After containing COVID-19, Singapore is now opening up. Here’s how the real estate market is doing.
Singapore, a country of over 6 million people, has been praised for how it contained COVID-19 due to the firm, decisive leadership, and a well-prepared healthcare system. Tough sanctions were imposed early to prevent community transmission. Most workplaces, including real estate offices and property showrooms, were closed and stay-at-home orders put in place. This resulted in less than 15,000 active COVID-19 cases, about 500 patients in hospitals, and 23 deaths as of May 2020. The majority of new cases are in foreign worker dormitories where migrant work permit holders reside, and very few cases were recorded amongst Singaporeans and permanent residents.
Like most countries around the world, real estate was restricted in its activities, show units were closed, viewings postponed, and many activities went virtual, causing home sales to slump by approximately 40% over the last March and April. In the first quarter, home prices fell to a three-year low. Border closures and travel bans led to a decline in foreign buyers; thus, luxury home sales dropped dramatically in the absence of wealthy Chinese buyers who propped up the top end of the market in 2019.
Lockdown, or circuit breaker, as it’s known in Singapore ended June 1 with the economy being opened in several stages. The government paid out over $6 billion over the last 60 days as a support measure for the 1.9 million local Singapore workers. Levy wavers and rebates were also provided to help firms meet their obligations to foreign employees.
Over 80% of residential housing developments in Singapore are developed by the government and managed by the Housing Development Board to provide affordable housing for Singapore citizens. The other 20% is privately developed and consists of mostly upmarket apartments and homes owned by foreign investors and rented to ex-pats. Local homeownership is over 80%—one of the highest rates in the world.
In April and May, home sales were low, but not as low as some months in 2008-2009 during the global financial crisis. Luxury new homes are still being sold. An example being a condominium of 4,700 sq. ft. in Hollard Hill sold for $8 million last month—just over $1,800 per sq. ft.
The mood is expected to be cautious with buyers being price sensitive and focusing on completed home projects with unsold units. Sales of projects under construction feel the pressure from building suspension and may provide an opportunity for savvy investors to purchase units at favorable prices. The relatively safe health environment is expected to lead an influx of foreign buyers once borders are opened, leading to a projected real estate recovery in 2021.
Peter Gilmour is REAL Trends chief foreign correspondent and Chairman Emeritus and co-founder of RE/MAX of Southern Africa. n