Singaporeans’ interest in Australian property wanes
Singaporeans are still buying property in Australia but their interest has dwindled slightly, given the abundance of residential options back home.
Julian Sedgwick, head of sales and marketing for high-end property developer Crown Group Australia, said that if the recent sales performance at the group’s mixed-use project, Waterfall, is a good proxy, Singaporeans seem to be holding back from international property purchases partly due to the abundance of options in their own domestic property market.
In a recent interview with The Business Times, he said: “Singapore is a tougher market at the moment for international property. Having said that, we did 10 sales out of the launch (from Singaporeans). People are just more conservative about where they are investing. There are a lot of options around.”
That was 10 units sold out of a total of 331 apartments. Of the units sold, a quarter came out of Asia, mostly from China, Jakarta, Singapore and Hong Kong. The project, launched on June 17 simultaneously in Sydney, Singapore, Hong Kong and Jakarta, has about 30 units left.
What could deter them further is a a new capital gains tax of 12.5 per cent for properties worth more than A$750,000 for foreigners that kicked in from July 1 this year.
The response from Australian buyers for the project, however, was “phenomenal”, said Mr Sedgwick, bearing testament to the still-growing demand for Sydney properties locally.
Part of the reason for this is the inadequate supply of homes to meet growing demand in Sydney. This is due to lengthy planning processes and height restrictions that deter the construction of high-rise towers there. This has led to chronic undersupply. At the same time, prices are rising due to the increasing population as more people, both from overseas and other parts of Australia, move to Sydney.
So far this year, house prices in Sydney have risen 13 per cent from a year ago, and apartment prices 8.6 per cent year on year, making the average increase across all dwellings to be 12.2 per cent.
Mr Sedgwick remains confident in the demand from Singapore buyers, which was why the company opened its office in Singapore in 2014, first at Suntec Tower Two, before moving to the newly completed CapitaGreen in 2016.
Its current office is a serviced office. The group is still looking for a permanent place, preferably a more spacious Grade-B office in the Orchard Road area that can accommodate more marketing displays and show suites and hold events as well.
But Crown Group has spared no effort in fitting out its current 500 square foot serviced office with wall-to-wall displays of the group’s current and completed projects. A model of Waterfall sits in the middle of the room, with one tower slightly leaning off-centre. Mr Sedgwick explained that it has been on a few rough flights.
He maintained that he is pleased with the results that the group has gotten out of the Singapore market. “We have a very strong following of investors from Singapore, but I think with what’s going on in the local residential market which seems to be recovering, people have sort of sat back to wait and see.”
Crown Group’s Singapore sales for its projects Down Under have increased 25 per cent over the last 12 months, but this is coming from a soft base in 2016, following a particularly strong 2015.
Mr Sedgwick said that the group settled close to A$800 million (S$846 million) of sales for the last financial year ended June 2017, but he declined to shed more light on the company’s revenue and earnings as it is a private company.
Crown Group’s Singapore office is the second in Asia after it opened an office in Indonesia in 2013. Indonesia was a natural choice, given that both its Chairman and Group CEO, Iwan Sunito, and CEO Paul Sathio, were originally from Indonesia. They later studied and now live in Australia, but their connections back home remain strong.
Asked if buyers from different countries have nuanced differences in their preferences, Mr Sedgwick said not really, but noted that Singaporean buyers are much more savvy investors.
“They will do their homework; they really do take their time to understand the development. Every time I meet different buyers, they know the area, the bus routes, the educational institutions (nearby). They know everything.
“In Indonesia, you have to spend more time with the buyers. There is more handholding needed, because it’s a newer thing for them. But we do still do great volumes out of Indonesia. And I think it is also because there are not so many launches every weekend in Jakarta, not so much offering out there.”
While its two offices have been sufficient to oversee sales within the region thus far, there is also a clear indicator to him that China and Hong Kong are promising buyer markets and the group may consider setting shop there next, he said.
Adapted from: The Business Times, 20 July 2017