The
real estate market in the United States
has become one of the latest contenders for a slice of Singaporean investors’
growing interest in overseas properties, joining the ranks of traditionally
popular markets such as Malaysia,
Australia and Britain.
In
recent months, Singapore
developers, including Keppel Land and Pontiac
Land, have flocked to the US, taking
stakes in American projects as they seek alternative sources of revenue amid a
lacklustre market back home.
On
their part, US
developers, including Millennium Partners, have also set up shop here, in an
attempt to attract more individual investors for their properties in the
States.
“We
first came to Singapore and a few other Asian cities in 2009 to market our
project Millennium Tower in San Francisco … We’ve seen
interest grow and our hope is that it will continue to grow; that’s why we’re
here,” said Mr. Richard Baumert, a partner at Millennium Partners. Mr. Baumert
was in town to kick-start marketing for the company’s latest project - Millennium Tower
in
Boston.
Overseas
properties are becoming increasingly popular with Singapore investors, who face tough
property curbs and high entry prices at home. The Monetary Authority of
Singapore said Singaporeans poured S$2 billion into foreign properties last
year based on deals done by real estate agencies here, a 43% increase from the
S$1.4 billion invested in 2012. And analysts said this figure could increase
further.
Mr.
John Stinson, Cushman and Wakefield’s executive
managing director of capital markets in the Asia-Pacific, said: “There has been
an overall surge in interest from the Asia-Pacific in investing in the United Kingdom, Europe and the US for almost
two years. This trend has really gathered momentum from Singapore and other parts of South-east
Asia this year. Many investors with portfolios highly concentrated
in Singapore
… are executing strategies to diversify offshore.
“The
US
has reached the top of many investors’ target lists of offshore country
targets. The markets showing the most appeal have been New
York, San Francisco and Los Angeles ... The US
markets are generally coming off a low base in almost every sector; interest
rates are historically low and the US dollar has again become a safe-haven
currency.”
Mr.
Sean Tan, general manager of real estate portal iProperty, agreed that the US is emerging as a viable investment
destination, especially among investors who are seeking a diversified
portfolio, but noted that its popularity still pales in comparison with that of
Malaysia, Australia and the UK.
“As
with any investment, there are risks. The US
is so far away; investors may not be familiar with the market so they may buy
into areas that are not so good … but cities such as San
Francisco and Boston
are not bad as their economies are quite promising.”
Mr.
Tan also said overseas developers are drawn to Singapore
for its status as a regional hub and gateway to affluent individuals in Asia, a sentiment that Mr. Baumert shares.
“We
have two more projects coming up after this one, so we thought we should just
set up an office here. We started in summer, so that’s around June. From a
branding perspective, it also helps to tell people that we have a presence in Singapore,”
said Mr. Baumert.
Source:
CNA
Coincidentally
the wife and I have been exploring the US property market for the past
year. Property prices in some of the US cities are still very attractive
currently, with some purportedly selling at "distressed" levels. And if you are looking at properties outside of
the major cities like New York, Boston and San Francisco,
the purchase quantum can be rather modest - we are talking about the US$100K range.
However,
we are not yet comfortable enough to put money in the US market due to the following reasons:
- The US market is still one that is relatively "undeveloped"
with Singaporean buyers compared to traditional markets like UK, Australia
and even New Zealand.
It is until recently that you find US projects/properties being marketed
in Singapore
but this is still few and far in between. As such, the level of education/information
on US properties is still low, which raises the level of uncertainty and
risks.
- Although there are
supposedly bargains to be had in cities such as Houston
or Detroit,
these are cities that we have heard about but totally unfamiliar with -
especially in regard to the property sector. So although the cost of
entry may be low, the prospects on rental yields and capital appreciation
may be similarly low. This is not helped by the horror stories of illegal
squatting or even burglary (dismantling of fittings
and furnishings within the property) that we have come across from the internet
while doing our research.
- The complex nature
of US taxes that one has to navigate through for property purchase and sale
are supposedly rather mind-blogging. We have not looked into what/how much
taxes one needs to pay for purchase and subsequent resale yet, but we have
marketing agents telling us that they themselves are confused by the myriad
of taxes that are payable.
So
with US developers such as Millennium Partners (and hopefully more to follow)
setting up shop here in Singapore,
the wife and I are looking forward to be "better educated" on the US property
market.
