At this stage of cooling measures, there is growing concern that even Singapore’s stable climate could discourage foreign real estate investment. The Additional Buyers Stamp Duty (ABSD) rate for foreigners is now 30 percent; this is in a context of sky-high interest rates and restrictions against land ownership (for example, foreigners cannot own property without special permission). A recent report on centi-millionaires by henley and partnershowever, he suggests that even these may be irrelevant in deterring the super-rich from Singapore’s shores.
One of the main reasons is due to the migration of the super rich. Given that roughly 40 percent of the world’s centillionaires are based in the US, it’s reasonable to assume that much of their wealth will be tied to the US dollar. Along with that come risks like political troubles and the US national debt approaching $31 trillion. For those who feel that the USD could never crash, a recent example of the British pound makes for gloomy reading.
As such, these centi-millionaires are seeing the need to move, be it to diversify their risks, for better education options, safer environments, etc.
Clearly, Singapore is making moves to attract these super rich. One of which is the Global Investor Program (GIP) which grants Singapore Permanent Resident (PR) status to eligible global investors. Here is the rating profile below:
And according to a hubby article about how Singapore is a regional and global hub for UHNW wealth, it’s clear to see what makes Singapore such an attractive place for the wealthy right now.
“They can say, yes, if I stay in my home country, I’m going to pay high tax rates on my worldwide income, worldwide capital gains, I’m going to pay estate tax when I die, I’m going to pay gift tax when I donate. But in Singapore they do not apply, and the family office and other structures also offer additional incentives. Today transparency is the norm, and secrecy is gone. Aside from incentives, Singapore also has many double tax treaties to help families invest in other countries as well. That is another great advantage that Singapore offers.
we collapsed Henly & Partners Report for you with 4 key points to consider.
Singapore’s lure for centi-millionaires:
Some of the key factors to consider include:
- Centi-millionaires own Singapore
- Not all foreigners pay ABSD
- Increase of family offices in the APAC region
- Singapore remains the most stable state in our region
1. Singapore’s Own Centi-Millionaires
Singapore’s ultra-rich aren’t just tied to the local property market; it is how most of them got to where they are. They have established the prevailing and perhaps self-fulfilling belief that ownership is the path to wealth.
As of 2022, the number of centi-millionaires in Singapore is increasing on the scale of the top 15 cities. We currently have about 336 centi-millionaires, and we’re ninth on the list of 15 cities.
as we saw in march last yearForeigners Rush to Buy Luxury Homes in Singapore; but it’s still local money which constitutes the majority of buyers. And from 2022, the proportion of foreign buyers has actually falleneven as demand and prices for private homes increased.
So far, the signs seem clear that Singapore’s wealthiest sons and daughters are still looking for property back home; And as Singaporeans get richer, our luxury developers still have a growing domestic market.
2. Not all foreigners pay ABSD
You’ll notice that US cities make up the bulk of the hotspots for centi-millionaires: this includes New York City, San Francisco, Los Angeles, Chicago, and Houston.
Given the heightened volatility of US markets and the problems of high taxes, it is likely that US centillionaires will look beyond their own shores. At this point, it is important to remember something about ABSD:
American citizens pay the same rate ABSD like Singaporeans. This means, for example, not paying ABSD on the first property they buy. Other exceptions include nationals and permanent residents of Iceland, Liechtenstein, Norway, and Switzerland.
While Americans do not make up a large demographic of property buyers here, this may change as Singapore becomes more visible through economic ties and the US pivots to Asia.
It certainly doesn’t help that Americans can avoid ABSD, and that US citizens are less likely to choose China and India due to rising political tensions.
3. Increase of family offices in the APAC region
A 2021 Citibank report estimated that 10,000 family offices have been established worldwide in the last two decades, a 10-fold increase since the early 2000s.
North America still has the most family offices; but Asia-Pacific recorded the fastest growth of such entities, growing 44 percent over the last two decades.
it is believed that 229 family office have been registered in Singapore since 2020.
Along with the rise of family offices comes permanent residences and portfolios seeking exposure to Singapore’s premier real estate sector. It has been observed, for example, that newer family offices tend to Prefer real estate and fixed income instruments. on growth assets.
A private wealth manager we spoke to, on condition of anonymity, said real estate in Singapore remains the easiest option, even with ABSD. She said that:
“If you want to invest in China, you have to deal with the government’s strict capital controls, and now there’s been a scare with the Evergrande situation. If you want to invest in places like Indonesia and Australia, there are strong controls on resale and profits; and in New Zealand many foreigners are outright prohibited from buying residential property.”
He also pointed out that Hong Kong, once Singapore’s closest rival in terms of real estate investment, is increasingly falling out of favor as political dissent grows.
As such, these situations may cause family offices to direct their clients’ wealth into Singapore real estate, especially in the volatile years ahead.
4. Singapore remains the most stable state in our region
Love it or hate it, Singapore has proven to be one of the most stable countries in Southeast Asia. From the Asian financial crisis to the global financial crisis and Covid-19, Singapore has survived without riots, street protests, or knee-jerk economic decisions.
A secondary benefit of this, mentioned in the report, is the stability of the Singapore dollar: like the Swiss franc, it is a well-managed currency that represents a secure store of wealth; somehow an analogy with the real estate sector in Singapore.
As long as Singapore continues to demonstrate stability, its real estate segment, particularly the luxury half, is likely to continue to attract foreign investment; ABSD or not.
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