Chinese buyers home in on Singapore

December 29, 2010 

It has been a good year for agents selling luxury properties to foreigners in Singapore. Ms Jasmine Png, an associate director with real estate agency OrangeTee, says she has never before seen as many earnest buyers from China.

What’s drawing them here are “the tightening measures in China and Hong Kong, which have actually made the Singapore residential market look appealing,” said Ms Png. The “relative ease in obtaining financing for purchasing Singapore properties” is also helping, she added.

Credit is getting costlier in China. The central bank raised the benchmark interest rate by 25 basis points to 5.81 per cent last Saturday, the second increase since October. Analysts expect another 100-basis-point increase in the first half of next year. They say that the People’s Bank of China (PBOC) is still behind the curve in combating inflation and will likely employ a slew of measures next year to contain rising consumer prices and cool the overheated property market.

The authorities in Beijing have already banned mortgages for third-home purchases and restricted developers from pre-sales of properties. These steps, along with the threat of a property tax, have driven some buyers to overseas markets.

According to Singapore’s Urban Redevelopment Authority, Chinese nationals have snapped up 1,474 private properties so far this year, surpassing the 1,448 purchases made by Indonesian buyers.

Chinese nationals have accounted for 5.3 per cent of the local private housing market this year. Among foreigners, they are second only to Malaysians, who make up 6 per cent.

In the third quarter, Chinese buyers accounted for 20 per cent of all foreign purchases in Singapore’s housing market, the highest ever, according to property consultancy DTZ. Although Singapore, too, has taken steps to damp speculative fervour in the property market, the low borrowing costs here are attracting foreigners, especially the Chinese, who are expecting a significant increase in their home-country interest rates next year.

In the PBOC’s previous tightening cycle from March 2006 to August 2008, the central bank raised the lending rate by 189 basis points to 7.47 per cent and increased the reserve requirement ratio for banks by 1,000 basis points, to 17.5 per cent.

After Saturday’s increase, the lending rate is currently at 5.81 per cent, though at 18.5 per cent, reserve requirement ratios are already above pre-crisis highs.

Source : Today – 29 Dec 2010