International Herald Tribune: 27 September 2007

SINGAPORE: When real estate developers visit new markets around the world, they generally view the trip as an investment in the future rather than an effort to actually sell anything.

But when the Singapore developer Keppel Land went to Seoul at the end of May to promote Reflections at Keppel Bay, its luxury waterfront residential complex designed by the renowned architect Daniel Libeskind, more than 10 units were sold on the spot.

"When we go on road shows to our more traditional markets, like Indonesia or Hong Kong, and sell anything more than five units over the weekend, it's considered a reasonable number because buyers will usually prefer to fly in to Singapore in the weeks after to check out the place before committing," said Albert Foo, Keppel Land's deputy general manager of marketing. "So to have people just walk in the exhibition room and plunk down a check, it's quite a feat."

But Koreans have been pouring millions into foreign real estate since 2006, when the South Korean central bank relaxed the controls imposed during the 1997-1998 Asian financial crisis. Last year they spent $780 million on overseas property, according to Bank of Korea data, and this year's total is expected to be far more as the Finance Ministry tripled to $3 million the total amount that an individual Korean can invest abroad.

While the number of Koreans buying in Singapore remains relatively small, with only 128 buyers in 2006, that number still was a 132 percent increase in the previous year's total, according to data from Singapore's Urban Redevelopment Authority.

In the last two years, Singapore has been growing in popularity with foreign buyers, thanks in large part to the capital gains available in its booming property market. "Singapore has become much more of a global city," said Ong Choon Fah, the executive director in Singapore and regional head of consulting and research for the global real estate consultant DTZ. "I think generally the place is no longer just seen as a place to work, but also as a place to have fun," Ong said, referring to the addition of Formula One racing and casinos.

Before the end of 2005, when Singapore's real estate market started to bounce back from the effects of SARS and some regional economic problems, foreign homebuyers were involved in fewer than 20 percent of all city purchases. But in the first half of this year, that share increased to 29 percent. (Most of the purchases are for condominiums because of continuing restrictions on the foreign ownership of land.)

Interestingly, the increase in the number of foreign buyers is hand in hand with a widening of the traditional base of foreign buyers.

Last year, Indonesians and Malaysians each accounted for 19.6 percent of foreign buyers, followed by Indians at 10.7 percent and Britons at 8.7 percent. By comparison, in 2003, 28 percent of foreign buyers were Malaysian, 23 percent were Indonesian while Indians accounted for only 4 percent.

Today, the number of purchases by Koreans, mainland Chinese and Taiwanese is growing fast, albeit from a low base. Korean buyers generally have a budget of $1 million to $3 million, while mainland Chinese and Taiwanese budgets usually are larger, real estate professionals said. "For mainland Chinese, we're aware of families buying units here for the mum and kids who are coming to study. There is a similar trend with Koreans," Ong said. "I think Singapore is considered a good pit stop where the kids can learn English in a familiar environment before they go elsewhere."

Even Middle Easterners, mainly institutional investors, are starting to show interest in Singapore. A Kuwaiti institutional investor, the Al-Nibras Islamic Real Estate Fund, recently spent $286 million on two apartment blocks totaling 56 apartments in Reflections at Keppel Bay.

"We have a sense that Middle Eastern individuals are not very familiar with this part of the world just yet. Right now, interest is driven by institutional buyers, but we think their presence will go up in the years ahead," Foo said.

One clear sign that Korean investors are buying for themselves, and not just investment, is the increase in Korean restaurants and retailers here.

"There are definitely more Koreans living here in the last few years. Everywhere I go, I hear Korean," said Emi Eu, a Korean professional who has been living in Singapore for seven years. "Now in every major food court, there is one Korean food stall; there are several Korean supermarkets and I know of at least two Korean rice cake shops here. Those are so specialized you'd really need a sizable Korean community to support them."

At the recently opened extension of Novena Square shopping mall, an entire floor has been reserved for small, 4.5- to 6.5-square-meter, or 50- to 70-square-foot, shops offering everything from Korean street wear to beauty products and Korean fast food. The location was modeled on Doosan Tower, popularly called Doota, a shopping mall in Dongdaemun, South Korea.