More Indonesians buying luxurious houses in S'pore

Fitri Wulandari The Jakarta Post Singapore

The Singapore property market is improving, spurred by growing demand for high-end property from foreign buyers, including wealthy Indonesians, a developer said.

Justin Taylor, Chief Executive Officer of Singapore-based McRidge Investment Pte. Ltd. said more Indonesians were now buying luxurious houses or "good-class" bungalows in Singapore either as second homes or for investment purposes.

"There has been a lot of interest in the property market because a lot of Indonesians are looking for houses to stay in," Taylor said recently.

McRidge is developing two good-class bungalow projects in a plush area of District 10, at the heart of Singapore.

Aside from Indonesians, other foreign buyers include those from mainland China and Hong Kong.

The increasing number of foreigners buying houses in Singapore is partly driven by the popularity of the city island as the center of education and business in Asia.

The close proximity between Indonesia and Singapore had prompted many Indonesians to move their families there while keeping their businesses in Indonesia, Taylor said.

"We see a lot of situations where the mother stays in Singapore where her children study, while the father lives in Indonesia and goes back and forth to Singapore," Taylor said.

Changing lifestyles among wealthy Asians are also driving up sales of luxury houses and quality bungalows.

Data from the Singapore government shows there are some 2,500 units of property categorized as good-class bungalows.

Tight regulation from the Singaporean government, has limited the numbers of houses and meant few are put on the market, which further pushes up prices.

Last year, there were 54 units of good-class bungalows changing hands, a 35 percent increase from 40 units in 2002.

The highest price paid for a Singapore residence for the last 12 months was a property in an exclusive area on Nassim road, which was sold to an Indonesian for over S$10 million (about Rp 50 billion).

Another reason for the interest in buying property in Singapore, Taylor said, was because it promised a high investment return with low taxes, favorable ownership laws and attractive government incentives. The Singaporean government only charges property buyers 3 percent for government tax.

In comparison, buying an apartment in Indonesia would be subject to a 10 percent income tax, 20 percent luxury tax and 5 percent conveyance tax.

Non-Singaporean buyers of Singapore property can also resell their properties without being subject to a capital gains tax. In Australia, reselling property by non-Australians would be subject to a 30 percent capital gains tax, Taylor said.

According to Taylor, the minimum rental price for a luxurious property could be as high as S$30,000 a month, a lucrative investment return.

He said the high interest from foreigners of buying property in Singapore had improved confidence in the country's market, which had been slowing down during the past couple of years due to the regional economic crisis.

Economic recovery in Asian countries had also helped push property sales on the island.

Many Singaporean developers were now offering their property projects to the Indonesian market first before offering them to Singaporeans, Taylor said. This was illustrated in the increasing exhibitions of Singapore property projects in major cities in Indonesia.