FOREIGN REAL ESTATE INVESTMENTS IN SINGAPORE - DRAWING ON HONG KONG'S EXPERIENCES TO HIGHLIGHT MEASURES TO ATTRACT FOREIGN CAPITAL

Abstract

Singapore's foreign real estate investments are on the rise. But the environment is apparently not as conducive as desired. A comparison with Hong Kong shows that there is still a general preference for investments in the colony, despite the overhanging uncertainty over its future. There is a need then to take a look at the underlying reasons why the environment in Singapore does not present itself more to foreign investors. The general profile of the investor was looked into to see why they invest abroad. The more pertinent reasons currently include the desire to emigrate, higher returns for investments abroad and also for diversification reasons. The key factors that affect the investment decisions of the rational investor were identified as political climate and government restrictions, with returns of the investment taking less priority. Further analysis shows that the main deterrent of Singapore was the over-regulated environment, and coupled with the low yields, makes the state less favourable for investments. Fortunately, the strong political stability of the country is a plus point. However, changing conditions and the trend towards globalisation of real estate increase the need for Singapore to capture some of that flow of capital. Thus, the basic pragmatic policies adopted by Singapore in the early years of independence that has seen the state through turbulent times must change. The government must show that they are willing to impose less on the market through the various state agencies as well as present a flexible, efficient and strong government image. The basic opportunities for investment should also be made available with more releases of sites. Incentives are not as crucial so long as the fundamentals mentioned prevail. With foreign investments, it is only natural that the xenopohic elements in the state harbour displeasure at foreign ownership for various reasons. This Includes increasing the volatility of the market, outbidding local counterparts and inflating prices. However, as with ail generalisations, there is only a kernel of truth in most of them. Closer scrutiny has yielded more complex explanations for the consequences of foreign ownership.