The Impact of Chinese Investors on the Singapore Property Market

Introduction - The Economic Landscape in Singapore

In recent years, Singapore’s economy has flourished, despite the looming impact and aftermath of the COVID-19 pandemic. Singapore has since made an impressive economic rebound, with inflation rising to 5.5%, the highest in 14 years.

Strong economic growth is normally followed by inflation in the property market, with housing availability becoming progressively more competitive. Likewise, the house pricing index in Singapore has seen a 8.6% growth to close out 2022, with a further 3.2% increase across the first quarter of 2023.

Additionally, Singapore is currently ranked as the top innovation hub outside of Silicon Valley, housing 80 of the world’s 100 tech firms, according to Tommy Wu, lead China economist at Oxford Economics.

Such a strong showing of economic growth and recovery has led to the attraction of wealthy foreign investors in recent years, especially from China.

Singapore as an Investment Market for the Chinese

The potential of Singapore as a strong investment market is not unheard of among the Chinese market.

Lazada, who has its regional headquarters housed in Singapore is an example of one of the largest Chinese investments in the country.

In fact, back in 2016, Chinese tech giant Alibaba decided to invest in and acquire a controlling stake in Lazada, South-East Asia’s leading ecommerce platform. The Singapore-based company has then received subsequent investments and has grown substantially, with Alibaba investing as much as $1.3bn in 2022. In addition to its investment into Lazada, Alibaba also led a consortium in 2022 to develop 8 Shenton Way into Singapore’s tallest skyscraper comprising retail, office, hotel and residential use.

Additionally, there has been a large number of Chinese family offices (private wealth management firms) being set up in Singapore, with the Monetary Authority of Singapore (MAS) reporting a rise from 400 to 700 offices from 2021-2022. Of this number of offices established, an estimated half were from China’s Greater Bay Area.

Chinese Presence in the Property Market

The strong presence of Chinese investments in Singapore’s economy has led to a higher number of knowledge workers and expatriates. This inevitably translates to a higher demand for housing. As a result, we see an equally active Chinese presence in the property market.

Chinese buyers make up the largest foreign buyer group of residential properties in SIngapore.

Chinese buyers make up the largest foreign buyer group in Singapore since 2016, and have represented a quarter of all foreign property purchased in the first three quarters of 2021. In 2022, they made up 6.9% of foreign purchases of private apartments, with a projected 10% increase this year according to OrangeTee&Tie’s senior vice-president of research and analytics, Christine Sun.

Why Choose Singapore?

This large influx of Chinese nationals choosing to invest in Singapore property can be attributed toward a multitude of factors, being Singapore’s strength in the economy, as well as the prestige that comes with luxury living in Singapore.

Singapore is seen as a safe haven and prime investment hub for investors due to its stable legal parameters and highly skilled professional workforce. There exists a large infrastructure and a complementary network of professional services such as trustees, legal and accounting professionals to support complex financial products, investments and transactions in Singapore.

Singapore's political and economic stability coupled with its status as a luxury capital and Mandarin-speaking population makes it a prime investment location for Chinese investors.

There is also an ever-growing wealth management and retirement planning sector driven by an ageing population and high concentration of high net worth individuals. In fact, Singapore’s number of billionaires has grown from 26 to 35 over the course of the year. This environment is extremely lucrative and attractive to China’s investors.

Conclusion

We at MOGUL.sg strongly believe this large influx of demand for housing, particularly private housing (as foreigners are ineligible to own a HDB) will therefore allow Singapore’s private property market to flourish. Not only will we expect to see more new launch luxury condo developments, we will see greater activity and a higher demand for private property on the resale market.

While this might make the market more competitive for most Singaporeans, we believe that this will be an overall positive that will further bolster the economy and property market. Singaporeans are still entitled to own public housing, enabled further by increased HDB grants that were announced in the budget earlier this year to combat the inflationary climate.

Meanwhile, there are still upsides in investing in the private property market for Singaporeans that can afford it or believe in doing so. While the entry point for investing in private property might have increased, doing so would reap favourable returns down the road via reasonable rental yields or divesting such property to the increased demand from foreigners, including Chinese investors.

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