Singapore remains a top choice for property investment
In the property consultancy’s Wealth Report 2018, Singapore is the third most favoured country among Asian investors, after the UK and the US. Among Australasians, Singapore takes fifth spot.
The rankings are based on an attitude survey within the report.
The index aggregates scores based on four parameters – wealth population and its rate of growth; property investments worth at least US$10 million; lifestyle; and future economic performance.
Singapore fared particularly well in the lifestyle component, where it was joint third with Chicago; New York and San Francisco were in the top two spots.
The lifestyle component comprised the number of luxury hotels, the number and quality of leading restaurants, average visitor spend, and education measured by the number and quality of universities in the city.
Nicholas Holt, Knight Frank’s Asia-Pacific head of research, said: “Asian cities took three of the top 10 spots in the City Wealth Index. Singapore’s standout ranking is a reflection of its strong performance across all criteria, with an especially impressive showing in lifestyle, considered increasingly important by the world’s international community.”
In terms of expected outbound residential property investments, Singapore was among the top five destinations cited by respondents in India, Malaysia, the Philippines and Australia; among Chinese respondents, however, it was not in the top five.
On the Singapore market, Alice Tan, Knight Frank director and head of consultancy and research, noted a significant uptick in purchases by foreigners in the luxury segment in the Core Central Region, which includes districts 9, 10, 11 and Sentosa.
The hike in buyer’s stamp duty (BSD) announced in the Budget this year, is unlikely to affect property purchases below S$2 million, she said. The stamp duty was raised from 3 to 4 per cent on the value of a home in excess of S$1 million.
“It may have a greater impact on the luxury segment because we’re looking at a S$5 million or S$20 million home. It will have a certain bearing on some locations on the fringes of districts 9 and 10. But for most prime locations like Nassim or Ardmore, the ultra wealthy may not see the BSD as a deterrent.”
Tay Kah Poh, Knight Frank head of residential services, said he remains optimistic about the prospects for the luxury home segment. “The pick-up (in 2017) was quite firm. Statistics show the ultra-rich have been picking up bargains in the high-end sector a year before recovery…
“Even though there are question marks about interest rate hikes, the environment seems very sanguine and, on the whole, economic growth has been strong. Land bids for some prime properties suggest there will be cost pressures on unit prices of launches, which may even break records. We’ll watch and see.”
The firm’s Wealth Report found that the number of ultra wealthy individuals – defined as those with US$50 million or more in net assets – rose by 10 per cent or 11,630 individuals last year. This takes the global population of ultra wealthy to 129,730.
Asia has overtaken Europe in terms of the absolute number of ultra-wealthy. North America (44,000) remains in the top spot, followed by Asia (35,880) and Europe (35,180).
In terms of commercial real estate, ultra-wealthy individuals are fast becoming a force. Last year, mega-deals worth US$20 billion were completed. Knight Frank said 43 per cent of US$1 billion-plus transactions were attributable to private investors.
Asia has emerged as the predominant source of demand for mega-deals, accounting for two-thirds of purchases by volume. These transactions include the US$5.1 billion purchase of The Center office building in Hong Kong by a consortium of private investors.
Deals worth US$500 million-plus are also becoming more popular. Deal values in this segment leapt from US$21 billion in 2012 to US$53 billion in 2017. Deals in this segment comprise a broader mix of assets, including shopping centres and hotels.
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