Restrictions in Asia Pacific on foreigners buying property unlikely to change, say experts
Restrictions for international buyers looking to purchase property in the Asia-Pacific region are unlikely to be lifted in the near future, according to Knight Frank’s latest review of property markets in the area.
Although cross border residential property purchases have increased over the last few years, the rapid rise in residential house prices has resulted in policymakers in the region taking more protectionist stances as domestic affordability becomes an issue.
It also shows that mainstream property prices in Hong Kong, China and Malaysia have increased by 28%, 23.8% and 6% respectively over the last year to the end of the first quarter of 2013.
But policies make it difficult for overseas buyers and land in a number of countries is seen as sacred and not something that can be given over to foreign owners. Also additional buyers stamp duties in Hong Kong and Singapore are good examples, as are the proposed additional taxes for foreign buyers in the Johor Bahru state of Malaysia.
However, it is worth noting that while certain countries have not been open to foreign ownership of property, overseas buyers in Japan, South Korea and New Zealand should face no significant barriers to home ownership in the region.
‘Other countries try to strike a balance between giving domestic citizens an affordable stake in their country, while offering the possibility of property ownership to attract foreign talent who make an economic contribution to the country,’ said Nicholas Holt, Knight Frank’s Asia Pacific research director.
‘Indeed, many countries allow foreign residents permission to buy property that would not be accorded them if they lived overseas. This is the case in the two giants of the region, China and India whose respective ownership regulations allow resident foreign purchasers the possibility to buy property,’ he explained.
In Singapore, foreign purchasers are permitted to access to the private non landed market freely, although this accounts for only around 17% of the total existing housing stock. Landed property however is more difficult to access for foreign buyers, with a number of hurdles having to be faced before a purchaser could even be considered.
Elsewhere, Australia’s policy of allowing foreign purchasers into the new build or land market, so as not to crowd out domestic purchasers in the resale or secondary market has limited the numbers of foreign purchasers, although it has provided developers with an incentive to target offshore interest.
In Thailand foreign buyers can buy freehold for up to 49% of a single development, if exceeded, the tenure will be leasehold. They can also buy land as a leasehold, whereas the improvements (residence) can be freehold.
In India a foreign national of non-Indian origin, resident outside India cannot purchase any immovable property in India unless such property is acquired by way of inheritance from a person who was resident in India. But a foreign national of non-Indian origin can purchase immovable property other than agricultural land, if he has been a resident in India as defined by the FEMA Act 1999.
A foreign national who is not resident or considered to benefit national development is unable to purchase property in Indonesia while in Singapore foreigners can buy private condominiums freely although they are subject to 15% additional buyer’s stamp duty. Sentosa Cove is the only place in Singapore where non-PR foreigners may buy a landed home.
Non-resident foreigners are not permitted to buy property in mainland China but foreigners who have worked or studied in China for at least a year are allowed to buy a home for self occupation.