Ultra-rich foreigners in Singapore hesitant to spend amid heightened wealth scrutiny

Luxury condos in The Residences at W, one of the most coveted properties in the Sentosa Cove area of Singapore, saw their listed prices slashed by 40% in April from their initial launch in 2010, the South China Morning Post reported.

Sentosa Cove is a residential enclave in the eastern part of Sentosa Island that provides resort-living lifestyle aimed at the ultra-rich.

Although the decline in prices has been partly linked to increased property taxes, it also reflects a wider trend of Singapore’s affluent foreign residents scaling back on lavish expenditures in response to intensified scrutiny of their financial assets.

Singapore uncovered a historic laundering case last August, where a group of criminals from China laundered more than S$3 billion (US$2.2 billion) in proceeds from online gambling through at least 16 financial institutions in the city-state, according to The Straits Times.

In the aftermath of the incident, the city’s authorities have demanded more information from family offices and hedge funds, which are private entities that provide a comprehensive suite of services to high-net-worth families and individuals.

Several large lenders in Singapore have also enhanced scrutiny of their wealthy clients and potential customers, The Business Times reported.

This cautious approach towards foreign money has caused many rich families from China to favor Hong Kong over Singapore for family offices.

Meanwhile, those with deep pockets in Singapore are now adopting a “wait-and-see approach,” according to property industry observers.

Luxury homes priced at S$5 million or more saw a 50% year-on-year decline in sales in the first quarter ending in March, with foreign purchases plummeting by 98%, as reported by local media.

Sales of ultra-premium cars, typically starting at S$1 million, have sharply declined, according to Bloomberg.

Just 32 new cars from six of Singapore’s top luxury brands were sold in the first quarter of 2024, a 74% decrease from a year ago.

Say Kwee Neng, managing partner at automotive consultancy One Strategic Consulting, told SCMP that new regulations stemming from the historic money-laundering case have required frontline sales staff to ask for additional information and validation for high-value purchases.

“With these stricter checks, many prefer to avoid the hassle and forgo buying their dream car,” he said, adding that there has recently been a noticeable decline in showroom walk-ins and more customers turning down test drive invitations.

Demand for other luxury items, including rare whiskies and golf memberships, has also diminished since 2021, when affluent foreigners were more inclined to spend freely.

Circle 33, a private club renowned for its expensive wine and wealthy Chinese clientele, shut down after failing to generate enough revenue to renew its lease, as the ultra-wealthy in the city-state have shifted towards discretion rather than flaunting their wealth, the Financial Times reported.

Nonetheless, according to Say, although those engaged in illegal activities may have disappeared, the upper class whose wealth is earned through legitimate means continues to go about their lives as usual.

“I think the money-laundering case has taken the froth away from the market. These are the guys whose money comes from dubious sources, they are now keeping a low profile. But those with legitimate sources of income will not change their consumption patterns significantly,” he said.