Property Trends: Why Singapore, Japan, Australia and New Zealand Rank High on Buyers’ Lists
When making a property investment, location, safety, investment potential are major considerations. These defaults remain regardless of the landscape. If anything, they get redefined—as the property trends in the pandemic-induced “new normal” indicate.
Although property owners and buyers are expressing a stronger desire to connect with nature, experts do not see this extending beyond balancing their urban comforts with greenery. A preference for urban living still prevails in Asia, says Victoria Garrett, head of residential for Asia Pacific at real estate consultancy firm, Knight Frank.
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“The pandemic has had the biggest role in shaping the divergence in buying preference for Asia and the rest of the world. A major contributing factor has been how well certain countries have handled the pandemic and set themselves up for recovery,” adds Garrett.
This has set up the Asia-Pacific region above US and UK markets. The property markets in countries that have managed to bring the pandemic under control have shown recovery earlier. Here, the experts highlight some of the countries that are experiencing strong interest from local and overseas buyers.
1/4 New Zealand
Sotheby’s International Realty’s 2021 Luxury Outlook report pinned Auckland as a destination for super-prime real estate along with Singapore. The North-Island city houses one-third of New Zealand’s population “and growth is occurring at a rate of almost 1,900 per month, due in equal measure to urban migration and natural increase”, says Tammy Fahmi, vice president, global operations and international servicing of the real estate brand.
Auckland offers home buyers the right balance of nature with lifestyle offerings such as yachting, island excursions, fine dining and more. The country’s success in combating the coronavirus fuelled its already booming property market as returning Kiwis and high-net-worth (HNW) investors have been parking their funds in real estate. This has pushed its median home prices up by 22 per cent year on year through April 2021. Besides, Auckland offers investors the right balance of nature with lifestyle offerings such as yachting, island excursions, fine dining and more.
“These are savvy investors seeking to gain new lifestyle advantages. They’re taking the pulse of markets, examining their own goals, and setting trends for others to follow. In most cases, purchases are firstly, a lifestyle choice; and secondly, an investment decision. But the two go hand-in-hand. Purchasers are after win-win opportunities,” adds Fahmi.
When it comes to prime real estate tied to lifestyle, the Queenstown-Lakes District on the South Island, Otago and Nelson have been doing equally well, as has New Zealand’s capital, Wellington.
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“We do see sustained interest for real estate in the countries in Asia-Pacific that host residence-by-investment programs”, says Dominic Volek, group head of private clients of Henley & Partners. The global citizenship and residence advisory firm has helped establish a few high-nett-worth (HNW) entrepreneurs and families across Asia acquire permanent residence in Singapore through Singapore’s Global Investor Program. The country has been one of the most sought-after by family-owned businesses worldwide wanting to expand their regional footprint in Asia.
In Singapore, the local market is equally booming and it’s not just the affluent who are getting in. Clive Chng, associate director of Red Brick Mortgage Advisory observes a new trend of “married couples decoupling” on their existing property so that the other party is able to purchase a private property for investment”.
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Singapore had seen a drastic decrease in owners purchasing a second residential property ever since July 2018 when the government had increased the Additional Buyer Stamp duty to 12 per cent—from the earlier 7 per cent. But the current low-mortgage-interest environment has changed that as debt burdens have dropped.
“For Asians, owning a property has traditionally been a means of accumulating or growing wealth. Imagine being charged 2.10 per cent to 2.20 per cent on your mortgage in 2019, and as low as 1.15 per cent in 2020 and 2021,” says Chng. That’s a cash-flow increase of almost 40 per cent.
“The ability to work from home means that home can now be anywhere,” adds Fahmi, and the fact that Singapore’s property market is stable and well-regulated, and that the island-state champions work-life balance are all top considerations for investors.
The desire to seek alternative residence has also put Australia on the radar of many high-nett-worth (HNW) individuals from India, UK and the US, with a new fast-tracked version to its Global Talent Visa Program, says Volek. This trend is still prevalent, despite the current border closures.
“Successful applicants are able to obtain permanent residence for the whole family within six weeks, which makes the programme extremely appealing, and will ultimately drive demand for real estate.”
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Volek observes a common thread among real estate-related migrations of HNW investors including their siblings, parents, and grandparents in their investment migration applications. Singaporeans have for long preferred to send their children to Australia for higher studies, in which case, a residency in that country so that they could have a home at their disposal. While retired parents and grandparents may prefer to move away from the hustle and bustle of the city.
“There are many ways to rank an investment. Often, the best investments are the ones that best fit your lifestyle,” says Fahmi. To that end, interest in homes in the country or second homes have surged attracting investors to areas such as Byron Bay, The Whitsundays and Mornington Peninsula in Australia. “These are all areas with natural beauty, clean air, and leisure activities that attract investors beyond urban centers,” she adds.
“If city life is your passion, Tokyo represents good value for investments,” says Fahmi. “The city’s housing market kept momentum throughout the year from HNW individuals—and this may also get a boost if the Tokyo Olympics open on schedule.”
In Japan, domestic and foreign purchasers are treated equally, which is unique in the region, says Fahmi—while overseas purchasers must pay additional stamp duty in Singapore and Hong Kong. “These duties, which vary across markets in the Asia-Pacific region, can be based on location, and charges can also be scaled based on the price level. To discourage flipping, some jurisdictions may assess a seller stamp duty if the property is not held for a required period.”
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The country has also started attracting investors looking to move away from urban centres towards coastal areas—Tokyo residents have been moving to cities such as Kanagawa and Chiba—as well as cultural centres such as Kyoto and Hokkaido.
“Hokkaido has a unique culture, with diverse landscapes to explore. With four seasons, the island bundles winter attractions with summer activities,” explains Fahmi. “ Investors from Hong Kong, Singapore, China, and the U.S. have discovered the area’s value and entered the market, sparking an influx of infrastructure, luxury resort, and branded residential developments. The Hanazono Residences and Aman Residences, Niseko (coming in 2023) exemplifies this development.”
Japan also announced its first Startup Visa Program last year for foreign investors into Fukuoka on Kyushu Island. Cited by the BBC as Japan’s answer to Silicon Valley, the visa program will likely contribute more global appeal and attract foreign entrepreneurs to the area.
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“While domestic demand has been the primary driver because of the pandemic, as national borders re-open and normal travel resumes, it’s reasonable to anticipate a new wave of activity driven by international demand and strength in these luxury markets is likely to continue,” says Fahmi.
Current travel limits aside, Asia-Pacific markets are as dynamic, and the purchaser profiles—local and international—are eclectic. “And home buyers will not easily forget the pandemic,” she adds.