More Indonesians buying luxury Singapore real estate
More Indonesians buying luxury Singapore real estate
Indonesians have already bought 30 properties in Singapore valued at USD5 million or more this year, up from just eight for the whole of 2015, data shows
The number of Indonesian nationals purchasing luxury homes in Singapore has nearly quadrupled from last year’s total, reported Bloomberg.
Data from the Urban Redevelopment Authority (URA) shows that Indonesians acquired 30 properties in Singapore valued at USD5 million or more from January to 17 August, a significant increase from only eight for the whole of 2015.
In the first half of 2016, Indonesians purchased 189 properties of all values in Singapore, up by 23 percent over the same period last year, revealed Cushman & Wakefield.
The pent-up buying activity coincides with the passage of a law by Jakarta, aimed at getting Indonesians to repatriate or pay taxes of around US$300 billion, which was moved to Singapore during periods of unrest.
More: Four reasons why Indonesians invest in Singapore
Under the said law, Indonesians will pay a tax rate of four percent on declared funds or property left overseas. The tax rate increases in stages to 10 percent just as the amnesty period comes to an end in March. Those who bring their money back to Indonesia and keep it there for at least three years pay two percent and are also offered various potential investments. Those who do not declare and are found out face paying 200 percent of the tax owed.
“We’re seeing a big increase in Indonesians buying the most expensive property,” stated Ang Kok Leong, a senior property agent at SLP Realty, who cited Singapore’s upcoming move to share financial information with Indonesia as the biggest motivation of his Indonesian clients.
“These people are generally in tune with this kind of situation back home, so if I’m not about to let the Indonesians know what I have, I will buy in Singapore.”
Singapore, Indonesia and other countries are adopting global tax reporting requirements to inform each other of nationals holding assets overseas. Indonesians moving money into property, however, are counting on information on assets held in banks, and not in real estate, as the only ones to be shared, said brokers and agents.
More: Record-breaking land bids expected in Singapore’s Marina Bay
Nonetheless, not all Indonesians buying real estate are avoiding taxes, with some seeing value in a market that bottomed out in prime areas at end-2015. Indonesians are attracted to property located in Singapore’s city centre, particularly the Orchard Road area where the luxury OUE Twin Peaks towers are situated. According to Cushman & Wakefield, apartment prices in the area rose by 0.6 percent since their low at end-2015.
The OUE Twin Peaks development, where prices went for as much as $4 million when it went on sale in July, saw Indonesians emerge as the top foreign buyers.
An agent at Propnex Realty, the company that handles sales for the project, said the robust demand from Indonesians came as a surprise. It is a significant change from the past sales of downtown luxury homes, like Marina One Residences last year, when buyers from Indonesia made up just three of around 200 units sold, revealed data from Cushman & Wakefield.
This article originally appeared on PropertyGuru.com.sg on 13 September 2016.
Read next: Why are expats still not buying Indonesian property?
Source: Property Report