LOCAL VERSUS OVERSEAS RESIDENTIAL INVESTMENT

Abstract

The past decade saw an inflow of capital movement which resulted from foreigners investing in the real estate sector of Singapore. Most of them were attracted by the socio-political environment of Singapore vis-a-vis its location in the midst of the fastest growing region in the world. Unfortunately, however, the last few years have seen an outflow of capital investments (caused by the feverish interest in overseas properties by Singaporeans) from Singapore. This 'capital flight' has been facilitated by the relatively higher income of the population, coupled with the strong Singapore dollar and the opening up of more Asian countries to foreign investors. Thus, this study set out to examine the factors which affect private residential investments, and in particular, to compare the costs and benefits of local and foreign residential property investments. After a theoretical analysis of the economics of residential property investment and a case study of the four countries which have been attracting Singaporean investors - Malaysia, Australia, Hong Kong and Singapore, it was found that Singapore is relatively more attractive for residential investments than the others as it offers low financing costs and steady appreciation of capital values. Most important of all, it has a stable economic and political environment which is conducive to investments.