Additional Buyers Stamp Duty (ABSD) for foreign buyers is at 30% on private property, will the 30% ABSD discourage these foreign buyers and keep them from coming to Singapore?
The global economic outlook looks bearish, and many talked about the possible recession in 2023. The recent URA flash estimate 2022Q2 Non-Landed Private Residential Property Index indicated that Core Central Region (CCR) is the slowest compared to the Outside Central Region (OCR) and Rest of Central Region (RCR).
Since 2009 CCR had been the worst performer index as compared to RCR and OCR. Will CCR start to catch up and eventually outperform? Let’s look at some factors.
Family Office
Over 10,000 family offices have been established worldwide in the past 20 years, a 10-fold increase from the early 2000s. Currently, North America still has the largest share of family offices however over the decades Asia-Pacific family office is the fastest growing. Singapore sets itself up to be the global hub for family offices as the island wants to become Asia’s top center for family offices.
Wealthy Chinese setting up family offices in Singapore sees it as a springboard to Asean. 3 years ago Chinese billionaire Liang Xinjun set up a family office in Singapore. However, before he had other options like Japan, Taiwan, Vancouver, and Hong Kong. Eventually, he decided on Singapore even though his concern over Singapore was challenging hiring and lack of opportunities.
“As investors or entrepreneurs, we don’t like sudden about-turns, emergency braking, nor illogical measures.” – Chinese billionaire Liang Xinjun.
Singapore Stability
Singapore is one of the most stable countries in ASEAN and the region. The Singapore dollar – like the Swiss franc- is a well-managed currency representing a safe wealth store. This help to bring stability too in property prices.
Hong Kong, once Singapore’s closest rival in terms of real estate investment, is increasingly falling out of favor as political dissent mounts. In China, you must deal with the government’s strict capital controls; in Australia, there are strong controls on resale and gains, and in New Zealand, foreigners can’t buy residential property. So long as Singapore continues to demonstrate stability, its real estate segment – particularly the luxury half is likely to keep drawing foreign investment.
Additional Buyer Stamp Duty
Under the respective FTAs, Nationals or Permanent Residents of the following countries will be accorded the same Stamp Duty treatment as Singapore Citizens: Nationals and Permanent Residents of Iceland, Liechtenstein, Norway, Switzerland, and Nationals of the United States of America.
This means these buyers do not need to pay ABDS on their first private property. With improved economic ties with the US, these wealthy buyers will likely avoid China and India and may start looking at Singapore.
Singapore is making moves to attract this super-rich. The Global Investor Programme (GIP) which accords Singapore Permanent Resident (PR) status to eligible global investors is creating a global center for UHNW. In March 2021, foreigners snap up luxury homes in Singapore.
The signs seem clear that Singapore’s wealthiest sons and daughters still look to properties at home; as Singapore grows richer, luxury developers still have a growing domestic market.