Singapore Real Estate to get a Boost after Brexit

How Brexit Affect Singapore Property Market is a question that is in the mind of most people in this region after the British public voted in a referendum to leave the EU. This news spread like wildfire in the global financial world as analysts and researchers tried to envision how the world will react to this adverse news.

This is something that has never happened before. Britain is regarded as one of the integral nations within the European Union. It was unthinkable that the people in this great country will decide to say goodbye to the EU. There is tremendous uncertainty in the entire world regarding the consequences of this unprecedented act. How the financial markets will react to this the brexit phenomenon is anybody’s guess. One thins, however, is sure: political uncertainty is always bad for the market.

The pound sterling was already losing its value against the dollar when the referendum was announced. This meant that it was also losing value against most of the currencies in the world.  When the British people voted in favor of leaving the EU, the political uncertainty reached unprecedented heights and paved the way for further decline in the value of the pound.

 

What will be the wider consequences of the brexit vote? The best guess right now is that anything can happen. It has been said that it can be safely assumed that the brexit vote can affect Singapore in three ways. Suitable responses can also be prepared in order to counter the adverse effect.

Let us first discuss trade. Singapore has recently concluded talks with the EU for Free Trade Agreement. This is the first such trade agreement between an AESAN country and the EU.

The terms of the agreement stipulate that the imports and exports between Singapore and the EU will not be subjected to vigorous restrictions. They will also be relatively cheaper. This was very good for Singapore because it had imported machinery, chemical and transport related equipment from the EU that was worth nearly 30 billion dollars.

However, the point is that most of the EU trade of Singapore was with Great Britain. Obviously, the agreement between Singapore and the EU will remain intact, but the deals with Britain will need to be renegotiated. The new terms of any deal with Britain will depend on the bargaining power of the two countries after the Brexit has actually become effective.

Watch video for Brexit Analysis by Straits Times

Why it cannot be predicted right now?

This is so because it is still not clear whether Great Britain will economy become weaker after Brexit. If this happens, business in Singapore will not be interested in working with her. They would rather prefer other countries still within the EU. Britain will automatically lose most of its bargaining power in this scenario.

On the flip side, Britain may end up having more influence over Singapore owing to it being a major business partner of the country.

No matter what happens. It is a fact that a lower pound will make importing foods from Britain much more desirable. There is another point to consider: it will take at least two years for Britain to leave the EU as per the terms of the EU rules.

Watch video for Brexit Analysis by CNA Insider

The net important point for discussion in this regard is investments. Presently, around 25 % of the entire foreign direct investment portfolio in Singapore comes from the European Union. Similarly, Singapore has also heavily invested in the EU.

Again, most of the investment from and inside the EU is through Great Britain. The situation clearly indicates that Britain’s exit from the EU will also affect the flow of investments from the European Union into Singapore. If Britain become economically weaker after Brexit, it would mean that the flow of investments coming from Europe will slow down consequently, it will become more costly for the British firms to expand their business in Singapore.

There are several British companies that have increased their investments in Singapore over the past few years. These include Shell, HSBC, and Rolls Royce etc. If the value of the pound decreases, it may compel investors in Singapore to invest more money in Britain.

How Brexit Affect Singapore Property Market?

Let us finally discuss the most important aspect of Brexit phenomenon: its effects on the Singapore property market.

It is being speculated that the residential and commercial property market in Singapore and Australia will be a major winner of the Brexit episode. This is because a big chunk of international capital will flow towards these two destinations and find its way into the property sector. Financial pundits are already saying that the asset managers will seek to transfer the bulk of their funds out of Britain and park it somewhere else. In this regard, Singapore and Australia are the two most likely destinations for shifting these funds.

Citi Group analysts have released a forecast stating that the office rents in London will go down by 16 to 20 percent because thousands of layoffs will be carried out in the city. Property stock prices of shopping malls and office buildings have also slid down by 4 to 8 percent. This is in anticipation of the reduction in operations of many European firms.

Office yields in Singapore have been tightened already since the Brexit. Citi Group states that the rent will further enhance as businesses seek to move out of the volatile European markets.

Singapore is considered a low-risk area and it is being estimated that apartment prices could also rise here as investment shift from Europe starts to occur. How Brexit Affect Singapore Property Market will, in the end, depend on the circumstances as they unfold in the financial markets worldwide.

Conclusion

 

At the end of the day, Brexit was the decision for the people of Britain. How their decision would affect the rest of the world was the least of their concern when British citizens cast their vote in favor of leaving Europe.

Of course, there will be some adverse effects of the phenomenon on the economics of the entire world, however, it seems that the property market in Singapore will get a great boost when the Brexit begins to happen within the next two years.

References:

  1. https://en.wikipedia.org/wiki/Brexit
  2. Business Insider. 01 July, 2016: http://uk.businessinsider.com/eu-referendum-brexit-fallout-singapore-lender-stops-offering-london-mortgages-2016-7
  3. Strait Times 04 July , 2016: http://www.straitstimes.com/business/banking/too-early-to-say-if-singapore-will-benefit-from-brexit-analysts
  4. The Australian 11 July, 2016: http://www.theaustralian.com.au/business/property/property-australia-singapore-to-benefit-from-brexit/news-story/e64097e03c62b2f5969ac99b5c0d37f0
Stephen Chong
Stephen Chong
Lim Ming Hwee
Lim Ming Hwee
2022-02-26
Stephen is a very good agent who goes beyond his way to ensure that his clients are happy. He is very patient and helpful, and will always give good advice.
Joseph Sze
Joseph Sze
2021-12-24
Stephen is a professional & responsible person who has provided good quality customer services to our recent Condo housing purchase & related matters. I found he has put in great efforts and gone for extre miles to assist us in the whole process and related purchase issues. Excellent work, Stephen!👍🏼👍🏼👍🏼
SZ Lim
SZ Lim
2021-07-20
Was going thru Stephen's video when I noticed he had a google review panel up. Going to copy paste my review on his FB page from 2019. I still stand by my review. Stephen was very professional throughout our engagement process. I first engaged Stephen as his effort could be seen thru the videos he made. The videos were informative, detailed, yet easy to understand from a beginners point of view. Could also see the improvement of his videos as time passes, and that speaks volumes about one's character on his eagerness to improve and share. During my engagement with him, Stephen was very professional. Since I was very new in the scene, I required alot of guidance and honesty. Stephen was very upfront with me on many items and did not try to hide any facts from me. As a first time buyer, both good and bad prospects were laid out after his detailed analysis on my current financial condition and also on the projects we went to see. Comparing to other agents who will just blab anything that benefits their sales point, Stephen was straightforward and truthful on the issue. I have met quite a few agents but would highly recommend Stephen to people who are looking for properties, be it looking for a place to stay, or looking for a property to invest.
YingYu Tan
YingYu Tan
2021-07-11
Stephen handled both my HDB sale and new condo purchase. The whole process was fuss-free and smooth. What impressed me was his willingness to go the extra mile for his client, from analyzing every detail and being there for me and my wife every step of the selling/buying process.
陳若芸
陳若芸
2021-07-04
Cannot believers Mr Stephen posting my rental unit less than 10 mins ? Yes, can't believed it ? but please believed it. 1st day open ..more then 8 enquiry. Mr Stephen was very professional, patient and knowledgeable, he shares all the information i needed, excellent service 💪💪 Rent out my unit within 2 days highly recommended ..BINGO
Jade Bai
Jade Bai
2021-06-30
We came across Stephen YouTube video and appreciated the tips he is providing. We decided to engage Stephen when we were house hunting. Most people may feel that you can DIY resale hdb buying process. Personally we feel its money well spent engaging Stephen. The whole buying process is swift. Stephen is very prompt in his reply. He did alot of detailed analysis and recommend us the units we can explore. He is very detailed anf meticulous. This process saved alot of time. He also gave us helpful advice on the units we viewed. No hard selling or rush you into hasty decisions 😊
Adrian Tay
Adrian Tay
2021-06-30
Knowledgeable and professional, Stephen is not the typical agent you will meet. Ever so patient, he will help provide his genuine feedback and never pushy unlike most sales agents. Fortunate to have Stephen walk with me in my property investment journey. Will recommend Stephen to anyone who is looking for a trustworthy agent to walk the mile with.
michael tan
michael tan
2021-06-29
Very patient and give good advise. I bought ec under him and he sold my hdb.
CY Goh
CY Goh
2021-06-05
I believe every property investors or home buyers have encounters with numerous property agents. However, how many of you ever met someone with passion and enthusiasm to sit down and analyze each property based on your criteria (budget, requirements like location, size, etc)? Having watched Stephen's videos in YouTube, decided to ping him and the rest is unspoken of. Not only did he helped to narrow down our search, he also analyzed which project has higher prospect and which unit (level, facing, etc) fits our living habits. No complaints, except for not knowing Stephen earlier. Good job Stephen, thank you.
Esther Cheh
Esther Cheh
2021-04-30
Stephen was the agent assisting us in the purchase of our condo and now to market them for rental. He is extremely helpful, open, transparent and reliable throughout the entire time. He went above and beyond to help us set things up while we are not in Singapore.He is also very professional and knowledgeable about the property market in general. I am confident to leave our condo in his care to find us a good tenant and to manage them in future.