Amid a lacklustre housing market at home, PropNex Realty, one of Singapore’s largest real estate agencies, embarked on its first regional expansion in the second half of last year with its entry into the massive Indonesian market.
“The reasons were quite clear. We have been in existence for 17 years. The first 15 years we had no intention to go regional because the market was very much upbeat,” said PropNex CEO Ismail Gafoor in a media briefing ahead of the company’s grand opening in Indonesia next Tuesday.
“When all the cooling measures started we straightaway had a strategy … It was time for PropNex to go and stretch its wings regionally.
“Naturally, we selected Indonesia because a lot of Indonesians, wealthy investors, do have a home in Singapore and they always see Singapore as a safe haven, secure and a place for schools and financial businesses … Also, among the Asean countries it has the highest population of 260 million.”
PT PropNex Realty Indonesia, set up through a master franchise arrangement, has grown to seven offices with a sales force of 600 within a few months, said Mr Ismail, adding he was confident it will cross the target of 1,000 by the end of the year.
Affluent Indonesians continued to show keen interest in Singapore’s properties, he added.
There have been “numerous sales” with Indonesian buyers picking up mass-market condominiums, he said, noting that there will be “natural interest” among Indonesians in the higher end of the market if prices drop further.
PropNex has Vietnam next in its sights as it continues its regional expansion, but it is still in the early stages of finding a partner, said Mr Ismail.
He said there has been little immediate impact from last Friday’s easing of property cooling measures and loan curbs in Singapore.
“Over the weekend, we have not seen any push in activities or buying interest patterns. To me, these are all not the key drivers. The key drivers … would be to tweak the Additional Buyer’s Stamp Duty (ABSD) for the second and third properties for locals and foreigners,” he said.
Nonetheless, Mr Ismail welcomed the easing as a “positive step”.
Under the latest changes effective from last Saturday, the Seller’s Stamp Duty (SSD) will be payable if a homeowner sells his or her property within three years of purchase, down from four years previously.
The SSD rates will also be lowered by 4 percentage points for each tier — to 4 per cent for properties sold in the third year; 8 per cent for those sold in the second year; and 12 per cent for those sold within the first year.
In addition, the Government will no longer apply the Total Debt Servicing Ratio (TDSR) framework to mortgage equity withdrawal loans, with loan-to-value ratios of 50 per cent and below.
The Government had imposed a series of cooling measures and borrowing curbs since 2009, to rein in a steep jump in home prices as the economy emerged from the global financial crisis.
These measures included the SSD, ABSD, tighter loan-to-value ratios and mortgage servicing ratios, as well as the TDSR, among others.
From the recent peak in 2013, private home prices in Singapore have fallen 11.3 per cent, while resale HDB prices declined 9.9 per cent, reflecting the sustained impact of the loan curbs and cooling measures.