Moving to Singapore as a foreigner just got a lot more expensive.
On Thursday, the city-state doubled its Additional Buyer’s Stamp Duty, Bloomberg reported. Now foreign home buyers will have to pay a 60 percent duty, the highest property-tax rate in the world.
“We are pretty adamant that this is not only going to deter but will put a brake on investments” in Singapore, Mark Elliott, the head of international residential sales at Savills in Hong Kong, told Bloomberg. “It will be great for London, the U.S., and other markets.”
If a foreigner were to buy a $5 million property in Singapore, they’d have to pay 65 percent in taxes, or about $3.25 million. In other major international hubs, the taxes would be much less: Foreigners in Vancouver and Hong Kong have a tax rate of 29 percent, while London, Melbourne, and Sydney are all in the 14 percent range. New York, in comparison, has a pretty low tax rate of just 4.3 percent.
Thanks to the change, foreigners are more likely to purchase property in nearby Hong Kong, Bloomberg noted. Those from mainland China, in particular, may see the region as much more appealing when compared with Singapore. Hong Kong currently charges a still-high 30 percent stamp duty on property purchases by foreigners—but if a homeowner becomes a permanent resident later on, most of that can be refunded, thanks to Hong Kong’s efforts to attract talent.
Despite the increase, not everyone is so pessimistic about the impact the hike will have on Singapore’s appeal to foreign buyers. The high tax rate “may slow the frenzy to move money to Singapore, but maybe not as much as you might expect,” Chang Shu, Bloomberg Economics’ chief Asia economist, told the outlet. “The demand for diversifying assets remains strong, and Singapore is still the top destination in Asia.”
That’s evident in how well the city-state’s housing market has been doing lately, with an influx of money and interest in the real-estate sector. However, that’s led to concerns about Singapore becoming less affordable for locals, a trend that the tax-rate increase is designed to combat—although perhaps to the chagrin of foreigners looking to snap up property in the country.