Huttons Asia: Singapore residential market to see gradual increase of Chinese buyers in 2023

Chinese buyers’ residential property purchases in Singapore stood at 1,637 in 2011. In 2022, the top three projects favoured by foreign buyers are Canninghill Piers, Riviere at Jiak Kim Street and The Avenir at River Valley Close. Though the government has imposed a “prohibitive” 30 per cent ABSD, Chinese investors have still shown an interest in Singapore real estate.Hotels and travel agencies in China report a surge in enquiries as international travel is expected to boom over the coming Lunar New Year festive period. Meanwhile, Singapore’s headline inflation has increased by about 6.7% Tengah Plantation EC y-o-y as of November 2022, and property prices have similarly climbed by 8.4% y-o-y. Despite this, investors remain cautiously optimistic.With global interest rates continuing to climb, buying sentiment among foreign buyers, including those from China, is expected to remain cautious this year. This, combined with the 30 per cent ABSD, could cap overall foreign buying demand. Despite that, there is still keen interest among Chinese corporations to set up operations in Singapore due to the city’s reputation for being a haven for investors.
Chinese investors have shown an interest in Singapore’s real estate sector despite the government’s “prohibitive” 30% ABSD. This was reaffirmed by a report from real estate agency Huttons Asia, which pointed to the potential for a gradual rebound in Chinese buyers as international travel resumes, starting from January 8.

Hotels and travel agencies have reported a surge in enquiries from Chinese-based travellers, many of whom are already planning trips to popular destinations in the Asia Pacific region for the upcoming Lunar New Year.

However, the ongoing economic environment could limit the strength of the rebound. With global interest rates continuing to climb and Singapore’s headline inflation sitting at 6.7% year-on-year (as of November 2022), property prices have also been on the rise, climbing 8.4% year-on-year. The benchmark Singapore Overnight Rate Average (SORA) stood at 3.0019% on January 9.

In 2011, Chinese buyers snapped up 1,637 residential properties in Singapore. This dropped by 62.2% year-on-year to 618 units sold in 2012, following the introduction of the Additional Buyer’s Stamp Duty (ABSD) of 10% for foreign buyers in December 2011. Subsequent cooling measures increased the ABSD for foreign buyers from 15% in 2013 to 20% in 2018 and finally to its current level of 30% in 2021.

Despite this, deep pocketed Chinese buyers have still been investing in upscale Singapore residential properties. EdgeProp Singapore reported that in June 2022, an unnamed Chinese investor purchased 20 units at Canninghill Piers at Clarke Quay for an estimated $85 million- a purchase average of approximately $2,773 psf. The mostly three- and four-bedroom units are spread across multiple stacks.

Huttons’ data show that all foreign buyers preferred the projects Canninghill Piers (51 units sold), Riviere at Jiak Kim Street (49 units sold) and The Avenir at River Valley Close (42 units sold). Other sought-after projects on the list included Perfect Ten at Bukit Timah Road, Irwell Hill Residences at Irwell Bank Road, One Pearl Bank at Pearl Bank Road and Pullman Residences Newton at Dunearn Road.

Despite the business climate, there is still a keen interest among Chinese corporations to set up operations in Singapore due to the city’s status as a “haven”. As such, the local real estate market could still see a rebound from Chinese investors in the coming months, albeit a more gradual one than previously anticipated.