Singapore attracted an inflow of S$448 million in 2021, a 59% jump over the previous year. Despite the large amount, the MAS chief, Ravi Menon, has allayed concerns of a real estate bubble as he explains that Singapore can absorb record inflows of money. Rather than blocking it, Monetary Authority of Singapore (MAS) has introduced cooling measures on the real estate market to prevent overheating.
The attractiveness of Singapore was amplified post-Covid as it was one of the first countries to take adequate controls on managing the pandemic and allow a smooth transition into resumption of regular business and lifestyle activities. Assets managed by local firms soared 16 per cent in 2021 to US$4 trillion, mostly from overseas, exceeding the global growth rate. Investors from US hedge-fund titan Ray Dalio to Indian billionaire Mukesh Ambani are setting up offices to manage their personal wealth.
The real estate market has gone against a decline reported in other major markets including Australia, Hong Kong and Canada. Property prices jumped 7 per cent in the first nine months – including a blazing 13 per cent in the third quarter alone despite the government’s cooling measures. Landlords meanwhile are asking tenants for significant rent increases, sometimes as much as double, when they extend leases.
Menon said money is coming from growing wealth across Asia, where the rich are seeking a place to invest. He acknowledged that North Asia’s affluent contribute a large portion of asset flows into Singapore.
As property prices including public housing surge to record prices, have prices truly peaked and will we see an outflow of capital anytime soon?