Singaporean home buyers look to Johor

08 November 2011 , By The Sun

The long queue for public housing in Singapore and high prices in the secondary market have resulted in more Singaporeans buying property in Johor and the Iskandar region, a Singapore real estate agent said.

Institute of Estate Agents Singapore immediate past president Jeff Foo said it is taking longer for young couples in Singapore to upgrade as property prices have gone up while supply is low.

"The government is working to provide more properties for young people, but we will only see the effect in several years' time," he said at the FIABCI-Malaysia Morning Talk on 'Singapore Property Market Updates' recently.

Foo said the certificate of entitlement or COE required for purchasing properties in the secondary market is expensive while the wait for new public housing from the government takes about three years.

He added that many Singaporeans, both local and permanent residents, are buying houses in Johor and commuting to work every day due to the lower cost of living and cheaper houses in Johor.

On the other hand, property buyers from China have overtaken Malaysians in Singapore. Today, 26% of property buyers in the republic are Chinese while 18% are Malaysians.

As for foreign property developers, most of them enter the Singapore market through joint ventures (JV) with local players as it is difficult to penetrate the market on their own. They would also need to know how the local players work in order to secure JVs, said Foo.

He said most foreign developers participating in the Singapore market are from China and Indonesia, while partnerships among local players are also common.

"I don't see Malaysian developers going into public housing projects as most tenders go to local developers. For luxury apartments, it depends if the project is worth going into a JV," he added.

On real estate investment trusts (REITs), Foo said prices have fallen due to lower demand while analysts have said Singapore's REITs are undervalued.

"REITs in Singapore have fallen, about 23% for hospitality REITs, office 22%, retail 5%, industrial about 7%," he said.

Foo said Grade A offices today are charging about S$10 to S$11 psf compared to the peak in 2008 with rentals of S$18 psf, which was still 50% cheaper than in Hong Kong.

However, healthcare REITs are growing, he said. Singapore's only two healthcare REITs are Parkway and First REIT.