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Singapore is Asian city of choice for the super-rich

By Michael Lim

/ The Edge Property |

March 6, 2016 12:00 AM SGT

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Singapore is the top Asian city of choice for ultra-high-net-worth individuals (UNHWIs), according to Knight Frank’s Wealth Report 2016 published on March 2. “Singapore is favoured over Hong Kong for now, owing to its long-standing credentials in terms of political stability, business environment and liveability,” says Alice Tan, head of research at Knight Frank Singapore. In the global ranking, London remains in top spot, with New York in second place and Singapore, third.

Tan warns, however, that Singapore must remain vigilant against competition from other gateway cities as they vie for the coveted global city status. The most pressing issue Singapore faces is uncertainty in the property market, which is expected to face greater headwinds amid a strong supply pipeline and slowing demand that is expected to persist for some time, she adds.

The pressure on projects affected by the Qualifying Certificate and additional buyer’s stamp duty continues to mount. Some 700 unsold units across 13 developments will be affected by QC in 2016 with estimated charges close to $100 million, Real Estate Developers’ Association of Singapore president Augustine Tan said on Feb 18. The ABSD remission claw-back for developments with unsold units will put further pressure on prices. About 6,000 units that remain unsold in 33 private residential developments will be affected by the ABSD remission claw-back in 2017 and 2018, according to Tan.

“Of the 6,000 unsold private residential units, about 2,000 are prime residential homes,” says Tay Kah Poh, head of residential services at Knight Frank Singapore. “UNHWIs are waiting on the side lines. The moment cooling measures such as the ABSD is tweaked, they will jump in.”

The dampening effect of such macro prudential policies can be seen in the ongoing weakness in the Hong Kong and Singapore property markets, where governments had deliberately introduced measures such as higher taxes and borrowing limits on mortgages to curb property prices.

“Should this sluggish performance continue, the attractiveness of Singapore to the ultra-wealthy as a choice destination for property asset creation and wealth preservation could wane and the inflow of real estate investments could fall,” says Knight Frank’s Tan. “Such risks need to be arrested early by way of policy adjustments before we lose more investments that would in turn affect economic growth and jobs stability.”

For the whole of 2015, the prices of prime residential homes in Singapore fell 2.1% versus 12.4% a year ago.

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This article appeared in the City & Country of Issue 718 (March 7, 2016) of The Edge Singapore.

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