Singapore has doubled its property stamp duty for foreign buyers to 60% in a surprise move to cool down the city-state’s housing boom. The tax will be 30% for foreigners buying a second property, while entities and trusts purchasing any residential property will pay a rate of 65%, up from 35%. Singapore’s Minister for National Development said the increases were “pre-emptive measures” to reduce local and foreign investment demand during a renewed spike in interest. The move comes as the government seeks to rein in property prices and ensure Singapore remains an attractive international financial centre.
The increase in stamp duty for foreigners buying property in Singapore makes Tokyo a more attractive investment opportunity for some foreigners due to the relatively lower cost of entry. Tokyo’s property market has been attracting increasing interest from foreign investors in recent years, particularly from Chinese and Southeast Asian buyers, who see it as a relatively stable and safe investment destination. Additionally, Japan’s government has been taking measures to encourage foreign investment, including easing visa requirements for investors and providing incentives for overseas companies to set up operations in the country.
In Japan, the property acquisition tax varies depending on the purchase price of the property. For properties that cost 50 million yen ($450,000) or less, the property acquisition tax is 1% of the purchase price. For properties that cost more than 50 million yen, it is 3% of the purchase price. Compared to Singapore’s new rates for foreigners, Japan’s rates are generally lower.
While there are certainly risks and uncertainties in any real estate investment, the recent move by Singapore on tax rates for foreigners, combined with Japan’s relatively low property transaction taxes and stable political climate, make Tokyo an attractive investment opportunity for foreign buyers looking for a safe haven for their funds. The comparatively low property prices in Tokyo, combined with steady rental demand, also suggest that there is room for growth in the city’s property market.
Source: Financial Times 27th April 2023
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