Southeast Asia Real Estate Buzz 2023

Singapore Property Building

Southeast Asia real estate market are seeing expats flock to Vietnam, Luxury Market Booms in Hong Kong, Singapore's High-End Property Appeal, and Thailand's Market Challenges. From the bustling streets of Ho Chi Minh City to the soaring skyscrapers of Hong Kong, the real estate landscapes across Southeast Asia are buzzing with activity.

In Vietnam, expats are drawn to the country's affordable housing options and vibrant lifestyle. Meanwhile, Hong Kong's luxury property market continues to thrive despite cooling measures, captivating investors with its prestigious addresses. Over in Singapore, the city-state remains a hotspot for high-net-worth individuals seeking exclusive luxury properties. However, challenges loom in Thailand as interest rate surges and affordability concerns impact the real estate market. Join us as we delve into the latest trends and developments across these dynamic Southeast Asian markets.

Let's dive into the four main countries real estate news from: Thailand, Hong Kong, Singapore to Vietnam property news.

Real Estate News in Thailand

Foreign investors, particularly those from China, are showing keen interest in Bangkok's luxury condominium market. The appeal of upscale condos in sought-after neighborhoods, combined with the Thai government's favorable policies on international real estate investments, has triggered a buying frenzy among these investors. The vibrant lifestyle offerings and the potential for attractive returns have further fueled their enthusiasm. Prime districts like Sukhumvit, Sathorn, and Silom have experienced a surge in purchases by foreign buyers.

Concurrently, Indian investors have shifted their focus to the emerging property market in Pattaya. They are attracted by the city's thriving tourism industry, ongoing infrastructure development, and supportive government policies. Indian investors are exploring opportunities in both residential and commercial properties, either through direct purchases, partnerships with local developers, or investments in real estate funds. This shift underscores their desire to diversify investment portfolios and tap into the dynamic tourism market of the coastal city.

Bangkok and Pattaya are both witnessing a wave of international interest driven by the allure of these vibrant Thai destinations and the potential for lucrative investments.

Home Loan in Thailand 2023

However, Thailand's recent increase in policy interest rates by 0.25% has had a significant impact on the real estate market, particularly affecting properties priced below 3 million baht. Banks have raised loan interest rates in response to the rate hike, which exceeded expectations.

The impact of the interest rate hikes is felt across all price levels, resulting in decision-making delays and declining ownership transfers. Real estate developers are adapting their strategies, focusing on luxury houses priced between 10-30 million baht. The interest rate hikes and inflation present challenges for the real estate market in 2023, particularly affecting low-end homes and condos priced below 3 million baht.

If the US continues its inflation-fighting measures, further rate increases of up to 1-1.25% or even 1.5% could be possible, significantly affecting the real estate market. Consequently, housing transfers are projected to decrease by 19.2%, and the value of transfers by 14.1%. Low and middle-income buyers may delay purchases due to higher loan rates tied to MRR or MLR. Affordability issues will arise, and investors will face challenges due to higher installment costs. Measures controlling mortgage loans and loan-to-value (LTV) ratios exacerbate these problems.

To calculator home loan use our very own Pattaya City Home Loan Calculator.

Thai Home Loans Mortgage in 2023

Singapore Property News

Singapore Implements Property Tax Hike to Curb Soaring Housing Market

Singapore is taking steps to address the surging housing market by raising taxes on property purchases. Concerns have grown that the influx of wealth into the city-state is negatively impacting affordability for locals and its competitiveness as a financial hub. The government announced an increase in stamp duties for second-home buyers and foreigners purchasing private property. Notably, the tax rate for foreigners buying any home doubled from 30% to 60%. These measures come as Singapore's property sector remains robust, fueled by an inflow of money and a shortage of supply during the pandemic, leading to rising prices and discontent among residents.

Key Highlights:

  • Stamp duty rates doubled for foreigners buying any home, rising from 30% to 60%.
  • The tax hike may moderately slow the inflow of money into Singapore, but demand for diversifying assets remains strong.
  • Singapore's housing market contrasts with Hong Kong's, which witnessed a resident exodus during the pandemic. Foreigners buying property in Hong Kong face a 30% property tax, half of Singapore's new duty rate.
  • The latest measures follow previous tax increases in December 2021 and tighter home-loan limits in September 2022.
  • Citigroup Inc. analysts anticipate a negative impact on shares of residential developers due to the "draconian" increase in taxes for foreign buyers.
  • Despite the measures, Citigroup forecasts a slowdown in the rate of price increase to around 2% in the coming quarters, given a healthy employment market. The exuberant property market has also contributed to a surge in rents, with Singapore surpassing New York for the strongest growth in residential rents in Q4 2022, according to Knight Frank.

Despite the measures, Citigroup forecasts a slowdown in the rate of price increase to around 2% in the coming quarters, given a healthy employment market. The exuberant property market has also contributed to a surge in rents, with Singapore surpassing New York for the strongest growth in residential rents in Q4 2022, according to Knight Frank.

Authorities expect an increase in housing construction to alleviate rental costs, as both public and private residential rental costs have risen significantly since 2021.

Singapore Property Turning into Political Issue

The housing problem in Singapore has become a pressing issue that not only affects individuals' daily lives but also has broader political implications. The government's ability to address housing affordability concerns and provide viable solutions will be closely watched as Singapore moves forward.

The property market issue is expected to play a prominent role in the upcoming presidential elections, indicating its significance in shaping the nation's future.

Singapore's property tax hike aims to address the growing housing market and ensure prices align with economic fundamentals. The government's efforts to cool the market coincide with plans to increase housing supply in the long term.

The housing problem in Singapore is escalating, affecting not only expats but also young singles like Sonam, who are struggling to find affordable accommodation. Rents in Singapore are skyrocketing at an alarming rate, outpacing the rest of the world. This surge in rental prices has forced many individuals, including Sonam, to consider relocating or supporting opposition parties in the hope of finding a resolution.

For the ruling People's Action Party (PAP), resolving the housing issue is critical, particularly as Prime Minister Lee Hsien Loong prepares to pass the baton to the next generation of leaders. Despite winning 89% of parliamentary seats, the PAP experienced its worst showing in the 2020 elections, prompting the need for policies that align with the aspirations and priorities of the younger generation.

The government has implemented measures to address the housing crisis, including a substantial increase in stamp duty for foreigners purchasing homes, positioning it as a potential election strategy. However, critics argue that these steps may not be enough to address the deeper-rooted problems faced by Singaporeans.

Singapore Rental Property Increasing Since 2021

In Singapore, the rental market for apartments has become increasingly challenging for tenants, as soaring rents and a dwindling supply of affordable options are causing concerns and frustrations. The country's reputation as a low-tax haven known for its safety and stability has attracted a large number of wealthy individuals, particularly from China in recent years.

Previously, tenants with a budget of S$3,000 ($2,200) per month had a chance of finding a suitable apartment in areas like Orchard, Singapore's prime central location. However, the rental landscape has dramatically changed. Singapore's status as a financial hub, the influx of wealth and talent, and a shortage of available properties due to the pandemic have contributed to a property frenzy. Rental prices for apartments in and around Orchard have surged by more than 40% since 2021, making it nearly impossible to find a S$3,000 apartment in the area.

A young American expat working in the tech industry experienced the impact of the rental market firsthand. When he attempted to renew his lease for a one-bedroom apartment in the central business district, his landlord demanded a 50% rent increase. Ultimately, he had to settle for a two-bedroom apartment on the outskirts of the city, paying significantly more than he did two years ago. This situation is not unique, as rents in central areas, often sought after for their prestigious schools, have also risen by more than 40%.

Median Rent Singapore and Hong Kong 2023
Median Rent Singapore and Hong Kong 2023
  1. Rental Contracts:
    • 2021 (Jan-Apr): 54% of newly signed rental contracts were S$3,000 or below.
    • 2023 (Jan-Apr): 12% of newly signed rental contracts were S$3,000 or below.
  2. Percentage Change:
    • Percentage drop from 2021 to 2023: 54% to 12%.
  3. Median Rent:
    • Current median rent for apartments: S$4,400.
    • Average rent in 2021 (Jan-Apr): S$3,580.
    • Current average rent: S$5,200.

Singapore's rental growth has outpaced other major cities, with an increase of 65% since January 2018. Unlike many cities that experienced a drop in rents during the pandemic, Singapore's rental market remained resilient and continued its upward trajectory.

To address the mounting concerns, the government plans to complete 40,000 homes this year, the highest number in the past five years, with a target of 100,000 homes by 2025. This increased supply is expected to alleviate some of the pressures in the rental market. Experts anticipate that rental growth will moderate in the second half of the year, with projected growth rates of less than 5%.

Overall, the current rental market in Singapore presents significant challenges for tenants, with rising prices and a shrinking supply of affordable apartments. The government's efforts to increase housing supply aim to ease the situation, providing some relief for renters in the coming years.

Yet, rental properties issues is not only in Singapore. Hong Kong property market is facing a similar problem.

Top Buyers in Singapore Property 2023
Top Buyers in Singapore Property luxury market in 2023: Source

Real Estate News in Hong Kong

Hong Kong's Luxury Rental Market Shows Early Signs of Rebound

Hong Kong's luxury rental market is beginning to show promising signs of recovery, overcoming its subdued performance during the pandemic compared to other major cities. According to a report by real estate consultancy Knight Frank, prime residential rents, representing the top 5% of the market, witnessed a 1.9% increase in the first quarter. The return of more expatriates to the city following the easing of strict pandemic rules, coupled with the introduction of a new talent visa attracting high-earners and foreign graduates, has contributed to this upward trend.

Knight Frank predicts that Hong Kong rents will continue to rise by 5% in 2023, signaling a notable turnaround from the 3.6% decline experienced in the 12-month period leading up to March.

In contrast, Singapore experienced the largest global increase in luxury rents, surging by 31.5% year-over-year, as reported by an index tracking prices in 10 major cities. Similar double-digit growth was observed in cities such as London, Sydney, Toronto, and New York.

Singapore Property rent Changes

Singapore's rental market has been driven by an influx of foreign wealth, resulting in a significant rise in prime rents, which soared by 6.4% in the past three months alone. In response to concerns about local affordability, the city doubled its stamp duty for foreign homebuyers to 60%, prompting some foreigners to opt for renting instead of purchasing property and further intensifying market pressures.

Overall, Knight Frank's Prime Global Rental Index witnessed an 8.5% rise in the 12 months leading to March, indicating a slight slowdown from the 10.2% growth recorded in 2022.

Liam Bailey, Knight Frank's global head of research, commented on the global rental market outlook, stating, "With construction volumes remaining low due to material shortages and high build costs, rents globally are expected to continue to rise well above trend through 2023."

The gradual recovery of Hong Kong's luxury rental market, along with the dynamic landscape observed in other major cities, underscores the resilience and evolving dynamics of the global real estate market.

Hong Kong Mortgage Increase for Houses

Hong Kong Mortgage Market Sees Highest Cash Rebates in Nearly Two DecadesThe fiercely competitive landscape in Hong Kong's mortgage market has led banks to offer the highest cash rebates in almost two decades. Data from Centaline Mortgage Broker reveals that these incentives, expressed as a percentage of the principal loan amount, have surged from around 1.3% last year to a current high of 2.6%, marking the highest level in over 17 years.

The motivation behind these attractive cash rebates stems from the subdued nature of property transactions in Hong Kong's real estate market, which is still recovering from the exodus of residents due to the zero Covid policy implemented last year. To draw in clients and offset the squeeze on lending rates, banks such as HSBC Holdings Plc and Bank of China (Hong Kong) have resorted to offering these generous incentives.

The largest players in the Hong Kong mortgage market, including Bank of China (Hong Kong), HSBC, and Hang Seng Bank Ltd., collectively accounted for more than 60% of new mortgages in the first quarter of this year. The intense competition among lenders in Hong Kong's mortgage market has created an environment where banks are actively vying for business and are willing to offer compelling deals to attract customers.

The high cash rebates have garnered interest from potential homebuyers, such as Lydia Cheng, an interior designer currently in the market for a property. Cheng, who usually banks with HSBC, received a preliminary mortgage rate of 2.5% and a 1% cash rebate from the bank. She plans to compare rates from different institutions before finalizing her property purchase and selecting the bank offering the most favorable terms.

While the increase in cash rebates has caught the attention of many borrowers, factors beyond financial incentives also influence decision-making. Ms. Leung, a marketing professional, opted for Bank of China (Hong Kong) despite being offered a higher rebate elsewhere. She cited the bank's superior service as a crucial factor in her decision to choose them for her HK$8 million mortgage.

To calculator home mortgages check out free real estate calculator here.

Vietnam Property News

Vietnam's Prime Minister Urges Measures to Boost Real Estate Market Liquidity

In an effort to alleviate the credit crunch faced by businesses, Vietnam's Prime Minister, Pham Minh Chinh, has directed the central bank to review real estate projects and implement appropriate measures. These measures include the possibility of delaying loan payments for select property companies, providing much-needed relief during challenging times.

As part of the government's strategy, the State Bank has been instructed to collaborate with lenders to reduce operating costs. The aim is to create additional flexibility for lenders to lower commercial lending interest rates, benefiting both homebuyers and real estate projects. Prime Minister Chinh emphasized the importance of stimulating market liquidity and urged ministries, including construction and finance, to work swiftly in removing obstacles hindering the completion of ongoing projects.

The statement released on the government's website highlights the need for government officials to overcome the fear of making mistakes and taking responsibility. By streamlining the project approval process and fostering a proactive approach, the government aims to expedite the completion of real estate projects and enhance overall market performance.

This directive demonstrates Vietnam's commitment to supporting the real estate sector and addressing challenges faced by developers and homebuyers alike. The government's proactive stance, combined with efforts to reduce financing burdens and facilitate project completion, is expected to improve market liquidity and restore confidence in Vietnam's real estate market.

What's Next

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Country Summary
Europe Europe real estate market is bracing for a sharp and abrupt reversal as the pandemic’s impact continues to be felt
Singapore Singapore property market is expected to see a surge in demand from Chinese buyers as the economy recovers from the pandemic.
Hong Kong Home sales in Hong Kong are predicted to rise by 50% as interest rate peak and the border reopens providing ample opportunities for investors.
China Real Estate trends in China market has been growing steadily, but the IMF recently called for the government to ease policies further to boost the recovering economy and provide more opportunities for investors.
Australia Sydney property market saw decline in home prices, its largest in five years, as economic conditions took a toll on the market.

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