Property Price Chart in Singapore

If others don’t come and compete with us

The fact is plain and clear, but only Singaporeans who are born and bred here can’t seem to tell. That is, modern-day Singapore is cosmopolitan since it was founded in 1819. And like all cosmopolitan cities, for example London, Singapore will be crowded. And they will always be crowded because businesses like crowds.

It is for this reason that I believe all the blaming and grumbling about how lives have been miserable due to the influx of foreigners got to stop at some point before they get ‘out of proportion’. Fixing problems arising from over-crowding is not as straightforward as it seems. This is because the population of Singapore isn’t just about growth; there are times where it dropped.

The Dynamism of Population

This has been an old tune sung by many motivational speakers who tried talking their audience into buying a property, that is, Singapore has 5.18 million people and only about 720 square kilometres of land and therefore property prices will only go up. This sounds logical and does not require great intelligence to understand. But, take a look at the green colour bar in the chart below. The year was 2003. For the record: the population did not increase that year; it decreased instead.


This should be a sober reminder that things are not what it seems on the surface. Economic migrants are highly mobile. They can take their skills and resources to places where they can create more opportunities for themselves.

As it is, population is dynamic and elastic and should therefore count as one of the factors that accentuate the inelasticity of supply of real estate, especially when bad time falls upon an economy. By this, I mean that when supply of residential property remains constant and demand for it is weakened due to falling number of immigrant arrivals, prices tend to swing more wildly than normal. And the negative development would not only impact investors but every one of us, regardless of whether or not we are native Singaporeans.

This may sound like a ‘cold blanket’ to property owners/sellers who are hoping for higher foreigner arrivals into Singapore so that higher demand for space would push up asset prices. Unfortunately, for the time being, a few other factors may not be in their favor.


[1] Scrapping of the Financial Investor Scheme (FIS)


For example, the Financial Investor Scheme (FIS) that allowed wealthy foreigners to obtain permanent resident (PR) status quite easily has been scrapped by the Monetary Authority of Singapore (MAS) in April this year. In the FIS, foreigners with at least $20 million in personal wealth (with minimum $10 million of assets held in Singapore for five years) can apply through their private bankers for the PR status. In the older version of the FIS, up to $2 million of the $10 million of assets held in Singapore can be used to purchase private residential property.

Just to put a proper perspective into the cancellation of FIS, it was reported that applications by foreigners under the FIS through their private bankers went up significantly when the constructions of the two casinos commenced in 2007*. In 2010, the FIS was tweaked (where the minimum sum of assets to be held in Singapore was increased from $5 million to $10 million) as a result of growing complaints by Singaporeans about the influx of foreigners into Singaporeans. *This can be collaborated by the spike in Singapore population in 2007 shown in Chart [1] above.

With the FIS scrapped, a PR application that previously took less than 6 months to approve now takes much longer time to process. The Red Ferrari driver who crashed the million dollar sports car on 14 May 2012 was awaiting the approval of his PR application.

The present Global Investor Programme (GIP) which aims to attract quality individuals to set up business operation in Singapore does not allow its candidates to include the cost of buying a private home as part of their required investment.

[2] Additional Buyer’s Stamp Duty (ABSD)

Apparently, the cooling measure that was introduced on 8 December 2011 against property speculation aims to limit the participation by foreign buyers and non-individuals, including both local and foreign corporations. Foreign buyers and non-individuals have had to pay an additional stamp duty equivalent to 10% of the sale price.

The measure seems to have finally reduced the number of foreign buyers amidst the on-going buying momentum. Here are some statistics to chew on:


To be fair to common folks who are born and bred here, none of us hopes to see our assets depreciate in value over time. What many have wished to see is a gradual appreciation not brought on by imported inflation or through the arrival of more ‘fortune seekers’. Such sentiment is understandable. But the recent official data seems to suggest that the conspiracy theory is unfounded. Charts [3] and [4] would prove that the foreigners are not the ones responsible for the latest round of spike in asset prices in Singapore. Let’s look at the charts below.


These are not relative but absolute numbers, which means to say that with the majority of foreigners sitting out, Singaporeans are filling the void and accounted for themselves impressively. The market volume of 10,334 transactions in Q2 2012 was higher than the 10,001 deals achieved a year ago in Q2 2011 – 3 months before the ABSD measure was introduced. 

[3] Tweaking of the Residential Property Act

On 7 January 2011, the Residential Property Act, the law that governs the business process of foreign developers operating in Singapore was given a few tweaks to ensure that they do not hoard lands or residential units and thereby causing property prices to rise. The tweaks are described in gist as follows:

(i)             Foreign developers who are given approval under the Residential Property Act to acquire or retain land for residential development are required to complete their residential development within a stipulated Project Completion Period, and sell off all units within 2 years from the issue of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) whichever is earlier. 

In the event that they fail to meet the stipulated timelines, their Banker’s Guarantee, which is pegged to 50% of the land price, may be forfeited.

(ii)           Foreign developers are not allowed to sell, assign, transfer, sub-lease or otherwise dispose of any land or residential property in its vacant or undeveloped state without the prior approval of the Controller.

(iii)          Changes in the market conditions shall not be the basis for foreign developers to seek special approval from the Ministry of Law to rent out completed units that the developers face difficulty in disposing within 2 years of TOP or CSC.

(iv)        All property developers, regardless of local or foreign, will have to pay 8%, 16% and 24% of the property purchase prige respectively for the first, second and third years of delay in complying with the rule to dispose of all completed units within 2 years of TOP or CSC, whichever is earlier. The amount is pro-rated based on the proportion of unsold units.

[More of this in my new book: ‘Real Estate Interests and Rights’ which is available for online purchase on my website]

What’s next going forward?

Let me reiterate that a couple of things about Singapore will not change. Firstly, its naturally endowed superior geographic location – where the East meets the West and the West meets the East – will not change. Secondly, the city’s cosmopolitan outlook right from the 19th century where Sir Stamford Raffles founded the modern Singapore will not change as well. And like any other cosmopolitan cities, the streets would be crowded because business love crowds.

Common sense must prevail. We stay because we want to stay. Let people come and go. I am talking business, not politics.

[Disclosure: I contributed this article under a different title: ‘Investing in real estate in a cosmopolitan city like Singapore’ to Singapore on 23 August 2012. It was meant for a different set of readers who are not real estate salespersons.]