Property-bound Singapore capital now prefers home turf

SINGAPORE (July 21): The capital flight to greener pastures abroad from Singapore has slowed to a trickle, amid a turnaround in the property market at home.

According to The Business Times report, data compiled by Real Capital Analytics and Knight Frank Research shows that the number of outbound investment deals dwindled to 34 in the first half of 2017. The figure was 144 for last year, and 503 in 2015.

The transaction value of deals done in the first half of the year also slid to S$6.7 billion (RM20.98 billion), from S$14.6 billion last year and S$37.7 billion in 2015.

In 2015, there was an exodus of capital abroad from a poorly performing domestic property market, as capital values of Singapore homes and commercial properties fell steadily in reaction to the government’s measures to cool the market.

Ian Loh, Knight Frank’s executive director and head of investment and capital markets, said at the launch of the property consultancy’s inaugural “Active Capital” report on Wednesday: “Two years ago, when Singapore was relatively quiet, locally listed players were rethinking what to do with the money, which was why they ventured offshore to look into recurring income assets.

“But since then, capital values in these markets have appreciated, and somehow, in many major cities, some sort of protection and stamp duties against foreigners have been introduced. Some of these investors have chosen to take profit in these overseas destinations. What then to do with the money? Meanwhile, Singapore is looking good.”

Indeed, there are initial signs that the residential property market in Singapore is bottoming out. In the primary market, developers sold 6,388 private homes in the first six months of this year — just 20% shy of the 7,972 units they moved in the whole of last year.

Private home prices also appear to be close to their trough, with the 0.3% fall in the official benchmark price index in the second quarter being the smallest of the 15 quarters since the peak in the third quarter of 2013.

The Business Times report said there had also been a pickup in collective sale activity. Four deals have been done this year — One Tree Hill Gardens, Goh & Goh Building, Rio Casa and Eunosville — for about S$1.5 billion. The latest to be put on the market is Villa D’Este condominium in Dalvey Road for S$96 million. The en bloc sale of two more condominiums, Dunearn Court and Normanton Park, is in the pipeline.

This article first appeared in The Edge Financial Daily, on July 21, 2017.

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