Singapore’s desire for Australian real estate

Cashed up investors in Singapore are snapping up properties in Australia in an astronomical amount. Singapore is now the second-largest buyer of Australian real estate, right behind the United States. So what gives? 

I came across some interesting facts about Singapore:

#1: A 56-year-old nation situated in Southeast Asia, off the Southern tip of the Malay Peninsula

#2: This island nation is fast running out of space with population estimated to grow to 6.9 million by 2030 living in an area of just 720 square km, 14 times smaller than Melbourne. 

#3: It takes around 45 minutes to drive from one end of Singapore to another. 

#4: Over the years, Singapore has been tapping its underground space for utility lines, rail lines and roads to create spaces for the future.

#5: Singaporeans are known to be quite competitive. There’s a deep-rooted belief in Singapore called ‘kiasuism’ which literally means: fear of losing out. The need to stay ahead of the curve has always been part of the social psyche. 

Housing in Singapore is very expensive. Since they don’t have much space, most wouldn’t even dream of owning a spacious terrace house like here in Australia. The majority of residents are living in modestly-sized apartments.

The city-state has spent nearly $20 billion worth over the last 2 years on Australian real estate, $6.1 billion more than China despite its economy being 44 times smaller. 

“Most big Chinese corporate investors have pulled back from Australia, while those from Singapore have doubled down on the lucky country” – Georg Chmiel Co-founder and Group Executive Chairman of Asian real estate platform Juwai IQI. 

Institutional investors funding large-scale projects such as the sovereign wealth fund (GIC) make up the large portion of the capital flowing into Australian home markets right now. 

Individual buyers also remain active. They have stocked their portfolio to the brim with projects of Singaporean developers. From their point of view, Australia appears to be an attractive destination that is only a short flight away from Singapore. 

“Singaporean developers are also helping bring their buyers from the Lion City to Australia. One example is luxury boutique developer Jean Yip Holdings. Their Perth project, Elements at Carousel, quickly sold out, and 60% of the units were purchased by buyers from Singapore.”

Policy changes play a part 

It’s fair to say: Now is the time for foreign investors to jump in Australia because on the whole it’s easier than ever. The far-reaching impacts of the COVID-19 pandemic as we have seen, have put the Australian government in desperate need for foreign investments to push recovery. 

At the end of March 2020, the government introduced the zero dollar threshold for foreign investment and then saw a significant increase in the number of applications and enquiries as a result. While it could raise much-needed funds for our recovery, there was a flicker of panic around the potential for Australian businesses to be sold to foreign interests without government oversight. Steps were taken by the Treasury to enhance the screening framework to assess these applications on the basis of commercial deadlines and risk profile and whether they protected and supported Australian businesses and jobs. 

In the same year, the Morrison government has instructed the Department of Home Affairs to begin prioritising investor visas over other types of applicants in order to “help inject additional funds into the Australian economy”. The decision which came into effect on September 1st 2020, means ultra-rich individuals who are willing to invest $5 million or more will be granted visas to stay up to 5 years in Australia.  

It doesn’t stop there

As if investing in shop fronts and development sites still cannot quench the thirst, Singapore decided to up the ante in other areas. They now represent the third-biggest source of foreign investment for Australia, only trailing behind the US and Japan, with major spending on agriculture, fishing and forestry as well as the finance and insurance sector.

If we look at the last 10 years, China remains the largest investor in Australia having spent around $126 billion since 2010. But in recent years, as of 2019-20, approved proposed investment by number from China fell by almost 600 approvals – moving it to the 6th largest source country by value. 

Looking into the future, Chmiel said property investment is likely to only rise further as travel begins to reopen. Here’s what to expect: more foregin investment to support our economic growth, increase competition and innovation in Australia’s industries. Australian Government Policies will make sure these investments will create more employment opportunities in the process.