The real estate market in Singapore has seen major investment activity over the last year or so, US$4.7 billion worth of transactions taking place between 2020 and the first half of 2021, or a 97 percent increase from the previous year. Prices of private residential properties increased further by 3.8% in the third quarter of 2022, compared with the 3.5% increase in the previous quarter.
According to Real Capital Analytics (RCA), this was the third-highest jump ever, with 2019’s spike being the highest in history. Globally, this ranks Singapore as the top foreign investment destination for 2023, with more than half of these capital inflows coming from international sources – and the numbers are only set to climb.
Why Singapore Is So Popular
As a well-informed investor, you may already know that property investment is considered one of the safest forms of investment in the country, by both citizens/PRs and foreigners alike. There is still much potential for growth in the comparatively young nation and the valuation of these properties are still considered competitive, according to world-renowned banks like UBS.
What makes Singapore such an attractive market for foreign investors? And more importantly, why should you invest in property here?
Singapore Property Market and the Government
Compared to many other countries, the property market here is regulated by the government to ensure its stability in the long run. This explains why even with the global pandemic and its ensuing economic downturn, Singapore still remains resilient, due to measures put in place that have directly impacted the prevention of property bubbles. Such necessary cooling measures as the Additional Buyer’s Stamp Duty have proven to be effective, while still maintaining competitive rates for overseas buyers.
While there have also been other property investment hotbeds in the region, they may not have not endured due to government instability and the collapse of democracy. This is an important consideration and explains why foreigners continue to acquire property here.
The country’s dependable and robust political leadership, coupled with its stable economy, has thus given rise to its status as an ideal investment hub for foreigners seeking to grow their nest egg, while resting assured that their investments will remain relatively stable and lucrative in the long run.
No Tax on Capital Gains
While the Additional Buyer’s Stamp Duty (ABSD) is necessary to maintain a stable property market, as discussed earlier, there is no tax on capital gains on your property. This is something worth taking note of, for the reasons discussed below.
Unless you are selling your property within three years of purchase, there is no Seller’s Stamp Duty on your property transactions. Neither are there any inheritance taxes, should you wish to pass your properties on to your beneficiaries later.
So while, as a foreigner, you may be initially put off by the 30% ABSD, you need not pay any of these other taxes in future, no matter how much your property appreciates!
And appreciate it most likely will, as Singapore continues to attract foreign business owners and High and Ultra High Net Worth Individuals (UHNWI) due to its low taxes and business-friendly economy.
Diversifying Your Portfolio
In our previous editions of Insights, we have discussed at great length the attractiveness of Singapore’s property market for foreign investors looking to diversify their investment portfolio. There is also good reason to increase the ratio of one’s overall investments in luxury homes in Singapore.
It is worth noting that investing in high-end real estate here, like the Tanglin, Nassim and Sentosa properties is a form of diversification in foreign exchange, so that your assets are not parked in any single currency or economy. To help you understand, here’s a simple case study:
Mdm Hartono is a savvy high net worth businesswoman who is looking to diversify her investments in foreign exchange. She purchases an Orchard Road property, a condominium on Ardmore Road that boasts impressive amenities and gorgeous views of the city. Some years later, the Singapore dollar rises sharply against her home currency. She sells the property and makes a lucrative profit, not just in capital gains from the rise in property prices, but also in foreign exchange, enjoying a double whammy of profits.
Of course, it is important that you work with an investment professional to help you make the best decisions on foreign exchange, as timing is of utmost importance.
Getting the Right Property Realtors
As a foreigner, it is understandable that you may have some concerns about buying property overseas. Thankfully, there are strict regulations in Singapore that ensure property agents are licensed professionals. This takes a lot of the stress out of purchasing a property here. The process will also run much more smoothly if you have the right property partners working with you to advise you on what’s best for your specific needs.
At Singapore Luxury Homes, our consultants Sunita Gill and Kaizar Karkaria are established professionals with decades of experience between them. The company has won numerous awards and stands amongst the best agencies in Singapore. What sets them apart from others, however, is the fact that SG Luxury Homes caters especially to a niche market, with an international clientele that includes Hollywood and Bollywood celebrities, UHNWI and big names in the business world.
With SG Luxury Homes, you know you can count on the utmost privacy and discretion, from engagement to completion.
We strongly believe in the Singapore property market as we are investors and owners of several properties ourselves, we understand the benefits of a good real estate portfolio to build a strong legacy for the next generations.