HK buyers making steady investments in Singapore property

OrangeTee’s Ms Sun believes that buyers are not waiting for the Singapore-Hong Kong travel bubble’s launch before making any purchases, adding that interested investors are already working with Singapore agents to tour the properties virtually. PHOTO: BLOOMBERG

Updated from : The Business Times, 8 Jun 2021

HONG Kong investors are expected to continue looking at Singapore property, though no spike in interest is expected, said analysts.

The number of transactions have held steady, said Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie. “Anecdotally, we have been receiving ongoing enquiries from Hong Kong buyers about properties in Singapore. Many of these Hong Kong investors are looking at luxury homes in Singapore. There is a mix of enquiries for bigger properties for families and smaller ones for investment.”

The Singapore residential property market has been on a tear amid cheaper debt. But developers said Singapore residents have mainly been driving demand for new condominium units. And from the data alone, it is less clear if Hong Kong investors are pouring more into Singapore private homes.

The first quarter of 2021 saw nine housing units transacted, down 18.2 per cent from the previous year’s 11 units, showed data from the Urban Redevelopment Authority’s (URA) Real Estate Information System (Realis). Meanwhile, April and May saw a total of four units being transacted – the same amount sold in Q2 2020.

Previously, the number of homes purchased by Hong Kongers rose to a record 53 units in 2019, up from 48 units in 2018.

The stronger demand at that point corresponds with the escalation of civil unrest in Hong Kong in 2019, as citizens challenged a Bill – since withdrawn – that would have allowed extradition to mainland China.

Ms Sun said this year’s numbers are still too small to make a conclusion or observable trend. She also suggested that the data might not tell the full story, as some Hong Kong buyers may not have specified their nationality. URA data reflects a “foreign (unspecified)” category for such caveats. To add, transaction information might not be updated yet.

Lee Sze Teck, research director at Huttons Asia, noted the Hong Kong government’s statement in early February that it does not recognise dual nationality. Given this, a year-on-year comparison might not be a full representation of the data, he said, as Hong Kong citizens might have purchased the properties under different nationalities in the past.

Analysts also point out that, more broadly, Singapore is not among the top destinations for Hong Kong buyers to invest.

Christine Li, head of research for Asia Pacific at Knight Frank, noted that stronger interest from Hong Kong property buyers may be seen in the UK, given the new British National Overseas (BNO) system.

Previously, Hong Kongers with BNO status could only visit the UK for six months without a visa. However, the new system allows BNO citizens and their close families to apply for two periods of five years to stay in the UK and, eventually, British citizenship.

“We have thus seen a surge in buying momentum in UK properties by Hong Kongers,” said Ms Li. Knight Frank estimates that Hong Kong residents have bought US$1.3 billion worth of UK properties in the first nine months since the new visa was given in July 2020.

Hong Kong is “well-positioned” to be a financial hub in the region, which could limit the amount of young professionals who might seek employment opportunities in Singapore, Ms Li added.

Meanwhile, demand from Hong Kong buyers is “not as significant” compared with markets such as China, India, Indonesia, and Malaysia, said Wong Siew Ying, head of research and content at PropNex Realty.

On the Singapore-Hong Kong air travel bubble, the analysts predicted only a slight growth in transactions brought about by its setup.

OrangeTee’s Ms Sun believes that buyers are not waiting for the bubble’s launch before making any purchases; interested investors are already working with Singapore agents to tour the properties virtually.

Nicholas Mak, head of the research and consultancy department at ERA Realty, also noted that an operational air travel bubble between Hong Kong and Singapore would indicate that the Covid-19 situation in both areas has improved considerably.

This would boost investors’ sentiments and could lead to more property acquisitions, regardless of the bubble.

Analysts also raised the “punitive” 20 per cent additional buyer’s stamp duty (ABSD) as a factor affecting foreign investors’ decision overall. ABSD is additional tax levied on top of Buyer’s Stamp Duty, a tax that property buyers fork out for a property.

Mr Mak said purchases from Hong Kong buyers fell in Q3 2018 after the Singapore government introduced cooling measures, but rose again in Q2 2019, when Hong Kong’s heightened civil unrest led buyers to look for more stable political and business environments to invest in.

Following that, caveats almost halved to 27 in 2020 – the year Covid-19 was declared a pandemic – and is now hovering steadily this year.

Based on Realis data, Singapore saw 93 property investments from Hong Kong investors within the period January 2019 to May 2021.

The most common price range was between S$30,000 to S$35,000 per square metre (psm), which saw 15 sales in the two years.

This was followed by the S$16,000 to S$18,000 psm range and the S$18,000 to S$20,000 psm range, which had 13 sales each.

In terms of unit price, the top range was between S$1 million to S$1.5 million (21 units), followed closely by S$1.5 million to S$2 million (19 units), and S$2 million to S$2.5 million (10 units).

Some 22 units bought, including two from this year’s sales, were in the Downtown Core planning area, which was the most popular among Hong Kong investors during the 29 months.

This was followed by 10 in River Valley, and eight in Geylang.