Tee Khoon, Country Manager of real estate portal PropertyGuru Singapore. This healthy demand drove up prices in the high-end Core Central Region (CCR), jumping 3.3 per cent quarter-on-quarter in the last three months of 2020.
The mega-rich are a key driver of this demand, which is set to rise this year. “In recent years, there have been a number of ultra-high net worth individuals like Sir James Dyson investing in Singapore, including relocating their businesses here,” added Dr Tan.
Amid the pandemic, Singapore has remained an attractive haven. “Foreign buyers will continue to invest in Singapore because of the nation’s sound fundamentals, policy transparency, safety and political stability,” Dr Tan added.
Political uncertainty in Hong Kong has also made Singapore a potential real estate showstopper, noted a Reuters report.
These are the key reasons many mainland Chinese buyers have come not only to invest, but also to build a life. Apart from being employed in multinational corporations, they also work for major Chinese companies looking to be based here.
In May 2020, Chinese e-commerce giant Alibaba bought half of the S$1.68 billion AXA Tower in Shenton Way, while ByteDance – the parent company of video app TikTok – has reportedly set up shop at One Raffles Quay.
Their employees make up a pool of potential homeowners who, as their families join them in Singapore, will have more at stake. Meanwhile, their new Singapore property shields them from any yuan devaluations in China by acting as a stable source of investment.
The rapidly recovering Chinese economy will also lead to more Chinese buyers eyeing Singapore properties.
“China has a V-shaped economy recovery in 2020 amidst the pandemic, mainly due to domestic consumption and industrial output recovery. Hence, it is foreseeable that there will be pent-up demand in overseas properties investment from the Chinese investors once the border has fully reopened,” said Winston Lee, PropertyGuru’s Director of Special Projects.
“Developers need to be agile and start pivoting their marketing strategy to capture these Chinese investors during their discovery stages.”
As Singapore further reopened with Phase Three, the expanded group gathering size means the property show will go on with more in-person viewings. The appetite of returning Chinese buyers will revitalise the market as we head into the next normal.
Watch the video here to discover more insights on attracting Chinese property investors in 2021.