I thought we’d mix things up with this post. Instead of focusing on the Seattle condo market, I thought it would be fun to talk a bit about the Singapore condo market and compare it to what’s going on in our Rain City.
Since I hadn’t been back to Singapore in over a year, I quickly realized how much has changed. There was a huge real estate boom so there are many more office and condo buildings, rental rates have gone up substantially, and the population is growing like gangbusters. (The Singapore government recently decided to heavily promote immigration to increase the population due to the nation’s declining birth rate.)
In some ways, though they are thousands of miles apart, Seattle and Singapore are going through very similar real estate cycles. Both cities had relatively few condos 10 years ago and went through the condo craze over the last few years. Rental rates for both cities are up, but more significantly in Singapore, with rent almost doubling in the last 4 years. The highest point of the condo market for Singapore was last year, similar to Seattle. Prices for condos for both cities have also started dropping since the end of last year. Developers for both cities are holding off their projects as well. Even the sub-prime market in US has affected the real estate market in Singapore since local developers are seeking financing from foriegn banks.
On the other hand, financing of condos in these two cities are quite different. During the condo craze in Seattle, a 5% earnest money check could secure a condo for you and you could finance the rest at closing with or without some down payment. In Singapore, you have to put down a 20% deposit and finance the rest at closing or make progressive payments when the condo reached different stages of construction. Home buyers using the progressive payment method helped the developer finance part of the construction costs and in return buy the condo at a discounted price.
The biggest difference for these two cities’ condo purchases is the land tenure. In Singapore, you have either freehold or leasehold condos (typically the land tenure is 99 years for leasehold properties after which it goes back to the Singapore Government). Obviously, in Seattle, condos are on a freehold basis meaning you own the land free and clear and Uncle Sam won’t take it away from your grand kids.
I couldn’t help myself so I decided to visit a waterfront condo sales center. Named Reflection sales center in Keppel Bay, the center displayed two actual size model units of a 2 and 3 bedroom home. The home also showcased many of the designer touches that will not be included in the actual home. So when looking at these sale center, you basically have to discount all the designer touches and visualize the actual unit with only basic finishes. I’m not saying that Seattle’s sale centers do not over-glamorize their model units but overly embellished model units seem to occur less often in Seattle with the model unit usually representing very close to what you are get in the actual home. I’m sure people would sue the developer if they went too far.
Overall, checking out the Singapore condo scene was pretty cool. They definitely have a lot of really big projects over there. It almost makes you wonder if urban living will become the norm for future generations as the world’s cities’ stack people higher and higher.