Prices in the neighborhood—the only area where foreigners are allowed to purchase luxurious bungalows—also jumped 7% last year, mainly driven by interest from China, said Lewis Cha, executive director at Sotheby’s International Realty.
“Some of the buyers decided to move out of their rental apartments for a more permanent home while others decided that Singapore is a safe haven to park their funds,” Cha added.
Buyers’ Confidentiality
Similar to London, there’s another factor luring well-heeled foreign buyers to Singapore: Privacy.
Buyers use trusts to conceal their identities from the public and even the government. For instance, banks can register themselves as the legal owner on behalf of the individuals. It complicates the burden on developers to screen prospective buyers for money laundering risks.
The city-state is reviewing existing laws to further strengthen requirements for developers to guard against money laundering activities in the sale and purchase of uncompleted private properties, a spokesperson of the Urban Redevelopment Authority said in a response to Bloomberg’s query.
Soaring prices have fueled speculation that authorities may impose curbs to cool the market, which last happened in 2018. Those concerns were allayed when the central bank said the property market wasn’t overheated, suggesting the government wouldn’t be making moves anytime soon.
Cooling Measures
Still officials have good reasons to be vigilant. More people are looking to upgrade from public to private units to show they’re moving up the social mobility ladder. If those buyers are priced out, it may become a political test for the ruling People’s Action Party, which is already under scrutiny after suffering its worst parliamentary results last July.
Ravi Menon, managing director of the Monetary Authority of Singapore, said in June that a prolonged divergence between prices and income is unsustainable and undesirable.
“If unresolved, this could lead to questions of a greater inequality gap and what the government is looking to do to reduce this,” said Nydia Ngiow, the Singapore-based senior director at BowerGroupAsia, a strategic policy advisory firm.
Barring any market shocks such as property curbs, however, Singapore’s housing frenzy is set to continue. “The market appears to be going on a Poseidon Adventure, sailing into a tsunami,” said Alan Cheong, executive director of research at Savills Plc. “The tsunami turns out to be the liquidity that is keeping the market afloat.
“Hence, rather than capsizing, the party could continue.”
This article was provided by Bloomberg News.