Published 31 March 2011
The Business Times
By Kalpana Rashiwala
Their numbers have shot up in Sentosa Cove but fallen in other prized locations because of PR factor
They are buying fewer bungalows in other prized locations in the rest of the city – but more at Sentosa Cove.
Foreigners (including Singapore permanent residents) have seen their share of bungalow purchases in Districts 10, 11 and 21 – home to many Good Class Bungalow areas – fall last year from the preceding year.
In absolute numbers too the number of detached houses bought by foreigners in these three districts in the past couple of years was generally much smaller than in 2006/2007 – the peak years of foreign buying of Singapore property.
However, in District 4 (which includes Sentosa Cove), both the percentage share of bungalows bought by foreigners as well as the absolute number of bungalows they purchased scaled fresh highs last year, according to a caveats analysis of bungalow transactions by CB Richard Ellis.
Knight Frank chairman Tan Tiong Cheng attributes the divergent trends in foreign buying of upmarket bungalows on mainland Singapore versus Sentosa Cove to the fact that fewer were granted PR status last year compared with 2009.
Last year, the government granted only 29,265 permanent resident passes, fewer than half of the 59,460 passes given out the year before. This number was the lowest PR intake in at least the last five years.
‘One of the criteria for a foreigner to be granted approval to buy a landed home on mainland Singapore is that he or she has to be a Singapore PR (making adequate contribution to Singapore’s economy). And even those who are PRs may have faced stricter criteria in getting approval to buy landed homes last year,’ suggests Mr Tan.
‘On the other hand, for Sentosa Cove a foreigner does not have to be a PR to get approval to own a landed home. So it’s easier for foreigners to buy bungalows there.’
A spokesperson for Singapore Land Authority said: ‘The government has been and will continue to be strict in granting approval for non-Singaporeans to purchase landed residential properties in Singapore. We assess very carefully the merits of each application. Permanent Residents today own less than 4 per cent of landed residential properties in Singapore. We intend to continue with the strict approach we have taken.’
‘The number of applications received (from non-Singaporeans to buy landed homes) generally reflects the prevailing property market sentiment and is not reflective of the number of (landed) properties eventually bought by non-Singaporeans as some may not proceed further to purchase the property after getting approval.’
According to Newsman Realty managing director KH Tan, in the past, the SLA’s Land Dealings (Approval) Unit had in some instances allowed PRs to buy GCBs with land areas slightly larger than the 15,000 sq ft maximum size set for foreigners buying landed homes. ‘However, since late-2009, LDAU has turned down applications by PRs seeking to buy bungalows with over 15,000 sq ft in land area,’ he said.
Most GCBs would be in this category and this could account for the decline in foreigners’ share of bungalow purchases in Districts 10, 11 and 21.
He also said that he has come across some PR clients from the West who were previously looking at buying a GCB in Singapore but last year decided there was more value in overseas property markets like New York and London.
On the other hand, at Sentosa Cove, foreign buying continued to strengthen because it is the only place in Singapore where foreigners who are not PRs may own a landed home. And cash-rich mainland Chinese prepared to pay the high asking prices are fuelling foreign buying, says Mr Tan.
CBRE’s analysis of URA Realis caveats data shows that the percentage of bungalows in District 4 (including Sentosa Cove) bought by foreigners swelled to a record 49.3 per cent last year – from 37.3 per cent in 2009. The number of such homes they purchased also surged from 9 in 2006 and 23 in 2007 to 33 last year.
District 10 – which includes GCB areas like Nassim Road, Cluny Park, Chatsworth Park, Queen Astrid Park and Leedon Park – saw the percentage of bungalows picked up by foreigners fall from 13.3 per cent in 2009 to 10.4 per cent in 2010. In absolute numbers, the number of bungalows foreigners have bought in this district has declined from 25 in 2006 and 20 in 2007 to 15 in 2009 and 14 in 2010.
It was a similar trend in District 11 – which covers GCB areas like Swiss Club Road, Raffles Park, Eng Neo Avenue, Camden Park, Chee Hoon Avenue and Caldecott Hill Estate. The foreign buying share slipped from 4.7 per cent in 2009 to 3.9 per cent in 2010; it used to be 18.5 per cent in 2006. The number of foreign buyers has also dwindled from 17 in 2006 and 16 in 2007 to 3 each in 2009 and 2010.
Over in District 21 – home to GCB areas like King Albert Park, Kilburn Estate and Binjai Park – the number of foreigners acquiring bungalows has slid from eight in 2006 to three each in 2009 and 2010. Foreigners made up 10 per cent of bungalow buyers last year, down from 11.5 per cent in 2009 and 17.8 per cent back in 2006.
Foreigners need LDAU’s approval before they can own landed property in Singapore. On mainland Singapore, the main criteria are that they are Singapore PRs and that they make an adequate economic contribution. Typically it takes LDAU about four weeks to process an application.
Foreigners buying landed homes on Sentosa Cove have traditionally enjoyed a 48-hour expedited approval channel from LDAU for their applications. While this is still available, SLA said: ‘Some applications may require more time, especially where more information is needed for assessment.’