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Chinese Developers Buying Properties in Singapore – Good News or Bad?

Posted by daniel on October 26, 2017
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What’s not to love with Singapore? When it comes to the best tourist destinations and attractions in the world, there is no doubt that Singapore is always included on the list. We have an amazing, rich culture and highly disciplined citizens living in a vibrant community. It’s a great place for individuals who love arts, wildlife, and authentic local eats. Singapore is a small island packed with beauty and innovation.

Perhaps this could be one of the reasons Chinese property developers have been fascinated with Singapore. The Lion City offers great opportunities for foreign businessmen, investors, and developers. While this is good news for the government land sales, it could be a downside for home buyers.

The Emergence of Foreign Developers in Singapore

Buying properties is a good investment. In Singapore, older folks are known to love investing in properties. If you will be able to make lots of money buying cheaper condominiums in the past and increasing the price in the present day, then this type of investment is certainly worth your money, time, and effort. All you need is a right time and a right place. And Singapore is a right place to start with your property investment.

For more than a decade, the empty Queenstown estate had remained untouched until earlier this year. On April, a property developer had submitted an application to the Singapore government indicating to launch the site for tender. The developer had promised to pay no less than S$685.25 million. The tender was then launched after a month. Out of 13 bids, two Chinese property developers, namely Logan Property and the Nanshan Group, got the highest and winning bid of a jaw-dropping and record-breaking S$1.002 billion. But this is no surprise. Because of the small size of the island, Chinese developers are forced to bid aggressively, which is a big windfall for the government.

On the other hand, this creates uneasiness to local developers. Singaporean developers may be involuntarily priced out by their counterpart Chinese developers. For this reason, local developers may need to check out collective sale market or leave their hometown for better deals in other countries.

A Crazy Amount of Money for Buying Land in Singapore

Before the enormous bidding for Queenstown estate, there was already a crazy bid made by Qingjian Realty, a China based developer, for Shunfu Ville. The property was bought for a staggering amount of $638 million. A week later, they bid again for the Bukit Batok West Avenue 6 sit for $301 million. Today, Qingjian Realty has 10 developments in Singapore.

Last June this year, another Chinese developers bid bid $75.8 million for a plot at Lorong 1 Realty Park. They are Sun Renwang, and Yang Xinping. The bid was 22% higher than the next top bidder, which is also a Chinese developer.

It’s safe to say that mainland China property developers are everywhere in Singapore and they are willing to bid a crazy amount of money just to own a piece of land in a small island. However, Singapore is not the only one who has been fascinated by Chinese developers. What Chinese developers are doing is an overall push around the globe. In 2016, Chinese real estate development hit a record high of US$33 billion (SGD$44.85 billion) in other countries.

Should Singaporeans Be Alarmed?

As the bidding for properties rises up, so do the prices. The emergence of Chinese cash affects the property market of Singapore. With the fast rising of land bids, Chinese developers could end up charging the locals in Singapore a steep price.

There is no issue with the high pricing that has been happening nowadays with private properties. This is perfectly fine as long as it will benefit the economy. However, if foreign companies will rampantly buy properties in our country, with their high biddings and all, this could distort our property market. As a result, Singaporeans will suffer from very costly properties. This doesn’t only affect the newly built condos, but older private properties may be sold at higher prices, too!

Although Chinese developers may contribute a little to government coffers, Singaporeans may still be losing instead of gaining. Foreign developers are welcome to invest and spend a huge amount of money in order to buy the property they want in our land. Then again, if it affects the majority, we may need to look on the other side before getting overwhelmed to money handed on the table.

Furthermore, we should not close our doors to foreign developers. Perhaps the best thing we can do is to limit their business in our country, so Singaporeans can spend their hard-earned money on reasonably priced properties.

References

  1. Stirling Road land parcel drops top bid, URA, Straits times, www. straitstimes.com/business/stirling-road-land-parcel-draws-top-bid-of-more-than-s1-billion
  2. Shunfu Ville sold for $638 million, Straits times, http://www.straitstimes.com/business/property/court-of-appeal-gives-shunfu-ville-sale-the-green-light
  3. Qingjian bids $301 million for Bukit Batok Site, Straits times, URA http://www.straitstimes.com/business/qingjian-makes-bold-moves-in-real-estate
  4. China Developers’ overseas investment hit new record, Jones Lang Lasalle, http://www.joneslanglasalle.com.cn/china/en-gb/news/578/overseas-investment-hit-new-record
  5. China developers pushing aggressive into the HK property market, SCMP, http://www.scmp.com/property/hong-kong-china/article/1873582/chinese-developers-aggressively-bidding-government-land
  6. Hong Kong Developers profit margin squeezed, SCMP, http://www.scmp.com/property/hong-kong-china/article/1441672/hong-kong-developers-profit-margins-squeezed
  7. Developers paying 29% more for land compared to 5 years ago, TNP, http://www.tnp.sg/news/singapore/developers-paying-29-more-land

 

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