Singapore’s resort island of Sentosa — where Gina Rinehart, Australia’s richest woman, and Bhupendra Kumar Modi, a telecommunications billionaire born in India, have homes — is losing its appeal for foreign billionaires, Bloomberg reports.
Taxes Singapore introduced in 2013 of as high as 18 percent on foreigners who purchase property have depressed prices and sales.
Condominium prices in the residential enclaves that line the seafront are near their lowest levels since the end of 2006, Maybank Kim Eng Securities Pte figures show.
Singapore has been trying to rein in the property market since 2009, with the toughest measures, including stricter lending, introduced last year. The city state is unlikely to ease the curbs until “a meaningful correction” takes place, Finance Minister Tharman Shanmugaratnam said on Oct. 28.
“The way prices have fallen is like during the [global financial] crisis” in 2008, Alan Cheong, a Singapore-based director at broker Savills Plc, said, referring to values on Sentosa Island.
Home prices on Sentosa have fallen about 40 percent since 2012, compared with a 28 percent drop in 2008, Cheong said.
Among the government’s curbs have been a cap on debt at 60 percent of a borrower’s income and higher stamp duties on home purchases. Additional taxes for foreigners buying residential property were raised to 15 percent in 2013 from 10 percent, on top of the basic buyer’s stamp duty rate of about 3 percent. All homebuyers must pay a 16 percent levy if they sell the property within a year.
In 2004, the city state eased rules to allow foreigners to buy land for development on Sentosa, luring buyers from Australia to Russia. Sentosa Cove became the first location where foreigners were allowed to own stand-alone homes with easy approval from the Singapore Land Authority.
“The curbs were to help the Singaporeans, but in the process they are also curtailing the growth prospects of the country,” Modi, who estimates his net worth at US$2 billion, told Bloomberg. “The government needs to differentiate between global and local citizens.”
Modi owns two properties on Sentosa. Rinehart, Australia’s richest person, owns two apartments in the Seven Palms Sentosa Cove project.
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