How would influxes of capital and immigration influence Singapore’s property market?

Inflows of Chinese Capital

With the recent outlook of the Chinese economy getting more bearish on the fronts of real estate and the equity market, an increasing number of ultra-rich in China have decided to pause their investments and hoard their wealth. On the other hand, some have decided to relocate to other jurisdictions, bringing their wealth along.

In April 2022, the Monetary Authority of Singapore (MAS) increased the minimum amount of the initial Asset Under Management (AUM) required for family offices registered under the S13O scheme to S$ 10 million upon successful applications, and have to increase to S$ 20 million within two years. This move could be associated with a sharp increase in the number of family offices. As reported by Lianhe Zaobao, the number of family offices had seen a 75% increase from 400 to 700 in the short span of a year from 2020 to 2021. As for 2022, according to Citywire Asia, MAS has approved more than 100 family office applications in the first quarter of 2022; at the same time, family office advisory firms are receiving an increased enquiry volume from Chinese prospects.

Real estate has remained a traditional investment instrument for family offices, given its anti-inflationary characteristics, shown by the high correlation between property prices and the Consumer Price Index (CPI). Aside from wealth relocation, setting up a family office is also a way to obtain permanent residency and citizenship in Singapore.

Deeply rooted in Chinese values, properties have always been Chinese investors’ go-to asset class to when it comes to investments. In June 2022, a Chinese national, undeterred by the 30% Additional Buyer’s Stamp Duty (ABSD), made headlines by purchasing 20 units of CanningHill Piers for more than S$ 85 million while still indicating interest in buying 10 additional units. In July, a Singapore PR of Chinese descent bought up an entire floor of Suntec City Tower 2 for $38.8 million, making it the largest transaction by quantum and the highest price per sq ft this year.

These trends, if continued, will inevitably increase property demand and property prices in Singapore.

Immigration of Highly-skilled Hong Kong Residents

Zooming out to the Greater China region, in light of recent events, some Hong Kong residents have also been contemplating leaving the Special Administrative Region (SAR) in search of stability. According to CNBC, more Hong Kong residents are planning to relocate to Singapore in the long run.

As shown by the Singapore Tourism Board’s (STB) data, we observed a sharp uptick in the visitorship of Hong Kong residents to Singapore in the first quarter of 2022 and an overall increase in their length of stay since 2019. The tourist arrival statistics are the closest proxy of immigration sentiment, given the limited data availability. Aside from Hong Kongers, Straits Times also reported that Hong Kong-based expatriates in the finance industry are progressively relocating to Singapore to avoid being affected by the prevailing nationwide Zero-COVID policy.

Similarly, the incoming wave of Hong Kong residents and expatriates would likely drive up private non-landed residential properties in both sales and rental markets.

Conclusion

Boiling down to the essence, the trends mentioned above could increase the demand for properties in both sales and rental markets, which ultimately keep the local property landscape lively in the long term.

*The opinions and thoughts expressed in the article are quoted from external sources and do not reflect the opinion of the author or Fraxtor.

For more information, visit our FAQ section.
Do check out our blog for more Real Estate content.