More and more Indonesians buy Singapore apartments

I. Christianto, Contributor, Jakarta

Singapore is not only a favorite place for shopping, but it has also become a favorite place to live either for business or for study purposes.

Many Indonesians have even regarded the island nation as their second home country.

The country's proximity, which is less than a two-hour flight from Jakarta, is the main factor which lures many Indonesians to stay or study there.

This explains why the demand from Indonesian citizens wanting residential property in the neighboring country continues to increase from year to year. At present, most Indonesians are attracted to buy property there not for investment, but for themselves or their children.

"The trend now shows that not only the upper class want to own properties in Singapore, but also the middle class. The main reason is for family accommodation, not solely for investment anymore," Dina Pattiasina, director of residential property consultant Colliers Jardin, told The Jakarta Post.

At present more and more Indonesians are sending their children to study in Singapore at a younger age. "Previously, many citizens of this country sent their children to undertake college or university in Singapore, but now they want their children to enroll at Singapore's elementary schools and even kindergartens. Many prefer to stay and live in Singapore with the parents, or at least their mothers."

As the interest to stay in Singapore grows, the choices of residential areas has also undergone a major change. In the past, Indonesians mostly bought properties in favored locations. But residential properties in suburban locations have become one of the choices.

"The top end people, with big budgets, usually buy properties in popular areas which include districts nine, 10 and 11 in central Singapore. But those with lower budgets prefer to buy in suburban areas where properties are cheaper," she said.

She said property prices in prime areas might range between S$1 million and S$3 million (Rp 17.5 billion), while the properties in the suburban areas between S$600,000 (Rp 3.5 billion) and S$700,000.

It is interesting to find that some Indonesians are also attracted to buy properties in Johor Bahru, Malaysia, if they cannot afford Singapore property, according to Dina.

"Johor is about 40 minutes drive by car from Singapore and property prices in Johor are cheaper than in Singapore," she said, adding that Collier is currently marketing some Johor projects in Indonesia.

Colliers recently started a promotion of the 9 Nasim Road and the Cairn Hill apartments and got positive responses from Indonesians.

"There were some 200 calls per day after we advertised the properties. Compared to Australian properties, which we also handled, there were only 50-100 calls per day asking for more information," she said.

She added that Indonesian buyers commonly trusted the Singapore property, in many aspects. "In addition, there's no bureaucratic approval for loans up to 60 percent (of the total property price). There is now a new regulation allowing foreigners to get loans in Singapore dollars for the installments," she said.

Associate director of property consultant Procon Indah, Deden Sudarbo, said his company also got a positive response when promoting and marketing Singapore properties in Indonesia.

"We find many Indonesians are very familiar with some locations in Singapore. Some of them also want to go to see the properties or projects firsthand," he said.

Both Dina and Deden agreed that most Indonesians were generally interested in properties in prime locations as such apartments allows ready access to the central business districts, schools or hospitals. But when they have limited budgets, they will also go to the secondary areas.

"Many Indonesians are interested in owning three-bedroom apartments. Some parents are sending more than one child to study in Singapore, and they usually visit them on weekends," Dina said.

And, according to Deden, it is common for Indonesians to gather or to travel in groups with the extended family, therefore they mostly want three-bedroom units.

Deden said that Singapore property prices are currently sinking as many expatriates left the country following the Sept. 11 attacks in the U.S. last year.

He said demand in the third quarter of 2001 was affected by the increased repatriation of overseas staff which led to a increase in the number of lease terminations.

He added rental rates dropped by 1.9 percent while selling prices dropped by 10.4 percent in the period.

Singapore property price are lower at present, but Deden estimated that the sector would recover again, although it would take a while for the industry to reach the peak level of a few years ago.

Collier also said the premium residential market, in the third quarter 2001, suffered a two-way blow (from the seller's standpoint) due to the consequences of the Sep. 11 tragedy. A direct consequence, there were immediate reconfiguration in expatriate movements in the world wherein many professionals were either repatriated or reassigned to different locations.

The situation also took place in Singapore and this weakened demand for property. "To add to (my) woes, was the country's weak economic climate that resulted in business retrenchments and poor consumer confidence."

Over the next 12 months, Colliers expects the rental market to remain steady.

Though many Indonesians trust Singapore property companies far more than they do Indonesian developers, one still needs to prepare several things before deciding to buy.

There are some points advised by Colliers' Dina Pattiasina and Procon's Deden Sudarbo: * Check the locations, the prime areas are districts nine, 10, and 11. Apartments in these districts will be easily resold at any time. * Choose an apartment which is located near public transportation such as bus routes or an MRT (subway) station. * Check the land titles; whether an apartment has the 99-year, 999-years or free hold title. Any title relates with the prices. * Generally the government controls the payment system, but it will be wise to check the off-plan projects and company profiles of developers. * Check the design of the apartment; do you really like the style? * Check the price; especially when there is a cheap used apartment offered to you, is it an HDB (government housing) flat? * Ask for a rental guarantee though many developers are now reluctant to offer it. * Find out about the legal and payment systems as well as taxation, tax implications and how to get loans.