Why is Singapore Attracting Ultra-rich Property Investors?

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The Covid-19 pandemic has caused massive global economic disruptions across many sectors. According to a report by the United Nations Conference on Trade and Development (UNCTAD), a loss of up to $4 trillion to the global GDP over 2020 and 2021 is expected.

In the midst of this strife, however, a few countries have found their footing and begun making headway. One such country is Singapore. While the island nation was not spared economic disruption — the government recorded the worst full-year (2020) recession since independence — Singapore’s Ministry of Trade and Industry (MTI) recently upgraded the country’s GDP growth forecast for 2021 to “six to seven per cent”, from a previous estimate of “four to six per cent”.

Thanks to well-managed crisis control, Singapore also reported a year-on-year GDP increase of 14.7 per cent in the second quarter of 2021, a much stronger growth than the 1.5 per cent reported in the previous quarter. Numbers like these are making the city-state very attractive to ultra-rich investors in the region. Singapore is seeing a boom in companies — especially from the tech industry — setting up shop there.

One area where we’ve seen Singapore reap the benefits of excellent crisis control is its realty market. In a previous opinion piece, our resident property and luxury investment expert Alexander Karolik-Shlaen shared that property sales was “up 126 per cent in December 2020” making it the highest performance in the month of December in eight years.

To find out more about the current climate of the property market and where it’s headed, we caught up with Shlaen for a quick chat. He also tells us what is attracting investors to Singapore during this pandemic, and what the local government has been doing right to aid its economy.

In your previous opinion piece, you said “the markets want to find their natural equilibrium between the demand and supply”. What patterns do you predict in the coming months?

It seems like the prices of property in various major cities will continue to climb up. Singapore property, especially the higher-end segment in the Core Central Region (CCR) is relatively cheaper than similar properties in other major cities such as London, Hong Kong, or Manhattan. Even Shanghai and Beijing are pricier in some quarters and hence more attention will be paid to the Singapore residential property market.

Singapore’s office market has been volatile in recent times, yet, we’ve seen office volumes pick up this year with price increases across the board. What’s your take on this – why has this occurred?

Despite some companies’ reduction on the high-grade rental space, such as banks, many new companies are moving into the top grade spaces, that they could not get before. These companies, such as new tech companies from the region and China will be at the top CBD locations. The demand is coming from technology companies, including digital banking, media, and telcos. It’s likely, however, that some of these new tech giants from China will be hit by the recent Chinese government crackdown.

Image: Unsplash

With the current pandemic predicted to hit travelling for the coming 12 months, is the current growth in Singapore’s real estate prices sustainable?

It seems that all the recent demand was building up even during the semi lock-downs and major travel limitations Singapore went through. Hence I see the current growth as sustainable and long-lasting. The only thing that can curtail the steady rise in property is the government’s perceived overheating of the residential market and the application of additional cooling measures.

Given that the Singapore economy is recovering well and growing at some six to seven per cent this year, it is likely that the property prices will rise in tandem at similar rates. Singapore is also experiencing human resources and especially workers shortages, soaring material costs, and rocketing wage bills, which are further pushing the costs up.

What is Singapore’s government doing better than other countries to keep the economy going during this difficult period?

It’s a mix of things. Mass vaccinations, and some limitations on congestion, keeping the crowds at minimal levels, the insistence of wearing masks, and more. All of these are excellent moves by the local government to have a balance between controlling the epidemic and keeping the economy and life going.

You are still bullish on the 9 – 10 – 11 districts, why is that?

Singapore is attracting more international and Asian professionals and wealthy because relatively Singapore is doing much better than many other countries. The epidemic just further highlighted the city-state as a super-secure, comfortable, low tax, high-tech hub for its well-off inhabitants. More professionals would like to live here and hence the rents will bring stable returns. More wealthy will move their businesses and their families and hence there will be more demand for prime area properties.

Image: Unsplash

Is Sentosa’s premium real estate market benefiting from the current pandemic?

Sentosa started feeling the demand for highest-end properties, such as villas. As per my observation earlier, the UHNWI will continue to move to Singapore and set a base here. Once the travel restrictions will be eased, many professionals will be coming to work in Singapore and then the demand for condos will follow.

Your views on the growth of the sales of yachts across Asia these past 18 months?

Many people feel a bit trapped during the epidemic with no chance to travel. The wealthy realised that yachts are one of the best “escapisms” available even when the borders are closed. We already realise that the epidemic is not going away anytime soon and hence we see and will see more yachts sold across Asia and its major wealth hubs.

About the author

Image: Alex Shlaen

Alexander Karolik Shlaen, Executive MBA, is the founder of the Singapore-based Panache Management Pte Ltd which represents Aston Martin Interiors, Tonino Lamborghini Casa and Formitalia design lines in Asia. Panache Management is involved in real estate and technology investment projects and provides luxury interiors and design for exclusive real estate, private jets and superyachts. Shlaen has appeared in various regional and global media and has written the Luxury Expert columns of regional business magazines since 2009. He was also the chairman of the judges’ panel for Asia Property Awards and is frequently sought to attend established business forums. Learn more on PanacheManage.com

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