Who are the current buyers of landed properties in Singapore? Who might you not have realised are eligible buyers? And who could potentially become your future buyers? My colleagues from SRI and I discussed these questions on our podcast.
Now, the most straightforward answer when it comes to selling landed properties in Singapore, a highly protected segment in the market, is that buyers have to be Singaporean citizens. In fact, that’s the question we ask upfront to avoid wasted work down the line. You’d be surprised – there have been agents who completed the entire negotiation process only to realise that the buyer isn’t eligible.
While this is true for nine out of ten transactions, the story doesn’t end there, as foreigners, including Permanent Residents (PRs), can indeed buy a landed property in Singapore. The question is how?
Can PRs buy landed property in Singapore?
PRs can purchase landed property in Singapore under specific conditions. Initially, they must obtain approval from the Singapore Land Authority, specifically from the Land Dealings Approval Unit, but this is no simple process.
Their application requires comprehensive documentation demonstrating their origin, activities during their time in Singapore, and, most significantly, how they have contributed to the local economy. The stringent qualifying criteria serves a crucial purpose – to reassure Singaporeans of the careful selection process.
After paying a substantial four-figure sum and successfully obtaining approval, they can proceed to make their purchases within a specified time frame. A notable example is James Dyson, the man behind the famous hair dryers and vacuum cleaners, who now owns a S$45 million bungalow in Bukit Timah.
Source But even if you're not a billionaire, there is still hope. There are categories of landed properties that foreigners can purchase without needing approval from the Land Dealings Approval Unit (LDAU), although having it is advantageous.
For instance, there's Sentosa Cove, the highly coveted island within an island, designed specifically for affluent individuals in the region. While this may be entirely out of reach for the general population, it plays a crucial role in Singapore's growth story. How else can we attract wealthy individuals from countries with vast land resources and a penchant for spacious living? To encourage these individuals to invest in our country, it's in our best interest to make Singapore as welcoming as possible, even if that means providing ample space for their Great Danes to roam. Meanwhile, here on the mainland, foreigners may consider townhouses at Seahill and cluster houses in Sommerville Residences, just to name a couple of developments. But hold on a moment – that doesn't mean all strata landed or cluster houses are available for purchase. If you're interested, please reach out to us for the full list of landed properties you may be eligible for. Furthermore, this aforementioned list may be of interest to sellers as well. If you're holding onto a property in one of these developments without knowing that foreigners are eligible buyers, your target market could be more extensive than you think. A knowledgeable marketing agent can have a significantly different conversation with both you and potential buyers, increasing your chances of a lucrative exit from the market.
Who are your buyers in the future?
"Now, shifting our focus to Singaporeans, we've lost count of the number of times our clients have asked us: 'Should I enter the market today? Do you think there will be enough buyers in Singapore to purchase my landed property? Or will there come a point in time where the market plateaus?'
Once again, the answer comes down to one key word: activity. When there's little activity in the landed property sector, it doesn't bode well for homeowners in the neighbourhood, and sellers may eventually need to lower their expectations, especially if they are in a hurry to exit the market. While we understand why clients may perceive a realtor's view as biased, we have three theories to support our prediction of sustained activity.
1. Singapore's targeted population size
First, there's a master plan concerning population growth. Last year, it was announced that the target population size in Singapore by 2030 is 6.9 to 7 million people. That's an increase of 300,000 to 400,000 individuals.
The number of foreigners will naturally rise alongside locals, which is an encouraging trend for individuals who currently own one of the 70,000+ landed properties in Singapore, of which only a fraction are currently being transacted. By 2030, we could potentially see a significant surge in eligible buyers across all segments of the landed property market.
These theories also apply to the condo segment. When foreigners who currently pay hefty ABSD for their condos become Permanent Residents, they can anticipate a 55% "discount," making them even better positioned to acquire new inventory. But let's not digress.)
2. The changing of guards in the landed segment
Second, let's discuss timelines. Consider the landed properties in Singapore that were sold in the last few years. These buyers are unlikely to re-enter the market for at least 3 years, thanks to the SSD, and are likely to have long-term plans. In the context of landed homes, we're talking about a minimum duration of ten years or even a legacy plan, where ownership transitions are unlikely to lead to property inventory releases.
Of course, the market experiences ups, downs, and plateaus, but owners of landed properties in Singapore are known for their resolute stance. Take the slowdown in landed property transactions between 2013 and 2017, for instance. If there's one lesson we've learned, it's that sellers don't exit the market when it's quiet unless they absolutely need to or are trading up.
3. The rise of savvy investors
Lastly, with the information age in full swing, knowledge-savvy investors have been empowered to make informed decisions over the past 10 to 15 years. We've witnessed them transition from HDB flats to new launches, leveraging rental yields or engaging in flipping properties for profit. They manage their finances more prudently than previous generations, and as these individuals progress in their careers, their age demographics are catching up.
Middle age might be deemed an opportune time to enter the landed property market, particularly among individuals who have made astute moves in the past decade, providing them with a good chance to fulfil their aspirations.
As a prospective buyer, understanding your eligibility for property purchases is crucial. And sellers, are you overlooking a significant portion of your target audience? A knowledgeable agent can guide you through the intricacies of buying or selling landed property in Singapore. For a comprehensive list of landed properties that foreigners can purchase in Singapore, please reach out to me, Harvey Chia, via WhatsApp at 9199 9141.
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