SINGAPORE – The additional buyer’s stamp duty (ABSD) hike has proven effective in dampening demand from foreign investors, as evidenced by a 71 per cent decline in condominium sales to foreigners in the past 12 months since it was rolled out.

Just 306 condo units were bought by foreigners from May 2023 to April 2024 (as at April 27) after the ABSD rate was raised from 30 per cent to 60 per cent on April 27, 2023.

In contrast, foreigners bought 1,064 condo units from May 2022 to April 2023, accounting for 5.4 per cent of total condo sales in that period. This figure fell to 1.8 per cent from May 2023 to April 2024.

Analysts noted that the decrease in foreign buyers was more stark in the prime district, or core central region (CCR), which typically draws greater interest from foreigners and investors.

In the 12-month period leading up to the ABSD hike, foreign buyers accounted for about 14 per cent of condo sales in the CCR. This dropped to about 6 per cent in the past 12 months.

Urban Redevelopment Authority (URA) data showed that fewer units changed hands after the ABSD hike. Sales volume fell 36.6 per cent, from 4,215 to 2,672 units sold in the CCR.

Ms Wong Siew Ying, head of research and content at real estate agency PropNex, noted that the number of luxury apartments priced $10 million and above in the CCR fell from 73 units sold in 2022 to 50 units sold in 2023, although the average unit price of such units held relatively steady at $3,800 per square foot.

“Many investors have financial holding power and do not need to sell their property hurriedly at a discount, preferring to lease out the units... Hence, it is not surprising that prices have held up, even though transaction volumes have softened,” she said.

Luxury home sales may also have slowed due to a more drawn-out sales process, with more stringent due diligence checks by financial institutions on big-ticket purchases, Ms Wong said, based on feedback she had received.

Mr Alan Cheong, executive director of research and consultancy at real estate firm Savills Singapore, said that in recent weeks, he has been seeing more foreigners who are exempt from paying the 60 per cent ABSD making inquiries or committing to purchasing luxury non-landed private residential properties here. 

“Quite a few are of South Asian descent but holding US citizenship. Nowadays, foreign buyers of luxury non-landed private residential properties have a predilection... for value-for-money deals, rather than splurging based on emotional value, that is, paying whatever it takes when they like one (unit),” he said.

Buyers from the US, Iceland, Liechtenstein, Norway and Switzerland do not need to pay ABSD for their first residential home in Singapore.

Mr Cheong also noted that the number of Chinese buyers in the luxury market dropped significantly after the ABSD hike.

Chinese nationals topped the list of foreign buyers of new and resale condos in the CCR in 2020 and 2021, with 112 and 155 caveats lodged respectively. This fell to 113 in 2022 and 93 in 2023, PropNex Research and URA data showed.

A caveat, lodged with the Singapore Land Authority, secures a property for the buyer. 

American buyers now top the list of foreign buyers in the CCR, with 110 caveats lodged in 2023 and 130 in 2022 – up from 59 caveats in 2020 and 91 in 2021.

URA’s latest data released on April 26 showed that overall private residential sales volume fell by 2.4 per cent to 4,230 units in the first three months of 2024. It was the third straight quarter of decline.

PropNex chief executive Ismail Gafoor noted that there were 43 transactions to foreigners from January to March 2024, of which 22 were from US buyers, five from China, three from Switzerland and two from Norway. Information on buyers’ nationality for the 11 other transactions is still unavailable.

Foreign buyers made up 1.2 per cent of total new and resale condo units from January to March 2024, he added. This is down from 1.7 per cent in the fourth quarter of 2023 and the lowest figure on record since 1995. Amid a pullback in foreign demand, home sales would be driven primarily by local buyers, said Mr Gafoor.