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Singapore's measures discouraging foreign property investment

Overseas real estate investments tend to flow into countries with fewer tax regulations, according to Andrew Batt, International Group Editor of PropertyGuru in a recent interview with Channel NewsAsia.

"There is a lot of money out there right now looking for investments in property, so the countries where it becomes easier to invest, where there are less tax regulations, the money is going to go to those kinds of places," he said.

On the other hand, Singapore's cooling measures have effectively reduced the percentage of foreign property buyers just like what happened in Hong Kong, where expatriates are still subject to a 15 percent tax.

"Going back two-and-a-half years, 17 percent of all property transactions in Singapore were from non-Singaporeans. As of the third quarter of last year it had dropped to seven percent, so that could be down to the additional buyers' stamp duty. It could be down to economic reasons as well," said Batt.

Meanwhile, the RM1 million minimum price threshold for foreign buyers in Malaysia is expected to impact investors who bought properties below that amount in Johor.

"The reason being, from 1 May, overseas buyers can only buy at one million ringgit and above. Let's say you are Singaporean and you have purchased a property in Johor state for RM750,000, there has not been that much capital appreciation yet. Let's say you need to get rid of it fairly quickly for one reason or another, you can only sell to a Malaysian below one million and, honestly, there are not that many Malaysians buying at that kind of price level right now so you could be stuck with something," he added.

Nevertheless, the latest ruling does not cover the Medini area in Iskandar, even though it has already taken effect in Penang and Kuala Lumpur.

Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg

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