SINGAPORE – Singapore’s property market has seen a significant drop in foreign buyers over the past year, even as global wealth continues to accumulate in the city-state.

From May 2023 to April 2024, only 321 condominium units were sold to foreigners, down from 1,054 units in the previous 12 months, according to Urban Redevelopment Authority (URA) data. This was an average of about 26 units per month. From May to August 2024, 88 units were sold, averaging only 22 a month.

Property experts attributed the decline largely to the 60 per cent additional buyer’s stamp duty (ABSD) imposed on non-residents, which has significantly curbed foreign investment, particularly in high-end residential properties.

Despite the regulatory constraints, Singapore continues to attract wealthy individuals.

In 2023, 3,400 high-net-worth individuals relocated to the city-state, according to investment migration consultant Henley & Partners’ 2024 World’s Wealthiest Cities Report.

This brought Singapore’s total number of resident millionaires to 244,800, along with 336 centi-millionaires – individuals whose wealth is at least US$100 million (S$130 million) – and 30 billionaires.

The number of single-family offices, which manage the investments and financial affairs of a wealthy family, in Singapore surged from 400 in 2020 to 1,400 by the end of 2023.

While China remains Singapore’s largest source of new wealth inflows, the latter holds about 25 per cent of all Indian cross-border wealth, making it the top centre in the region for Indian wealth, according to management consultancy Boston Consulting Group’s Global Wealth Report 2024.

Optimism remains among some market players that foreign capital will eventually flow back into the luxury residential sector here.

Christie’s International Real Estate Singapore managing director Harmeet Singh Bedi believes in the long-term potential of Singapore’s luxury market, despite the challenging regulatory landscape.

He said: “Paradoxically, these tighter regulations make this market all the more attractive to us.”

The attractiveness of Singapore’s real estate market stems from the Government’s proactive measures to maintain sustainability and prioritise housing for owner occupation, protecting the market from volatility, Mr Bedi explained.

He added that high-net-worth individuals tend to prioritise capital preservation over high returns, and Singapore offers a secure, stable investment environment. 

The firm primarily targets properties starting from around $5 million, such as high-end condominiums and single-family homes, or standalone properties.

Ms Chia Siew Chuin, head of residential research, research and consultancy at JLL, believes that Singapore’s safe-haven status and reputation for wealth preservation may outweigh the higher costs of property acquisition.

She noted that ultra-high-net-worth individuals drawn to Singapore can mitigate the ABSD by obtaining permanent residency or citizenship, which offers more favourable tax rates.

Permanent residents (PRs) pay 5 per cent ABSD on their first property, while citizens face 20 per cent ABSD only on their second property.

While there may be optimism about long-term growth in the luxury residential sector, others believe the current regulatory environment could delay a resurgence in foreign demand.

Ms Wong Siew Ying, head of research and content at real estate firm PropNex, said family offices are unlikely to drive a resurgence in luxury real estate, as they face a 65 per cent ABSD on residential property purchases.

“Most family offices are instead channelling their investments into commercial properties, where ABSD does not apply,” she said.

She noted that Minister of State for Trade and Industry Alvin Tan told Parliament in May 2023 that Singapore-based family offices have had virtually no impact on the private housing market, as they had not bought any residential property in the previous six years.

Data from PropNex noted that foreigners (non-PR) accounted for 4.7 per cent of the landed and non-landed private homes transacted on the new sale and resale market in 2024 as at Sept 3. The data was derived from URA’s Realis caveat database.

Ms Wong added that any significant recovery in the luxury market would depend on changes to the ABSD. “At the moment, few foreigners are willing to fork out the 60 per cent ABSD to buy a residential property here, especially if the price quantum is high,” she said.

She also noted that under free trade agreements, citizens and PRs of certain countries, including the United States and Switzerland, receive the same stamp-duty treatment as Singapore citizens, making them potential buyers.

In fact, Americans have surpassed Chinese buyers in the number of non-landed new and resale private home transactions in Singapore, in terms of caveats lodged, said Ms Wong. In 2023, Americans accounted for 91 transactions, compared with just 17 transactions by Chinese buyers, a trend that has continued into 2024.

Mr Manish Tibrewal, co-founder of multi-family office Farro Capital, believes foreign interest in luxury real estate in Singapore will remain subdued in the short term, pointing to the strong competition from cities such as Dubai, London and New York.

While there has been renewed interest in Singapore’s good class bungalows among local family offices, Mr Tibrewal said that most foreign investors avoid residential property purchases due to the high ABSD.

Mr Mandeep Nalwa, group chief executive of wealth management firm Taurus Wealth, agreed, saying that given the high ABSD rates, many foreigners are redirecting their investments into other asset classes, such as commercial properties.

However, foreign interest in Singapore properties remains strong, he noted.

Foreigners who set up their businesses or family offices here are increasingly seeking to change their residential status to become citizens or PRs, he said, and when successful, they will look at buying luxury real estate.