The Avenir sits on the site of the previous Pacific Mansions, a big Freehold land in River Valley. While many investors speculate that prices will be falling due to economic uncertainty, I’ll touch on a few reasons why The Avenir may in fact have a price increase in 2020. This is what I have considered:
a. Demand for prime real estate has not drop even after a higher ABSD on foreigners.
From the graph, the number of foreign purchases of property $2000psf and above have started to increase since 2016 and has maintained at around the same firgures from 2017 to 2019, even though a higher ABSD of 24% was imposed on foreign purchases in July 2018. This shows that the high net worth foreign investors perceive Singapore’s real estate prices as reasonable and at low risk of a bubble. With the Seller Stamp Duty in place so property owners who sell within 3 years of the purchase will be taxed heavily, the investors who bought in 2018 and 2019 have confidence that Singapore can maintain the prices of high end residences for the next few years.
b. A huge jump in foreign direct investment into Singapore in 2019 compared to 2018
The demographics of foreign buyers in the last 10 years being predominantly mainland Chinese, with Hong Kong buyers to re-emerging in recent years 2019 among the top 10 countries that buying residential properties in Singapore.
Due to the US-China trade war instability, and Hong Kong’s political turmoil, investors have started to move their real estate investments out of Hong Kong and China, and into Singapore as early as Q2 2019. In fact foreign direct investment (FDI) in Singapore rose to US$110 billion in 2019, a surge of 42% from the year before.
Given the trade war and political situation of Hong Kong have yet to resolve, I expect FDI to continue to rise in Singapore for 2020. (https://www.channelnewsasia.com/news/commentary/how-singapore-is-benefiting-from-hong-kong-protests-12296248)
c. Singapore has been for the last 15 years the most livable city according to Asian expats.
With a reputation of a safe and clean city, Singapore was recently named again the most livable city by Asian expats, 15 years in a row. As with most expats, they historically prefer to stay within district 9, 10 and 11, which is near to the Central Business District, good schools and still close to big open spaces of nature like the Fort Canning Park and the Singapore Botanic Gardens. This latest vote of confidence means investors can expect good tenancy at The Avenir going into 2020 as Singapore continues to attract expats regionally to live and work in our city.
d. The Avenir has big 3 and 4 bedroom units.
The Avenir has 68 3-bedroom units that are more than 1500 square feet, and all the 101 4-bedroom units are more than 2000 square feet. This is bigger than the typical 3 and 4 bedroom units sold at the other new launches. This is an attractive factor for expats and foreign owners who prefer a more spacious living environment, which they are likely used to back in their home country.
e. Effect of new developments near The Avenir on capital appreciation
The completion of the Great World City MRT station, a new connection from the Singapore Botanic Gardens to the Singapore River through Somerset, and a new waterfront hotel at Clarke Quay all serve as factors for The Avenir to gain capital appreciation. As all these developments are either just news or still under construction, there is still room for prices to appreciate, making now a good time to acquire The Avenir before the price increases.
With these factors in consideration going into year 2020, we are looking at prices of The Avenir to be on the rise as demand for good property remains strong, the tenant population increases, and introduction of new amenities in the vicinity make The Avenir an ideal home for many.
About the Author
Hsien Loong is a real estate investor and a director in a property holding company. He had previously sold buildings to investment firms and he is always looking for the next good deal.
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