Singapore Property Weekly Issue 29

8/3/2019 Singapore Property Weekly Issue 29

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Issue 29Copyright 2011 www.Propwise.sg. All Rights Reserved.
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CONTENTS

p2 Singapore Property News This Week

p9 Additional Buyers Stamp Duty The Straw thatBreaks the Camels Back

p15Resale Property Transactions

(November 19 November 25)

Welcome to the 29th edition

of the Singapore Property

Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR
mailto:[email protected]://www.propwise.sg/advertise/http://www.propwise.sg/http://www.propwise.sg/advertise/mailto:[email protected]


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SINGAPORE PROPERTY WEEKLY Issue 29

Singapore Property This Week

Page | 2Back to Contents

Residential

Savills: Less high-end residential

transactions, but more non-PR purchase

In a study by Savills Singapore, there have

been fewer transactions in the market forhigh-end homes, but the proportion of non-

permanent residents foreigners who bought

such properties have increased. From

January to November this year, there

were1,285 caveats lodged for apartments and

condos priced at $2,000 psf and above inhigh-end districts, a 33% decrease from the

caveats lodged in the same period last year.

On the other hand, the proportion of non-PR

purchase of non-landed homes priced at

more than $1,951 psf in these districts has

increased from 28.4% to 37.8% in the same

period. The increase is likely due to the

restrictions on Chinas property buying,resulting in mainland Chinese turning to the

Singapore property market. The negative

outlook in the Western economies may also

push investors to turn to the Asian economies

for investment. While Indonesians traditionally

dominate the purchase of high-endapartments in Singapore, the proportion of

Chinese and Indian buyers have increased.


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Chinese buyers, in particular, have increased

their share of total buying from 5.8% to

11.8%. Nonetheless, the high-end residential

market is not likely to be very active in the

next few quarters given the current global

economy even as Singapore continues to

draw interest from foreigners looking to invest

their monies in safer economies.

34 units at the Scotts Tower sold at an

average price of $3,100 psf

34 units of the initial batch of 56 one and two-

bedroom apartments released for the preview

for the 231-unit The Scotts Tower, the first

development under the Far EastSOHO brand,

was sold at an average price of $3,100 psf.

Prices start from $1.94 million for a 624 sqft

one-bedroom small office, home office

(SoHo) apartment. The 103-year leasehold

31-storey development comprises of one to

three-bedroom apartments and four-bedroom

penthouses with access to recreational

facilities such as landscaped gardens and sky

terraces.

Top bid for 99-year Alexandra residential

parcel at $396 mil

The top bid of $396 million, or $750 psfppr

from a consortium comprising City

Developments' unit Sunmaster Holdings,

Hong Leong Group's Intrepid Investments

and Hong Realty's Garden Estates was

higher than the predicted $600 to $650

psfppr. This is due to the sites attractiveness,

being located near the city and amenities

such as Redhill MRT station. The strong sales

for recent new project launches are likely to

have contributed to the higher confidence in

the site. Given the land cost, breakeven is

estimated to be at about $1,300 psf.


5/17



The site, which has a maximum gross floor

area of about 524,900 sqft, attracted seven

bids. This should not be viewed as a loss of

market interest since the value of the site ismuch higher than that of other suburban site

making it less affordable for some

developers. The consortium planned to

develop the site into a 40-storey or greater

residential project.

Stamp duty for foreigners to cool private

home prices for Singaporeans

Foreigners and corporate entities now have to

pay an additional 10% for an additional

buyer's stamp duty when purchasing private

homes in Singapore. Permanent residents(PRs) buying their second or subsequent

homes in Singapore and Singaporeans

buying their third Singapore residential

property or more will also have to pay 3%.

This is to make the private homes affordable

for Singaporeans again but many developers

feel that the measures are coming at a wrongtime. Despite the strong sales in recent

months, which were driven by the increase in

new launches and attractiveness of particular

projects, the market is not going to become

speculative, claimed the Real Estate

Developers Association of Singapore

(Redas).

On the other hand, Deputy Prime Minister

and Finance Minister Tharman

Shanmugaratnam stated that the large

investment flows into the property market islikely to continue as long as interest rates

remain low. He added that the duty can help

to cool investor demand and avoid


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developers of luxury property the worst even

though the whole market is likely to be

affected. The ABSD is targeting foreign buyers

of local residential properties, with the stamp

duty of 10% imposed on foreigners and

corporate entities. This may be a measure to

counter the increase in foreign buyers of local

homes. The impact of ABSD is likely to be felt

most strongly in the prime and mid-prime

markets though less so on the suburban mass

market. Analysts believe that the impact

should be immediate with the second month

after the implementation showing whether the

market can sustain the stamp duty.

However, there are also analysts who believe

that the luxury housing sector may not be soseverely affected. There had been an

increase in rich foreigners who have deep

pockets and therefore will not be affected by

the ABSD.

Collective sales affected by ABSD

Developers buying residential land have to

develop any residential sites (including

Government Land Sales (GLS) plots and

private-sector sites such as en bloc sales)they

buy from Dec 8 and sell all the units in the

new project within five years if they do not

want to pay the new 10% additional buyer's

stamp duty (ABSD). This means that

developers will find it less viable to land bank.According to the Inland Revenue Authority of

Singapore e-tax guide on the ABSD,

developers can apply for upfront remission if

they develop and sell all units in the new

development within five years of the date of

contract or agreement to buy the site. If thedeveloper fails to do so, the ABSD (with

interest) will have to be paid immediately on

the expiry of five years.

SINGAPORE PROPERTY WEEKLY I 29


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Thus, developers have to be sure that they can

complete and sell all the units before they buy

the land. This is more risky for collective sales

since the date of contract or agreement refers

to the date when the site is awarded by theSales Committee. Even then, the sale may not

be legally complete and completion can take

six to 12 months or even longer if there is a

delay in court approval. This time spent waiting

for the legal completion of the purchase would

result in lesser time for the developer to build

and sell the units. This would be detrimental to

the sale of larger en bloc sites, where there is

higher difficulty in selling all units within five

years. Foreigners from countries which signed

free trade agreements will not be affected,

however.

ABSD to affect Sentosa Cove Market

Sentosa Cove, the only place in Singapore

where foreigners don't need to be permanent

residents (PRs) to buy landed homes, is likely

to be badly affected by the new cooling

measures. Given the high property prices in

the area of more than of $15 million, the ABSD

would result in a stamp duty of around $2

million, a price that buyers may be unwilling topay. This also means that buyers who had

earlier bought properties in Sentosa Cove for

resale purpose would find it harder to find

buyers. However, the limited number of homes

available in Sentosa may mean that this is not

a big problem. Furthermore, developers and

investors of properties in Sentosa Cove are

likely to be those with deep pockets and

therefore need not worry about having to sell

their properties immediately.

Buyers holding back on purchase as

response to cooling measuresAs a result of the new cooling measures on the

property market, buyers have adopted a wait-

and-see approach when purchasing properties

resulting in a slower market.

SINGAPORE PROPERTY WEEKLY I 29


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Nonetheless, the recent closing of the tender

for a 99-year 138,783.3 sqft residential site at

Chestnut Avenue / Almond Avenue attracted a

total of 22 bids, with the highest at $510.38

psfppr. The strong interest in the site is beyond

expectations and this may be because many

see the ABSD as a measure that does not

affect the landed market. The estimated

breakeven price and selling price are $2.3

million to $2.4 million per unit and $2.7 million

and $2.8 million per unit respectively,

assuming that the site is developed into a

strata-landed development of 64 units with a

build-up area of 4,600 sqft per unit.

Some developers like City Developments

(CDL) do not think that the new measures will

have much effect on their companies, while

others like CapitaLand Residential and Rodyk

& Davidson both thought that the latest

measures was unexpected. Some, like ECG

Property, felt that the measures will only be

effective in the short term but no longer so

when people start to accept it.

CommercialSingapore tops property investment survey

again

In a survey jointly published by the Urban

Land Institute (ULI) and

PricewaterhouseCoopers (PwC), Singapore

triumphs other countries in the Asia-Pacific

region for its commercial real estate

investment and development prospects in

2012. This is because Singapore is being

viewed as a good place for both investment

and development of properties, unlike Hong

Kong. . Nonetheless, investors are still

cautious in their investments, with a tendency

towards core investments with low capital

appreciation but guaranteed cash flows.



10/17



Additional Buyers Stamp Duty The Straw that Breaksthe Camels Back

By Mr. Propwise

On the evening of December 7th the

Government announced an Additional Buyers

Stamp Duty (ABSD) to be imposed on certain

categories of residential purchases. The intent

is crystal clear stamp out (pardon the pun)

investment demand, especially from

foreigners. There have been a flurry of news

reports and opinion pieces, and Id like to add

on my thoughts here in this article. I believe

that this Government measure will be a

turning point for the residential property

market.

http://www.ura.gov.sg/pr/text/2011/pr11-162.htmlhttp://www.ura.gov.sg/pr/text/2011/pr11-162.html


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Details of the ABSD

The ABSD will be collected on top of the

current Buyers Stamp duty, and will apply to

the higher of the purchase price or market

value of the property for the following:

Foreigners and non-individuals (including

corporates, trusts and collective

investment schemesetc) buying any

residential property will be hit with anABSD of 10%

Permanent Residents (PRs) buying a

second or greater residential property

(including part ownership but excluding

overseas property) will pay an ABSD of

3%

Singaporeans buying a third or greater

property will pay an ABSD of 3%

The ABSD will be effective 8 Dec 2011.

The Governments rationale for this measure

is to promote a sustainable residential

property market where prices move in line

with economic fundamentals. It sees the

rising prices of residential properties (now

13% above 2Q96 peak and 16% above 2Q08

peak) as unsustainable given the economic

uncertainties and fears a property bubble that

could have destabilizing effects on the

banking system.

In particular, the Government fears the large

pool of global hot money that is looking for a

safe haven in the Singapore Dollar, now

considered by many as the new Swiss Franc.

Foreign purchases of property have been

growing, and now account for 19% of all



12/17



private residential property purchases in

2H11, versus 7% in 2H09.

The ABSD has also been designed to

intentionally exclude Singaporean first timebuyers and upgraders, and buyers of HDB

flats. This not only helps to emphasize the

home occupation use of housing but will no

doubt score some political points among the

electorate.

On the supply side, the Government will list

sites that could potentially yield 14,100 units

in the 1H12 Government Land Sales (GLS)

Programme, with 7,000on the Confirmed list.

This is on top of the 41,000 unsold private

housing units in the pipeline.

Impact of the ABSD

Transaction cost for investors will

increase substantially, killing

investment demand. Foreigners andcompanies will be the hardest hit. For

example for a $1 million dollar purchase,

the effective buyers stamp duty will

increase from $24,600 to $124,600, a

$100,000 or 500% increase! The effective

tax rate will increase from 2.5% to 12.5%.

This will effectively stamp out any

investment demand from all but the

wealthiest who may have other non-

investment considerations.

http://www.propwise.sg/secretsofsingaporepropertygurus/


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Even for Singaporeans who already own

two and PRs who own one unit, they will

be heavily discouraged from investing in

property as their effective stamp duty forthe $1 million purchase will increase from

$24,600 to $54,600, a 220% increase.

The message to the rich is clear:

Dont invest in residential properties.

Transaction volumes will fall. Some

analysts are looking for a 20% fall in

volumes next year. With investing

sentiments dampened by the continuous

stream of government measures and the

unstable economy in Developed

countries, this is quite probable. Bid-askspreads between buyers and sellers will

increase, tanking volumes and setting the

stage for price decreases later.

The impact on prices will be negative

but uncertain. The measures were

unexpected as property price momentum

has already been falling for the past eightquarters. Some analysts expect a 10-15%

fall in prices, but the impact is uncertain

as interest rates remain low and

unemployment hasnt rise, so property

owners still have holding power.

Furthermore economists are still

expecting a 3-5% GDP growth rate for

Singapore in 2012, which is not bad,

although this number is volatile and can

be revised downwards quickly if the

external environment deteriorates. Thelarge spike in supply is expected in 2014-

2015 so the market could be hit then if

this measure is still in place.



14/17



Foreigners will shrink as a percentage

of all buyers. The recent wave of

foreigners (especially the Chinese)

coming to Singapore to buy property will

think twice. Foreigners (excluding PRs)made up 18% of new units sold in 3Q11,

versus ~15% in 1H11 and the last peak of

15% in 2007.

Negative impact on high-end market

will be larger. The impact is likely to be

larger on the high end residential marketas the share of foreign buyers there is

higher. Foreigners (excluding PRs) and

companies accounted for 34% of new

sales in 3Q11 versus 17% in suburban

locations. Some analysts are predicting a

40% fall in volumes in prime districts.

Developers will be leery of bidding

aggressively for new land. In addition to

the measures above, the IRAS will also

levy the ABSD on developers if they fail to

sell all the units in a residential project

within five years. Developers will thus be

more careful about stocking up on land

bank unless they are sure they candevelop and sell it within that timeframe.

Developers are also incentivized to cut

prices to move inventory if they are

approaching this deadline. As the ABSD is

based on land price, the impact is likely to

be less significant versus generalsentiment and investment interest.

Investors may focus on the

commercial market instead. Now that

the residential property market has been

effectively closed to investors both local

and foreign, will they turn their attention to

the commercial property market? The

problem is that with an uncertain global

environment and



15/17



Singapores open economy, office and

industrial rents could also moderate.

Will investors start to look at foreign

property? Both local and foreign investors

could start to divert their funds earmarked

for investment into Singapore properties

into overseas locations such as Malaysia,

where property is significantly cheaper.

All things considered, I believe that the ABSD

will be the turning point of the market. Giventhe current negative sentiment and slowing

price growth (prices were up just 1.3% in

3Q11), these heavy-handed measures are

likely to be the straw that breaks the camels

back and may mark the turning point of the

property cycle. 2012 could turn out to be ayear of woe for those who are heavily invested

and leveraged, and one of bargain hunting for

cashed-up long term investors and end users.
http://www.moneymatters.sg/


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17/17


NOTE: This data only covers non-landed residential resale propertytransactions with caveats lodged with the Singapore LandAuthority. Typically, caveats are lodged at least 2-3 weeks after apurchaser signs an OTP, hence the lagged nature of the data.

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

17 AVILA GARDENS 1,324 980,000 740 FH

17 BALLOTA PARK CONDOMINIUM 1,249 888,000 711 FH

17 BALLOTA PARK CONDOMINIUM 1,776 1,225,000 690 FH

18 THE TROPICA 1,238 1,000,000 808 99

18 EASTPOINT GREEN 1,130 908,000 803 99

18 CHANGI RISE CONDOMINIUM 1,259 1,000,000 794 99

18 MELVILLE PARK 1,345 940,000 699 99

18 TAMPINES COURT 1,690 1,078,000 638 101

19 GOLDEN HEIGHTS 1,184 1,370,000 1,157 FH

19 STADIA 904 975,000 1,078 FH

19 ROSYTH VILLE 1,087 1,058,000 973 999

19 THE COURTYARD 1,076 940,000 873 FH

19 CHILTERN PARK 1,572 1,350,000 859 99

19 RIVERVALE CREST 1,141 920,000 806 9920 GOLDENHILL PARK CONDOMINIUM 926 1,230,000 1,329 FH

20 COUNTRY GRANDEUR 1,442 1,530,000 1,061 FH

20 THE GARDENS AT BISHAN 883 885,000 1,003 99

20 PEIRCE VIEW 1,302 1,160,000 891 FH

20 GRANDEUR 8 1,195 1,050,000 879 99

20 BISHAN PARK CONDOMINIUM 1,324 1,018,000 769 99

20 BRADDELL VIEW 1,862 1,330,000 714 99

21 THE STERLING 1,938 2,500,000 1,290 FH

21 MEADOWLODGE 1,399 1,750,000 1,251 99

21 GARDENVISTA 1,173 1,438,888 1,226 99

21 HUME PARK I 904 830,000 918 FH

21 SYMPHONY HEIGHTS 1,076 919,900 855 FH

21 SOUTHAVEN I 1,378 1 ,010,000 733 99

21 SHERWOOD TOWER 1,518 1 ,040,000 685 99

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

22 PARC VISTA 1,259 940,000 746 99

23 HILLINGTON GREEN 990 995,000 1,005 999

23 HAZEL PARK CONDOMINIUM 1,518 1,388,000 915 999

23 HILLBROOKS 1,130 1,000,000 885 FH

23 YEWTEE RESIDENCES 1,238 1,085,000 877 9923 HILLVIEW REGENCY 1,119 972,000 868 99

23 THE MADEIRA 1,302 1,030,000 791 99

23 HILLTOP GROVE 1,238 945,000 763 99

23 THE MADEIRA 1,270 950,888 749 99

23 MAYSPRINGS 1,292 910,000 705 99

23 REGENT HEIGHTS 2,594 1,600,000 617 99

25 WOODGROVE CONDOMINIUM 2,153 1,300,000 604 99

26 THE CALROSE 1,238 1,390,000 1,123 FH

27 ORCHID PARK CONDOMINIUM 958 760,000 793 9928 SERENITY PARK 1,582 1 ,313,000 830 FH

28 SELETAR SPRINGS CONDOMINIUM 947 750,000 792 99

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