Since the Singapore government raised the ABSD, foreign investors' interest in the country’s condo market has sharply declined. According to recent data, the number of condos purchased by foreigners over the past year decreased by 71%, a significant drop that clearly illustrates the direct impact of the ABSD adjustments on foreign buyer demand.

The market's response to the ABSD adjustment was swift and pronounced. Since the government increased the ABSD for foreign buyers from 30% to 60% in April 2023, the number of condos purchased by foreigners drastically fell from 1,064 units the previous year to 306 units. This decrease is shocking not only in terms of volume but also in the percentage of purchase volume, which dropped from 5.4% to 1.8%.

This policy adjustment effectively curbed the demand from foreign investors, especially in the Core Central Region (CCR), where the proportion of apartments bought by foreigners sharply fell from 14% to about 6%. The CCR area usually attracts more foreign investors and high-end buyers, thus the reduction of foreign buyers in this area was particularly noticeable.

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According to the Urban Redevelopment Authority (URA), after the ABSD adjustment, condo sales in the CCR area decreased by 36.6%, from 4,215 units to 2,672 units. Nevertheless, the average price per square foot for luxury condos remained relatively stable at around SGD 3,800. Observers note that many investors are not in a rush to sell their properties at discounted prices, instead opting to rent them out, a phenomenon that has somewhat maintained price stability.

However, buyers from some countries are exempt from ABSD when purchasing residential properties in Singapore. This might partially explain an increase in some foreign buyers in the CCR area, particularly those from the United States. U.S. buyers led the list for new and resale condo purchases in the CCR area in 2023, tending to transact based on the property's real value rather than emotionally driven consumption.

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Nonetheless, the increase in ABSD has also led to a significant reduction in Chinese buyers in the Singapore luxury property market, who were once among the main foreign buyer groups. According to data from Bona Research and the URA, the number of purchase warnings by Chinese buyers in the CCR area's new and resale markets sharply declined from 112 in 2020 to 93 in 2023.

With the significant decrease in foreign demand, Singapore's real estate market will increasingly depend on local buyers. In the first quarter of 2024, foreign buyers accounted for only 1.2% of the total number of new condo and resale units, the lowest figure since 1995. Thus, the market direction will be more closely linked with local economic conditions and policy support.

Although the increase in ABSD successfully cooled foreign investors' enthusiasm for the market, this policy may pose challenges to market dynamics and price stability. As the market adjusts gradually, it is expected that the Singapore real estate market will develop in a more balanced and robust manner. While maintaining market vitality, the government also needs to ensure the health and stability of the market.