Chinese Investors Choose Singapore Over Hong Kong For 'Diversification' — But Things Could Change

Esplanade And Marina Bay From High Up

Investors from mainland China who are inquiring about real estate in Singapore has hit record highs, starting from the second quarter of 2019, and, thinks that this trend will continue till the first half of 2020 at the minimum. This is a good opportunity for everyone planning to create their Property Agent Career.

However, a cautious valuer notes that the increase in buyers from China grabbing real estate in the Singapore have only minimal effect on the movement in the local residential market.

“The city state is a safe haven regionally and the recent unstable economic and political environment makes safety appear worthy to pay a premium for,” comments Georg Chmiel, the executive chairman of is the biggest foreign property online marketplace in mainland China. George mentioned that the uptick noticed in the Singapore market is from “Chinese funds meant for Hong Kong, or money that are seeking offshore diversification away from Hong Kong.”

Hannah Jeong, the top lady at Colliers in the department of valuation and advisory, commented that Singapore is at best a short-term alternative to Hong Kong, due to “Singapore being the next nearest Mandarin speaking country to Hong Kong.”

“In spite of the money movement restrictions out of the country, a setting up a mutual fund or family trust will enable individuals to move capital legally and continuously from China,” said Hannah.

China real estate investors have at many times been accused for driving up property prices in Hong Kong.

However, according to chairman of Hong Kong business at JLL, Joseph Tsang, the number of Chinese purchasers within their own country has dropped significantly in the last decade, in part because of the higher cost of investment, and also because of the government’s tightening currency control in the earlier two years.

Preventing A Housing Bubble

As both financial hubs attract international talent, Hong Kong and Singapore are often compared with each other. However, one key thing that sets apart between the them is the issue of home ownership.

According to the Department of Statistics of Singapore, the nation’s home ownership rate was a high 91% in 2018. By contrast, the home ownership rate of Hong Kong was at a lower 49.2% in that same year, according to the Census and Statistics Department of Hong Kong.

A significant reason for such a gap is because Singapore’s government has implemented numerous robust housing policies and preventive measures over the years to stop wealthy investors from inflating prices.

One critical policy, named the additional buyer’s stamp duty (ABSD), requires foreign buyers to fork out a 20% tax on a residential property purchase, on top of the standard stamp duty.

Despite this steep expense, investors from China are still buying into what they see as safe investments, a reason why only a few units are left under The Watergardens At Canberra Balance Units.

Temporarily Attractive

Georg says that the majority of wealthy Chinese are seeking to diversify their wealth safely, and protect a bit of it under offshore assets which are less affected by economic cycles in China.

He said that more residential units have transacted at the $7.3 million mark, or more, in Singapore this year than in any year after 2008, and the firm anticipates “this trend to sustain into the first half of 2020 at the very least.”

Hannah noted that the property price index of bigger units in Hong Kong went up by 21.9 percent in the recent five years, and 83.5 percent in the 10 years from 2009, according to the Rating and Valuation Department of Hong Kong. That’s the biggest reflected appreciation in whole of Asia, she commented.

In the Republic of Singapore, however, the residential property price index rise in the last 5 years was merely 2.5 percent and 55.4 percent between 2009 and 2019, said Hannah Jeong, explaining why the Penrose Price is so attractively competitive.

Hannah said she does not perceive a rise in Chinese buyers will affect the Singapore housing market drastically in the long term, as a large portion of Singapore’s population depend on public housing. In Hong Kong however the people rely heavily on private housing.

“In spite of Chinese property buyers raising the prices of the private housing market in Singapore to some degree, the actual impact will be marginal,” she noted.

“Chinese home purchasers still expect a better capital appreciation in the Hong Kong market as compared to the other regional cities. Therefore, these Chinese property buyers will return to the Hong Kong market once the current social unrest issue resolves,” commented Jeong.


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