Keep it open to foreigners

Resentment over foreign purchases pushing up apartment prices is still only murmured about, but it will be out in the open if the price spiral continues at its present clip. The agencies tracking the property market will then face pressure to restrict sales to non-Singaporeans. The property firm Colliers International reckons that seven in 10 of these deals done this year in the upper price band were for investment and not occupation, a fact that could only harden opinion against outsiders feasting at the table. It is to be hoped public sentiment never gets that misguided. It is conceded the resentment is instinctive and quite natural, as happened when the pre-Hong Kong handover immigration wave in the 1990s stoked price pandemonium in the favoured Asia-Pacific destination cities of Vancouver, Sydney and Auckland. Any clamour to curb foreign interest in strata-title developments in Singapore should be resisted as counter-productive. It would be bad for the market, a blow to the economy and ultimately harmful to Singapore’s reputation for being welcoming of capital and talent. Foreign interest in any metropolitan city’s residential scene is a crucial stimulus not only for enhancing real estate value, but also for its catalytic effect of making a striving city a throbbing one and of keeping a great city great. Singapore in fact would gain a premium if foreign buyers of condominiums extended beyond South-east Asians to include more Japanese, Europeans and North Americans. That would be a triple-A rating in the confidence stakes.

Unlike limited landed property for which restrictions on foreign buyers should on no account be relaxed, the supply of apartments is ample. This makes the price frenzy an irrational one. First-time buyers, assuredly a constituency the Government must watch over, are not in the market for those luxury residences that keep setting new psf benchmarks and average transacted prices. But their worry that high-end price behaviour will influence the mass market of condos starting at about $600 psf will need careful tending by the Government. Some 23,000 condos due for completion by 2010 are unsold in this crazy market, but first timers’ jitters persist. Why? The answer may lie in the anxiety whipped up by news of ever more en bloc sales removing supply and upping sellers’ replacement cost. To get through this boom cycle without mishap, it is preferable that collective sales slow down until replacement supply appears in four to five years. There are signs these sales are decelerating as a new realism about illusory riches takes hold. The best thing that could happen now is an end to the en bloc round through natural attrition.

Source : Straits Times - 17 Jul 2007