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Singapore ranks among top-five investment homes abroad with Asian buyers

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Asian home buyers from India, Japan, Malaysia and South Korea rated Singapore in their top-five list of locations when considering investment homes abroad

  • UK, US and Australia, Singapore most sought after for investment homes abroad by UHNWIs in Asia-Pacific as pandemic-induced residential mini-boom continues.

According to Knight Frank’s latest edition of The Wealth Report 2021, 26% of ultra-high-net-worth individuals (UHNWIs) globally are planning to buy new investment homes abroad in 2021, a sharp increase from the 21% revealed in 2020.

This demand for investment homes abroad will help fuel price rises of up to 7% in key markets over the course of the year.

The Attitudes Survey revealed that a lower percentage of UHNWIs in the Asia-Pacific region have bought new investment homes abroad in 2020, with 1 in 4 respondents intending to buy a new home in 2021. The survey also revealed that these homebuyers are particularly interested in purchasing a second home in UK, US, and Australia, followed closely by Singapore.

Victoria Garrett, Head of Residential, Asia-Pacific at Knight Frank, said, “In a Global Buyer Survey conducted last year, the increased flexibility of remote working has fundamentally changed the demands on and expectation of homes. Coincidentally, 26% of those surveyed indicated that they were more likely to buy a second home in countries that they felt were able to handle the crisis well – as a result of the pandemic.

As 2020 progressed, we witnessed more travel bans and even second or third lockdowns. While the purchase intentions for new homes have not changed, the reasons of purchase have. UHNWIs are now looking to upgrade their main residences (usually domestically), followed by having a holiday home (domestically or abroad).

With the pandemic supercharging demand for locations that offer a surfeit of wellness – mountains, lakes and coastal hotspots, paired with low mortgage rates and other government aids, it is no surprise that territories such as UK, US and Australia stay top-of-mind for homebuyers in Asia-Pacific.”

Nicholas Keong, Head of Residential International Project Marketing, Knight Frank Singapore, shared, “Among the Asian wealthy, the luxury residential market in Singapore is the top Asian territory of choice when purchasing a new home, ranked behind UK, US and Australia. Asian home buyers from India, Japan, Malaysia and South Korea rated Singapore in their top-five list of locations when considering investment homes abroad. The manner in which Singapore’s government was able to financially support businesses as well as put in place measures to control the spread of COVID-19 further enhanced Singapore’s reputation as a safe bastion for investors in an unpredictable world.”

Auckland leads Knight Frank’s Prime International Residential Index (PIRI) with price rises of 18% in 2020. New Zealand’s handling of Covid-19, its rapid economic recovery, ultra-low mortgage rates and limited supply of stock were behind the surge.

The index, which tracks the movement of luxury residential prices in 100 cities and second home markets globally for the 12-months to the end of December 2020 also reveals:

  • Asian cities occupy the next three rankings: Shenzhen (+13%), Seoul (+12%) and Manila (+10%)
  • Australasia (4.9%) was one of the top-performing regions in 2020. The region saw a surge in pent-up demand as lockdowns eased and homeowners re-evaluated their lifestyles
  • Perth (+4%) was Australia’s frontrunner and Sydney (+1%) registered its highest volume of prime sales ever in the third quarter of 2020

The PIRI 100

   

Luxury residential market performance, annual price change December 2019 to December 2020

All price changes are in local currency.

  
    

No.

Location

Annual % change

 

1

Auckland

17.5%

 

2

Shenzhen

13.3%

 

3

Seoul

11.7%

 

4

Manila

10.2%

 

5

Moscow

9.9%

 

6

San Diego

9.1%

 

7

Aspen

9.0%

 

8

St Petersburg

8.7%

 

9

Shanghai

8.5%

 

10

Vancouver

8.1%

 

     

Keong added, “Prices of prime homes in Singapore did not grow in 2020 like the other Asian cities mentioned above, contracting by a slight 0.2% annually in 2020. The prolonged and continuing travel measures restricting the inflow of visitors into the city-state hindered potential foreign investors from physically viewing and purchasing homes, resulting in an overall 20.4% year-on-year (y-o-y) decline in sales of luxury residences compared to 2019. Combined with a lack of new launches, prime homes in Singapore struggled to gain traction in the year of the pandemic.

“Nevertheless, once travel restrictions are lifted the demand for luxury homes in the city-state is likely to grow in 2021, in a territory that has provided substantial fiscal support to businesses, restrained community spread of the virus and commenced nationwide vaccination.”

According to Knight Frank’s Attitudes Survey conducted in Q4 2020 of over 600 private bankers, wealth advisors, intermediaries and family offices managing approximately US3.3 trillion on behalf of UHNWIs across the globe, half said that their clients’ wealth had increased in the past year despite the pandemic and highlighted three key themes as to why: diversification, equities, and property – which is consistent to how they have adjusted their clients’ portfolio at the onset of the pandemic in late 2019.

Apart from the biggest wealth creation and preservation worry – the ongoing disruption by COVID-19 – respondents to our Attitudes Survey in Asia-Pacific* generally take an optimistic view in terms of wealth growth, with over 80% predicting their clients’ wealth to increase or increase significantly in 2021.

“Given the vaccine optimism, most major markets in Asia-Pacific (Australia, Chinese Mainland, Singapore, India, South Korea, and Taiwan) see a larger majority of their respondents (~90%) expecting wealth growth in 2021. It is also worth noting that markets struggling with the outbreak like India, Malaysia and the Philippines are also anticipating wealth growth, showing the strength and confidence in the continued growth of wealth in Asia,” Garrett added.

The countries which saw the biggest increase in their UHNWI population in 2020

CountryChange in UHNWI population in 20202020 UHNWI populationAnnual Change
China9,59470,42615.8%
US6,080180,0603.5%
Japan1,19914,7558.8%
Germany78928,3962.9%
Canada76610,0258.3%
Switzerland6467,5539.4%
Saudi Arabia6177,0209.6%
Sweden5315,24311.3%
South Korea4367,3546.3%
Singapore3453,73210.2%

Source: Knight Frank Wealth Sizing Model

Written by Ravi Philemon

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