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S’pore emerges as favoured investment destination for China’s super-rich

Singapore is gaining popularity amongst wealthy Chinese investors because of its world-class health facilities and international schools, while Mandarin is among its four official languages.

While Hong Kong continues to be the primary destination for China’s offshore money, more Chinese high-net-worth individuals (HNWIs) are looking at Singapore as a safe haven to park their wealth.

This comes as Chinese HNWIs feel exposed by Hong Kong’s changing banking practices, reported Bloomberg.

SEE ALSO: Chinese cash policy puts the squeeze on ambitious Johor project

Hong Kong has entered into tax transparency agreements which requires banks to report their account holder’s information to Hong Kong officials, which in turn makes the information available to 75 jurisdictions, including mainland China.

While Singapore also has similar agreements with 61 jurisdictions, it does not include either Beijing or Hong Kong, which means the Chinese government has no access to their account holders.

“Many rich people from the mainland believe Hong Kong is still a part of China, after all,” said Xia Chun, chief research officer at Noah Holdings Ltd. of Hong Kong, an asset management service provider. “They think there’s no difference in putting money in Hong Kong, compared to Beijing.”

With this, the number of Chinese HNWIs who consider Hong Kong as their preferred overseas destination for investment fell to 53 percent from 71 percent in 2016, revealed a Bain & Co. survey. Over 20 percent prefer Singapore, an increase from 15 percent in 2016.

“Singapore is the Zurich of the East,” said Xiao Xiao, chief operating officer of Chinese wealth manager Fortunes Capital.

“We see Singapore, not Hong Kong, as the bridgehead of China’s investment overseas,” noted Li Qinghao, co-founder of NewBanker Tech Consulting.

Singapore offers other attractions for Chinese HNWIs. The city-state has world-class health facilities and international schools, while Mandarin is among its four official languages.

And with real estate far cheaper than in Hong Kong, mainland Chinese emerged as the biggest foreign buyers of luxury properties in Singapore in H1 2017, said Cushman & Wakefield.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg

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Singapore listed one of Asia Pacific’s top real estate investment markets

After two years of falling rents caused by a glut of supply and a sluggish economy, the promise of a bottom in the city-state’s office market pushed its ranking up from next-to-bottom last year to third in this year’s Emerging Trends in Real Estate Asia Pacific 2018 report.

“This position is reassuring for Singapore’s investment prospects, given that we have major projects in the pipeline to transform our city, such as the development of Jurong Lake District as an exciting second Central Business District, and the doubling of capacities of both our air and sea ports,” said Khoo Teng Chye, Chairman of the Urban Land Institute (ULI) Singapore, and Executive Director at Centre for Liveable Cities.

Jointly published by PwC and ULI, the report noted that office rents in Singapore firmed earlier than expected, while the completion of Asia Pacific’s biggest office deal in September 2017 galvanized the local market as well as set a floor for valuations. A number of core office transactions have also taken place this year, with foreign funds buying actively.

The residential sector also showed signs of recovery, with increasing transactions and a slight improvement in pricing. Sales of developer sites soared amid tightening supply as developers look to replenish their land banks.

“The rebound seems likely to be sustainable, given several years of pent-up consumer demand. The Chinese developers have also been active in buying land, pushing up land auction prices for residential sites significantly through 2017,” noted the report, which is based on the opinions of over 600 real estate professionals, including developers, investors, lenders, property company representatives, brokers and consultants.

However, other respondents believe that talk of a bottoming in the office market is premature.

“Singapore’s still in a difficult place. They don’t have a lot of business confidence, there’s quite a lot of supply and not a huge amount of expansion,” said a fund-manager active in the market.

“It’s challenging to bring foreign workers in because the government has responded to local concerns to protect jobs, and at the same time, a lot of the European banks are downsizing, which hits demand for space. I don’t want to be negative, but we’re not seeing a big pipeline of deals that interest us.”

 

This article was edited by Keshia Faculin.

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