Never mind that Singapore is experiencing one of the worst property slumps in its history. The demand for luxury housing is suddenly coming from an unexpected group - wealthy Indonesians.
Purchases of homes valued at $5 million or more by Indonesians in Singapore have already nearly quadrupled so far this year from last year's total.
The stepped-up buying coincides with the passage of a law in Jakarta aimed at getting Indonesians to repatriate or pay taxes on cash stashed overseas. "We're seeing a big increase in Indonesians buying the most expensive property," said Mr Ang Kok Leong, of SLP Realty, who cited concerns about Singapore's upcoming move to share financial information with the authorities back home as the single biggest motivation for his Indonesian clients.
Under the tax amnesty scheme by the Joko Widodo government, Indonesians are to pay a tax rate starting at 4 per cent on declared property or funds left overseas. It increases in stages to 10 per cent as the amnesty period draws to a close in March. Those who send their money home and keep it in Indonesia for at least three years pay 2 per cent. But those who do not declare and are found out face paying 200 per cent of the tax owed.
Indonesia, Singapore and other countries are adopting global tax reporting requirements to tell each other about nationals holding assets abroad. "This global shift into increased transparency will no doubt result in subtle yet important changes in the portfolio allocation of a typical high net worth individual," said Mr Evrard Bordier of Swiss private bank Bordier & Cie.
The tax amnesty deal may attract $5 billion to $9 billion of Indonesian funds deposited in Singapore, Sanford C. Bernstein analysts Kevin Kwek and Norbert Topouzoglou wrote in a July report.
Agents and brokers say Indonesians moving money into property are counting on the authorities sharing information only of assets held in banks, and not in real estate.
Indonesians bought 30 Singapore properties valued at $5 million or more between January and Aug 17, compared with only eight such deals for all of last year, according to the Urban Redevelopment Authority. Disclosure of nationality is voluntary. During the first half of this year, Indonesians bought 189 properties of all values in Singapore.
Not all Indonesians buying real estate are seeking to avoid taxes, however, as some may see value in a market that bottomed out in prime areas at the end of last year, analysts say.
In response to a request for comment, the Monetary Authority of Singapore and the Ministry of Finance said Singapore is ready to help in "any case of suspected cross-border tax evasion".