The dilemma of foreign ownership

Our Law Minister expects approved purchases of landed property by foreigners to be reduced by half.

‘Foreigners’ are confined to Permanent Residents only.

The current foreign ownership is 3.5 percent (below the target of less than 5 percent).

Under the Residential Property Act that comes into effect this January, foreigners buying landed properties already need approvals on leasing and selling during non-disposal period.

I agree with Colin Tan’s response in his article “Foreign ownership rules: when the Government intervenes …”

Below are my two-cent thoughts on foreign ownership of Singapore properties:

1) Restrictions more valid in developing countries

Restrictions on foreign ownership of land/properties happen more in developing rather than developed countries.

In the Philippines, foreign ownership of a condominium is limited to 40 percent.

In Thailand, foreigners are not allowed to buy landed properties. To overcome this problem, foreigners marry locals to buy houses under the name of their spouse.

In fact, buying interest from foreigners often stems from the country’s low currency and property prices.

That’s why Malaysia comes up with Malaysia My Second Home (MM2H) program to entice foreigners to buy affordable properties there and retire in their country.

2) Foreigners didn’t push up prices

I echo with Mr. Tan that the fear of snapping up of Singapore’s precious land by rich foreigners is more psychological than real.

There are more Singaporeans (compared to foreigners) who want to upgrade to private/landed properties.

And if majority of the property buyers are locals, how can we blame foreign buyers for jerking up property prices?

3) There’s no housing problem in Singapore

More than 70 percent of locals stay in HDBs which cannot be owned by foreigners.

That implies Singapore citizens and PRs are already assured of homes not open to buyers from other countries.

Unlike Hong Kong, there is no insufficient supply of public housing to force locals to buy/rent private properties.

Unlike some countries in this world, we don’t have businessmen reselling government housing for low-income families for a profit.

4) Let foreigners buy into the high-end market

If, at the end of the day, most of us will only buy HDBs, mass market or mid-range condos, why can’t we let people (be it locals or foreigners) who can afford high end condos or good class bungalows to go ahead with their purchase?

If it’s the Government who benefits from the stamp duties and property taxes, why can’t we let this lucrative stream of revenue to continue subsidize the building of value-for-money public flats?

5) What if the market goes downhill?

The resent of foreign ownership is very similar to the fear of importing foreign talents.

When the market is good, many foreigners join the market. Locals feel that these foreigners are competing with them in employment and housing.

When the market is bad, foreigners leave in droves. Landlords lament difficulties in finding tenants and upholding reasonable rent.

In 2006, after a depressed property market that lingers 4 to 5 years, the government removed the rule that foreigners can only buy properties with ‘condominium’ status.

When the market clashes next time, will the new rules on foreign ownership of landed properties be changed again?