01/06/2022
Reading between the lines, this buyer paid 30% ABSD on $85m which is $25.5m.
Have you ever wondered why, despite having to pay such heavy taxes to the government, they proceeded?
Here is my take:
Over the past 2 years, we've witnessed how the Chinese Government have no qualms in making giant companies kneel down before them to beg for mercy. It started with big Chinese tech firms (Alibaba, Tencent etc) then followed by all the property developers (China Evergrande, Shimao, Vanke etc). Along the way, some Chinese billionaires lose their billionaire status due to all these uncertainties.
In this part of the world, especially to the Chinese people (Malaysian, Singaporean, Indonesian and ethnic Chinese people from other countries included), the belief is that owning properties is a form of wealth preservation.
Popular Chinese cities like Beijing & Shanghai have restrictions on their citizens owning multiple properties hence these wealthy individuals have no choice but to buy elsewhere.
The question is where?
If ease of communications & being relatively close to China is one of the top criteria, then naturally countries with Chinese-speaking population like Singapore & Malaysia will rank highly in their books.
Malaysia did try to woo Chinese investors to varying degrees of success back during the Najib administration. Thousands of residential units, heck entire cities were built to cater specifically to the China buyers in the state of Johor where there were Forest City, Country Garden Danga Bay & Princess Cove just to name a few.
When the opposition came into power in 2018, everything crumbled. Due to the sudden change in power and hence policy and attitude towards China investors physically relocating to Malaysia, these so-called Chinese enclave became ghost towns. You will know what I mean if you have a chance to visit either or all of the places I mentioned above.
On top of that, it is inherently disadvantageous for foreigners to invest in Malaysian residential properties because they can only purchase those that are priced above RM 1 million (RM 2 million in some other cities). FYI, rarely do Malaysians buy non-landed properties (aka condos) above RM 1 million.
So despite being more than 70% cheaper to invest in and minus the hefty taxes compared to Singapore, China buyers' response towards the Malaysian property market is cold.
So what does Singapore have to offer them that they are willing to pay 30% tax to the Singapore government to buy properties here?
In my opinion, political stability, transparency as well as good & clean governance that is corruption free.
The current government has proven over time that they are capable, reliable & free from corruption. If not, it would be impossible to turn Singapore from a fishing village to what it is today. They have also proven that they fulfill all the promises they have made and plans that were envisioned were turned into reality within the stipulated timeframe.
Singapore is also a global city with an open economy and is the APAC hub of many multinational companies. Its status is on par with other global cities like Hong Kong, London and New York. Coupling this with a strong and stable currency, Singapore is actually a magnet for highly skilled and highly paid executives.
The proliferations of these companies has also resulted in better job opportunities for locals and with better opportunities, comes better income. The spillover effect it has on the real estate market is evident as prices has increased since the COVID-19 pandemic began.
In fact, if not for the 10 rounds of cooling measures put in place by the government since 2010, I think prices would have been easily be 50% higher than what we are seeing today.
Wealthy Chinese buyers will be well aware of these factors with the many private bankers and investment advisors updating them. The fact that they proceeded despite the hefty 30% tax disadvantage is a vote of confidencen in not only the Singapore property market, but in the whole of Singapore as well.
Bulk purchase of 20 units at CanningHill Piers by Chinese buyer brings total sales in the project at Clarke Quay to 92%
