Despite the noise surrounding Singapore being a beneficiary to Hong Kong outflows, the housing hoopla is overhyped, according to a recent research report, which said that sales dropped more than 60 percent year-on-year.
According ERA Research & Consultancy, Hong Kong citizens purchased just 12 apartments in Singapore in the first half of 2019 compared to 32 in the same period last year, a near 63-percent decrease. The rate further slowed from July to mid-August, the researcher adds, with only four purchases recorded.
ERA Research notes that there is a simple reason Singapore is not the leader of outbound Hong Kong housing demand: price. While Hong Kong itself is a regular leader in unaffordable housing prices – urban planning consultant Demographia estimates that housing prices are 20.9 times the median household income compared to Singapore’s 4.6 – outbound interest is seeking cheaper options elsewhere.
What Markets Benefitted Instead?
The report highlighted Malaysia, Thailand and Taiwan as major beneficiaries of outbound investments into housing due to pricing. In Kuala Lumpur, for example, a $360 per square foot apartment would be worth more than $1,000 per square foot in a similar area in Singapore.
Pricing aside, cultural similarities, such as Taiwan’s usage of traditional Chinese in text compared to mainland China’s usage of simplified Chinese, are also relevant drivers.
While Singapore may not lead in housing, it continues to lead in overall real estate demand, according to a Cushman & Wakefield research report which said that $1.4 billion of Hong Kong’s total $5.2 billion in outbound real estate investments fled to the city-state.
