The ongoing property boom, coupled with indications of growing foreign interest in Singapore, prompted Goldman Sachs

The ongoing property boom, coupled with indications of growing foreign interest in Singapore, prompted Goldman Sachs to call for the removal of controls on foreign ownership of landed property - and speculate that such a policy change is likely on the cards.

In a report released on Sunday, the investment bank argues that relaxing the curbs, set in 1973, that require foreigners to seek official approval before buying a landed home would spur further foreign buying - which saw a surge last year - and close the price gap between bungalows and luxury apartments, and just overall give the already-buoyant property market a fillip.

The Law Ministry has since come out to quash any such hopes (that developers, in particular, might have harboured), saying that ‘landed properties have to be treated as a special category’ in land-scarce Singapore, and there are no plans to liberalise foreign buying restrictions. Be that as it may, the matter strikes - beyond the property market - also at issues of hearth and home for Singaporeans, and debate on it will no doubt surface again from time to time. And, in making its case, Goldman Sachs made some notable points.

It suggests, for instance, that free and full access to landed housing would attract more foreigners to town. That’s highly arguable, not only because what usually moves executives and professionals to relocate halfway around the world are, first and foremost, career and business opportunities, not quite housing options, especially where there is no serious lack of choice in a well-developed city. Particularly for the rich and super rich - or at least those who would go for landed homes - there is a good enough range of luxury apartments here, and many rent.

In any case, the landed property curbs, to begin with, are not exactly highly onerous : Foreigners are not absolutely barred from buying; they can buy, subject to approval, which is usually granted. They are just obliged to stay in the house for at least three years, not rent it out or sell too soon, and they may not own more than one landed property at a time.

It is easy to see how a full relaxation of the curbs could inject a strong speculative element to this segment of the housing market - given all the wealth out there - and how it would easily be priced out of the reach of even upper-income Singaporeans, particularly during an upswing. As it turned out, foreign ownership of prime-district houses (in districts 9, 10 and 11) grew 67 per cent last year to an 11-year high - and this excludes, of course, Sentosa Cove, which foreigners can freely buy. It would be quite a different matter if land is plentiful and abundant in Singapore as it is in the US or Australia.

But here on this island nation of barely 700 sq km, that is actually highly anxious to get its share of foreign talent, being slightly possessive about landed property ownership is nothing xenophobic at all. Most foreigners would understand that.

Source: The Business Times, 29 June 2007