Fri, Feb 11, 2011
tabla! Malavika Nataraj
Indian expats snapping up prime property in Singapore
AFTER four years of renting, Ms Amareen Shami is ready to buy her own home in Singapore. However, the homemaker, who moved here from Dubai with her family, has one condition: It has to be in central Singapore, where she has been living all this while.
Ms Shami is not alone. Many Indian expatriates and permanent residents now prefer to live in property they own rather than rent. Some even take it a step further, and pick up investment properties which they rent out.
Singapore's property market has always been seen as a safe investment. And with the Government taking steps to prevent a bubble, the market looks likely to show a gradual positive trend as we look ahead. Therefore, it comes as no big surprise that this island has been attracting foreign property investors like bears to a honey pot.
According to Urban Redevelopment Authority (URA) figures, nearly 20 per cent of properties sold here between 2000 and 2010 were bought by foreign buyers - 12 per cent of whom were Indians.
Today, even as the Government's anti- speculative measures take some effect, Indians are continuing to sign along the dotted line. For many, owning multiple properties - especially an overseas property - is a status symbol.
And with thousands of completed units on the market in Singapore, Indian investors are spoilt for choice.
Savills Research & Consultancy senior manager Christine Sun has seen a rise in the percentage of Indian buyers here since 2008, and she has figures to prove her point.
"Indian purchasers constituted 3.1 per cent of all landed and non-landed private home purchases in 2010. This is higher than the percentage registered for both 2008 (2.9 per cent) and 2009 (2.7 per cent), showing that their market share has grown in Singapore over the years," she says.
So what kind of properties are the Indians buying?
While property consultancy Knight Frank's associate director and head of consultancy and research Png Poh Soon says many Indian buyers (foreigners and PRs) look for something priced around $750 per square foot (psf), others in the property industry claim that there are many Indian buyers who prefer to stay in the prime districts and are willing to open their wallets much wider.
A spokesperson for SingLand, developers of The Trizon (left), an upmarket 289-unit condominium in the Mount Sinai area which saw its units fetch an average of $1,500 psf and above, says: "The Trizon is currently about 73 per cent sold (210 units) of which 5 per cent were sold to Indian buyers."
She added that most of the buyers felt that the location, which gives them unblocked city views, as well as the size of the apartments were pull factors.
"They felt that it was so close to the city, yet in terms of price it was good value for money as well. And they also felt that the value of their apartments will appreciate over time," she told tabla!.
This is a change in direction for those who assume that Indians flock to the east coast. Saying "Indians seem to prefer homes in the eastern part of Singapore, as the top three spots for the past three years were all in the east", Ms Sun attributes this to the fact that these buyers seem to prefer sea views and waterfront living. Condominiums like Mountbatten, Pebble Bay and Sanctuary Green located in the east are all popular among Indians.
However, property agent Jessie Nathan, who specialises in handling top-end Indian clients, says: "I am seeing more Indians keen on buying property in districts 9, 10 and 11, especially those from the shipping and marine industries. Many of them have been in Singapore for more than five years and have been renting for a while. So they are keen to settle down in Singapore and would like to get a good investment here.
Despite the high prices, they think the property prices in Singapore will be a lot more stable."
Singaporean businessman R. Kumar is one of those who opted to go the prime route. Having purchased an apartment in district 10, he says: "I consider it a good investment.
The value of my property will appreciate since districts 9 and 10 are popular with senior executives and CEOs as it is close to the Central Business District. And if I rent out my property, which I am thinking of doing, I am guaranteed of returns."
Another part of Singapore that is fast becoming popular like districts 9, 10 and 11 is the Keppel Bay area. Factors that appeal to Indians include proximity to the business and financial district, possibility of ocean views and that it is only a stone's throw away from Sentosa.
One of the popular developments in the area is Reflections at Keppel Bay which offers luxury waterfront homes.
Why choose Singapore?
In this time of global monetary easing, when inflation is most certainly on the rise, solid assets like real estate are the choice investments. So when the Indian real estate market - growing by almost 20 per cent annually - is pegged as the second most attractive globally (China being the first), why are Indian expats still choosing to buy here?
The reason is pure economics: Favourable interest rates and long-term stability. As Knight Frank's Mr Png says: "With strong fundamentals such as healthy economic growth at 15 per cent, low unemployment rate at 2.1 per cent and sustained low interest rate, the Singapore property market is going strong."
In addition, Singapore's mortgage market is easily one of the most developed in Asia, making up over one-third of the total GDP - this means there is a large volume of loans available for the taking.
No wonder the head of Knight Frank's India desk Jaideep Singh recently said: "People are buying property abroad because these are as expensive or sometimes even cheaper than in India."
Banker Mohit Khurana, who has been living here for 41/2 years and owns an apartment, agrees. "Low interest rates in Singapore make home loans affordable, when compared to India," he says. "Interest rates for mortgages in India are almost 10 per cent, when compared to a relatively fixed interest rate of less than 2 per cent here."
Owning property on this island therefore appeals to financially astute investors like Mr Khurana, because the monetary policy uses foreign exchange rates rather than interest rates to adjust inflation and economic growth, unlike, for example, the United States. As a result, the property and finance pundits' view is that interest rates here are not likely to shoot skywards.
No wonder Mr Tony Mistry, an Indian expat who works for a prominent oil and gas multinational company, is upbeat about Singapore property despite leaving the country for a couple of years. After a three-year stint here, he moved to Amsterdam and returned to Singapore two years ago. That's when he bought his three-bedroom apartment in a luxury condominium in district 11.
Although it was a good time to make such an investment - the end of 2008 saw a major property slump - he acknowledges that he would make the same decision even today. "Singapore is a steady market, not as volatile as many others. It has a good, strong currency, with a low risk of currency devaluation, which makes it a safe place to put your money," he says.
Credit research and advisory firm Lucror Analytics CEO Madhav Kapadia, who has been here for a year and owns a property in Bukit Timah, doesn't agree that Singapore is not a volatile market.
However, he still thinks that "the Singapore property market always has been, and will continue to be an appreciating market in the medium to long term".
He adds: "Although price falls and rises do tend to be dramatic, the market also tends to correct its prices in the medium to long term. And certainly, one can get much better value for money here rather than in a city like Mumbai or even Hong Kong."
Pre-empting the bubble
Concerned about the phenomenal growth of Singapore's property market in 2009, the Government stepped in to cool the market and hopefully prevent a property bubble forming.
Consequently, property prices rose in a slightly more restrained manner last year. But despite slowing down - a recorded increase of 2.9 per cent in the final quarter of 2010 against a 5.3 per cent increase earlier in the year, according to URA figures - these measures have not had a huge impact on residential property prices in the more prime areas.
Mr Png says: "The cooling measures taken by the Government do partially curb the market but they mainly affect the mass market rather than the high end. Prices of private properties have increased steadily over the last few quarters of 2010, since the dip in 2008."
Now, even as more condominiums spring up all over Singapore, ensuring that supply is high, prices are not showing much of a drop. Property buyers however are optimistic, and many feel that all the measures the Government is implementing will begin to take effect this year.
Mr Kapadia affirms: "The market will correct itself and prices will stabilise thereafter. We will have a clearer picture later in 2011."
Till such time, Singapore property continues to be an attractive proposition for Indians who appreciate the country's economic stability. The fact that Singapore serves as a regional headquarters for the Asia Pacific region - therefore, a banking hub - is also a big selling point. Most of all, it has also become a melting pot of all things Eastern as well as Western, without compromising lifestyle.
As Mr Mistry says: "What is most important for me and my family is that there is a great work-life balance here."
Ms Shami agrees: "We are now considering buying a property here because we feel that this is a good place to make our home."
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