Article from: http://www.stproperty.sg
They seek higher returns abroad after measures at home to cool property sector
A growing number of Singaporeans are investing in luxury condominiums in the Philippines.
They are hunting for higher returns abroad following government measures at home to cool the property sector.
Property consultant CBRE and Philippine developer Megaworld told The Sunday Times that one in five foreign buyers of high-end condominiums in the Philippines now is Singaporean.
"A lot of people in Singapore are looking for a place to park their money," said Mr Jan Paul Custodio, a senior director at CBRE Philippines.
Megaworld vice-president Eugene Lozano said Singaporeans make up half of the foreign buyers of two condominium projects that his company is building in the Philippines' prime Makati central business district, and they are not buying just one unit but sometimes an entire floor.
Under Philippine laws, developers can set aside 40 per cent of the total number of units in a condominium for foreigners.
Mr Lozano said Singaporeans are being drawn by promises of a 20 per cent annual return on their investments, a yield much higher than what they can earn now in Singapore.
Mr Custodio said measures to cool Singapore's property market are driving the sudden interest over the past year among Singaporeans in Philippine property.
Mr Johnny Chng, head of international pro-jects at marketing firm OrangeTee, cited two measures that have hit the Singapore market in particular: the additional buyer's stamp duty (ABSD) and the total debt servicing ratio (TDSR).
The ABSD, introduced in December 2011, slaps a 15 per cent duty on any home purchase made by a foreigner. For Singapore citizens, the duty is set at 7 per cent for a second home, and 10 per cent for subsequent purchases.
The TDSR prevents banks from approving a home loan that pushes a buyer's monthly debt servicing to more than 60 per cent of his monthly gross income.
Mr Chng said measures such as these are "pricing the middle class out of the market".
Proof of this, he said, is that the average profile of a Singaporean buying a condominium in the Philippines is a white-collar executive in his mid-30s to 40s, with hard cash to invest.
He said the duties and taxes a Singaporean has to fork out just to purchase a second home in Singapore are sometimes enough to fully pay for a $150,000, two-bedroom condominium in Makati and in the Philippine capital Manila.
Mr Lozano said most buyers from Singapore are planning to rent their units out to office workers, while some intend to flip the properties before the turnover date.
Earlier this year, local businessman Jonathan Lim Keng Hock led a group of wealthy investors who bought 300 condominium units and 100 parking spaces at a project along Manila Bay for almost $100 million.
The development includes four casinos set to be completed by 2016.