Chinese tycoons are disappearing from Singapore, which has been called the "Switzerland of Asia" and served as a safe haven for the money of China's super rich. Since the start of the year, as Beijing tightened oversight of overseas assets, fears have grown that flaunting wealth could make one a target for investigations. To avoid Chinese authorities' scrutiny, they are riding Chinese-made electric cars instead of ultra-luxury sports cars and hiding expensive wine in secret warehouses instead of drinking it.
Reuters said on the 4th (local time) that wealthy mainland Chinese residents in Singapore have recently slashed spending as authorities step up surveillance.
The shift is most evident in the ultra-luxury car market, where a single vehicle can cost at least several hundred million won. In Singapore, regardless of model, simply driving a Bentley or Rolls-Royce means paying taxes amounting to two to three times the car price. Last year, as it overhauled the tax regime on high-priced cars, the Singapore government sharply raised the additional registration fee (ARF) rate on vehicles whose open market value (OMV) exceeds 80,000 Singapore dollars (about 90 million won) from 220% to 320%. To buy a 1 billion won Rolls-Royce, you would owe an additional 3.2 billion won in taxes.
Even with steep taxes, Bentleys and Rolls-Royces had been flying off the shelves, but sales have plunged this year. According to the Land Transport Authority (LTA), only 19 Bentleys were sold in Singapore from January to October this year. That is a drop of more than 80% compared with 103 units in 2021. Rolls-Royce, whose average vehicle price is higher than Bentley's, is faring even worse. While 95 were registered in 2023, just 13 were sold in the same period this year. It is not merely a slump; it is a market collapse.
By contrast, sales of BYD, a Chinese electric vehicle brand, have surged. BYD sold only 1,416 units in Singapore in 2023. But this year, 7,473 units were sold through October. With sales soaring 430% this year, BYD even overtook longtime powerhouse Toyota. The brand has now risen to No. 1 in Singapore's overall car market—including both electric and internal combustion engine vehicles.
High-performance BYD models such as the Seal sell locally in Singapore for about 200,000 to 250,000 Singapore dollars (about 230 million to 280 million won), including the Certificate of Entitlement (COE). Compared with the price of a Bentley including the additional registration fee and COE, it is only about one-tenth as much, making it ill-suited for flaunting wealth. Instead, experts said it offers a convenient pretext to "join the eco-friendly trend" while evading China's crackdown on conspicuous consumption.
Local dealers told Reuters, "The big-spending Chinese now want 'low-profile' models that no one looks at on the road."
Chinese tycoons have also vanished from the real estate market. To block inflows of overseas money with unclear sources and to cool an overheated market, the Singapore government doubled the Additional Buyer's Stamp Duty (ABSD) on foreign purchases of dwellings to 60% from 30%. That means paying more than half the home price in taxes.
As a result, the number of foreign luxury condo purchases this year has plunged 98% from a year earlier. According to local real estate statistics, foreigners' share of total real estate transactions fell from about 4.7% in early 2023 to around 1.8% this year. In the Sentosa area, long known as a hub for Chinese tycoons, foreign memberships at golf clubs fell more than 30%, from 950,000 Singapore dollars (about 1.1 billion won) in 2023 to 660,000 Singapore dollars (about 740 million won) this year.
Industry players lamented that the environment has shifted to one where even with money, you cannot buy a golf club membership unless you prove the funds are clean. Applications to set up family offices dedicated to managing the assets of high-net-worth individuals have fallen more than 50%, led by mainland Chinese tycoons. Citing a Singapore golf membership brokerage, Reuters said, "Clubs are conducting much broader and more detailed checks on Chinese buyers' sources of funds than before," adding, "Transactions are frequently halted when buyers fail to adequately explain the source of funds."
Art and wine markets, once focused on display and collecting, are now centering on concealment. This year, the aggregates of art imported by Singapore rose 74% from last year. Experts said the surge in import value is due more to "safe asset storage" than to "active transactions." In other words, Chinese tycoons drove a temporary spike in imports as they snapped up art to hide assets.
Demand for expensive wine—once favored as gifts or for show by figures in politics and business—also remains strong. The method of purchase and storage, however, has changed. Among Singapore's Chinese tycoons, a trend is rising of buying rare wines and storing them not at home but in private warehouses within duty-free zones.
Private duty-free vaults near the airport attract reclusive wealthy individuals by offering state-of-the-art security and a system that allows valuables to be stored without customs inspection. John Kapon, chairman of the Singapore wine auction house Acker Wines, said, "Chinese collectors' interest remains strong, but their methods have become discreet," adding, "After it became known that thousands of bottles of wine and whisky were included on the seizure list during a recent large-scale money-laundering investigation led by the Singapore government, fear spread that simply keeping a massive wine cellar at home could be construed as concealing criminal proceeds."
Under this year's "common prosperity" policy line, Chinese authorities have markedly tightened tax audits and monitoring of overseas income and assets. With the domestic economy slowing on the mainland, images of Chinese tycoons living lavishly abroad could stoke public backlash within China.
The South China Morning Post (SCMP) reported last month that "local Chinese tax authorities used big data to track individuals who failed to report overseas income and imposed back taxes and additional tax totaling in the millions of yuan." In particular, inspections and warnings for unreported overseas income are being carried out across major economic hubs with high income levels, including Shenzhen, Beijing, Xiamen, Guangdong, Fujian and Sichuan.
Singapore's stance on flaunting wealth is also firm. Senior Minister Lee Hsien Loong said in an interview in October, "Singapore welcomes wealthy foreigners," but warned, "Do not pop $20,000 champagne or roar around at midnight in a Ferrari to announce 'I am here.'"
Local media analyzed that Singapore has moved from an era when "any wealth is welcome" to one where "clean wealth only" is welcome. Kevin Teng, CEO of the asset management corporations WRISE Group, said, "We have witnessed Chinese tycoons behaving more cautiously and discerningly," adding, "Investments that spray money around indiscriminately, as in the past, will no longer be welcomed in Singapore."