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They also account for 22.5% of all private-home purchases last year, the highest in at least 10 years

Foreign nationals including permanent residents accounted for a solid 44.1 per cent of private-home buyers in the high-end segment last year.

The percentage, which is for homes costing between $1 million and $5 million, is up on a 36 per cent foreign share in 2004 and 29 per cent in 2003, according to a research paper by Savills.

Overall, foreigners accounted for 22.5 per cent of all private-home purchases in both the primary and secondary markets in Singapore last year. This is up on an 18.4 per cent share in 2004 and is the highest figure in at least 10 years.

Looking only at the prime districts of 9, 10 and 11, this figure was as high as 40 per cent.

‘Districts 4, 8, 15 and 16 (HarbourFront, Little India and the East Coast) were also popular and recorded a sizeable amount of foreign buying interest due to several launches (Caribbean at Keppel Bay, The Azure, The Berth By The Cove, City Square Residences, The Sea View),’ says Savills.

Indonesians and Malaysians combined accounted for almost half of all foreign buyers last year. Indonesians had a 26 per cent share, followed by Malaysians with 25 per cent. UK nationals and mainland Chinese tied for third place, with a 10 per cent share each, followed by Indians with 9 per cent.

Savills’ full-year figures reiterate a trend of strong foreign buying of private homes that has emerged over the past 12 months or so. Foreign buying has been leading the recovery in the island’s luxury residential sector, while local buyers in the mass market continue to be cautious because of interest rate hikes and job stability concerns.

This has led to the much-discussed phenomenon of a ‘two-tier market’.

Singapore’s decision to go ahead with two integrated resorts with casinos in April last year also boosted the island’s profile among international investors, leading them to re-visit its property market, say property consultants.

Residential property prices here had been appreciating at a far slower pace than elsewhere in the region, making the Singapore market undervalued.

In terms of per square foot price, Savills says the average transaction price for the 15 most expensive deals in the luxury segment rose 9.2 per cent last year to about $1,700 psf. However, this is still about 13 per cent lower than the 1996 peak of $1,950 psf.

‘With continued positive sentiments over the future economy, we believe that Singapore’s residential prices will continue to rise, even surpassing the 1996 peak - over the next one-and-a-half years,’ it says.

Savills’ research head Wallace Chu reckons there’s still plenty of room for luxury home prices to recover. For one, the country now has a more modernised infrastructure than 10 years ago. ‘Moreover, as Singapore’s image as a global city becomes more acknowledged by foreign investors, proven by strong foreign buyer activities in the residential sector, this ‘international appeal’ will in turn support the luxury residential market’s recovery,’ he says.

On the growing foreign investor interest in the Singapore residential sector, Savills points to the competitiveness of the local market compared with other regional and international markets like Hong Kong, the UK and Australia.

‘Singapore property values are relatively cheap, but more importantly, investors now perceive that the Singapore market has turned the corner and offers excellent capital gains potential,’ Savills says.

‘Liberal investment policies such as the absence of a capital gains tax and currency controls, easy payment and banking financing schemes for foreign investors are some of the major attractions of the Singapore property market to overseas buyers,’ it adds.

Savills expects overall private home prices - as measured by the Urban Redevelopment Authority of Singapore’s price index for private homes - to rise by 5 to 10 per cent this year, following a 3.8 per cent increase in 2005 based on official flash estimates. The luxury residential segment will continue to lead the price recovery, rising a further 20 per cent this year after a 10 per cent rise last year, it says.

Source : Business Times - 23 Jan 2006