Issue 29

Copyright 2011 www.Propwise.sg. All Rights Reserved.

CONTENTS
p2
Singapore Property News This Week

FROM THE

EDITOR

Welcome to the 29th edition of the Singapore Property Weekly. Hope you like it! Mr. Propwise

p9

Additional Buyers Stamp Duty The Straw that

Breaks the Camels Back

p15 Resale Property Transactions

(November 19 November 25)

Contribute
Do you have articles and insights and articles that youd like to share with thousands of readers interested in the Singapore property market? Send them to us at info@propwise.sg, and if theyre good enough, well publish them here, on our blog and even on Yahoo! News.

Advertise
Want to get your brand, product, service or property listing out to thousands of Singapore property investors at a very reasonable cost? Head over to www.propwise.sg/advertise/ to find out more.

SINGAPORE PROPERTY WEEKLY Issue 29

Singapore Property This Week

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 for high-end homes, but the proportion of nonpermanent residents foreigners who bought such properties to have increased. this year, From there January November 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-end apartments in Singapore, the proportion of Chinese and Indian buyers have increased.

were1,285 caveats lodged for apartments and condos priced at $2,000 psf and above in high-end districts, a 33% decrease from the caveats lodged in the same period last year.

Back to Contents

Page | 2

SINGAPORE PROPERTY WEEKLY Issue 29 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 twobedroom 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
Back to Contents

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.
Page | 3

SINGAPORE PROPERTY WEEKLY Issue 29 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 is much 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 wrong time. 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 is likely to continue as long as interest rates remain low. He added that the duty can help to cool investor demand and avoid

Back to Contents

Page | 4

SINGAPORE PROPERTY WEEKLY Issue 29 a potential major destabilising correction in the future. DTZ's Southeast Asia chief operating officer Ong ChoonFahalso stated that the ABSD is trying to strike a balance between keeping the economy open and looking after the interest of Singaporeans, given that it distinguishes between foreigners and PRs and also considers the purpose of buying homes investment or occupation. Prices are likely to fall but developers will most likely absorb the stamp duty or give furnishing vouchers before lowering their prices. Fewer residential sites to be released in H1 2012 policies and the large supply of 81,600 private residential units that are already available in the pipeline as at Q3 2011. Nonetheless, there will be more land for building EC units available given the higher expected demand for ECs after the raising of the income ceiling for new EC purchase. Analysts considered the upcoming supply of land excessive especially with the new cooling measures. More than 50% of the supply is from the north-east of Singapore, a risk for home owners in those locations. Whether the supply will be absorbed by the market will depend largely on the rate of migration in the longer term. Luxury developers worst hit by cooling measures The additional buyer's stamp duty (ABSD) over and above the current stamp duty announced by the government is likely to hit
Page | 5

The Ministry of National Development (MND) would release new land for about 14,100 private homes in the first half of 2012. This is after taking into account the new cooling
Back to Contents

SINGAPORE PROPERTY WEEKLY Issue 29 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 so severely affected. There had been an increase in rich foreigners who have deep pockets and therefore will not be affected by the ABSD.
Back to Contents

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 the developer fails to do so, the ABSD (with interest) will have to be paid immediately on the expiry of five years.

Page | 6

SINGAPORE PROPERTY WEEKLY Issue 29 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 the Sales 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. 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 to pay. 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 measures As a result of the new cooling measures on the property market, buyers have adopted a waitand-see approach when purchasing properties resulting in a slower market.
Page | 7

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
Back to Contents

SINGAPORE PROPERTY WEEKLY Issue 29 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
Back to Contents

Property, felt that the measures will only be effective in the short term but no longer so when people start to accept it. Commercial Singapore 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.
Page | 8

SINGAPORE PROPERTY WEEKLY Issue 29

Additional Buyers Stamp Duty The Straw that Breaks the 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.

Back to Contents

Page | 9

SINGAPORE PROPERTY WEEKLY Issue 29 Details of the ABSD The ABSD will be collected on top of the The ABSD will be effective 8 Dec 2011. The Governments rationale for this measure

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

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

corporates,
investment

trusts

and

collective
buying any

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

schemesetc)

residential property will be hit with an ABSD 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%

considered by many as the new Swiss Franc.

Foreign purchases of property have been growing, and now account for 19% of all

Back to Contents

Page | 10

SINGAPORE PROPERTY WEEKLY Issue 29 private residential property purchases in 2H11, versus 7% in 2H09. The ABSD has also been designed to intentionally exclude Singaporean first time buyers 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 and companies 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 noninvestment considerations.

Back to Contents

Page | 11

SINGAPORE PROPERTY WEEKLY Issue 29 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 for the $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-ask spreads between buyers and sellers will increase, tanking volumes and setting the stage for price decreases later.
Back to Contents

The impact on prices will be negative but uncertain. The measures were unexpected as property price momentum has already been falling for the past eight quarters. Some analysts expect a 10-15% fall in prices, but the impact is uncertain as interest still rates have remain holding are low and unemployment hasnt rise, so property owners power. still Furthermore economists

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. The large spike in supply is expected in 20142015 so the market could be hit then if this measure is still in place.
Page | 12

SINGAPORE PROPERTY WEEKLY Issue 29 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 market as 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 can develop 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 general sentiment 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
Page | 13

Back to Contents

SINGAPORE PROPERTY WEEKLY Issue 29 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. Given the 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 a year of woe for those who are heavily invested and leveraged, and one of bargain hunting for cashed-up long term investors and end users.

Back to Contents

Page | 14

SINGAPORE PROPERTY WEEKLY Issue 29

Non-Landed Residential Resale Property Transactions for the Week of Nov 19 Nov 25
Postal District 1 1 2 2 3 4 4 4 5 5 5 5 8 9 9 9 10 10 10 10 11 11 11 12 12 Project Name THE SAIL @ MARINA BAY PEOPLE'S PARK COMPLEX ICON ICON TANGLIN VIEW THE COAST AT SENTOSA COVE CARIBBEAN AT KEPPEL BAY CARIBBEAN AT KEPPEL BAY THE ESTIVA NORMANTON PARK REGENT PARK VISTA PARK JALAN BESAR PLAZA THE PIER AT ROBERTSON ROBERTSON 100 MACKENZIE 138 BOTANIKA MELROSE PARK SHEARES VILLE VALLEY PARK THOMSON EURO-ASIA SKY@ELEVEN THOMSON 800 OLEANDER TOWERS THE CITRINE Area (sqft) 1,184 1,119 700 1,066 1,249 2,626 840 2,282 1,130 1,270 958 2,433 1,593 1,109 883 850 2,260 1,292 1,528 1,216 1,130 1,851 5,791 861 1,313 Transacted Price ($) 3,080,000 980,000 1,288,000 1,800,000 1,520,000 4,550,000 1,380,000 3,200,000 1,190,000 1,200,000 880,000 1,888,888 1,350,000 2,280,000 1,490,000 1,065,000 4,528,000 2,150,000 2,230,000 1,700,000 1,900,000 2,850,540 5,500,000 1,038,000 1,388,000 Price Tenure ($ psf) 2,601 99 875 99 1,841 99 1,689 99 1,217 99 1,732 99 1,644 99 1,402 99 1,053 FH 945 99 919 99 776 99 847 FH 2,056 FH 1,688 FH 1,252 FH 2,003 FH 1,664 999 1,459 FH 1,398 999 1,681 FH 1,540 FH 950 FH 1,205 99 1,057 FH Postal District 12 12 12 12 13 14 14 14 14 15 15 15 15 15 15 16 16 16 16 16 16 16 16 16 16 Project Name SUNVILLE BALESTIER POINT CHELSEA GROVE CALARASI AVON PARK DAKOTA RESIDENCES ASTORIA PARK ESCADA VIEW BLOSSOM VIEW PEBBLE BAY ONE AMBER PARK COURT MANDARIN GARDEN CONDOMINIUM LEGENDA AT JOO CHIAT EURO-ASIA LODGE CASA MERAH COSTA DEL SOL THE SUMMIT CASA MERAH PARBURY HILL CONDOMINIUM AQUARIUS BY THE PARK EAST MEADOWS EASTWOOD GREEN THE TAIPAN TANAMERA CREST Area (sqft) 1,163 883 1,496 2,443 1,281 1,023 958 775 990 1,367 1,302 947 2,024 1,238 1,356 947 1,238 1,249 1,259 2,077 893 1,195 1,173 1,776 1,173 Transacted Price ($) 1,050,000 790,000 1,210,000 1,930,000 1,500,000 1,288,800 940,000 718,000 818,000 1,850,000 1,698,800 883,000 1,818,000 980,000 1,068,000 1,080,000 1,320,000 1,320,000 1,315,000 2,060,000 860,000 1,125,000 921,500 1,325,000 860,000 Price Tenure ($ psf) 903 FH 895 FH 809 FH 790 FH 1,171 FH 1,260 99 981 99 926 FH 826 FH 1,353 99 1,304 FH 932 FH 898 99 792 99 787 FH 1,140 99 1,066 99 1,057 FH 1,044 99 992 FH 963 99 942 99 785 99 746 FH 733 99

Back to Contents

Page | 15

SINGAPORE PROPERTY WEEKLY Issue 29

Postal District 17 17 17 18 18 18 18 18 19 19 19 19 19 19 20 20 20 20 20 20 20 21 21 21 21 21 21 21 Project Name AVILA GARDENS BALLOTA PARK CONDOMINIUM BALLOTA PARK CONDOMINIUM THE TROPICA EASTPOINT GREEN CHANGI RISE CONDOMINIUM MELVILLE PARK TAMPINES COURT GOLDEN HEIGHTS STADIA ROSYTH VILLE THE COURTYARD CHILTERN PARK RIVERVALE CREST GOLDENHILL PARK CONDOMINIUM COUNTRY GRANDEUR THE GARDENS AT BISHAN PEIRCE VIEW GRANDEUR 8 BISHAN PARK CONDOMINIUM BRADDELL VIEW THE STERLING MEADOWLODGE GARDENVISTA HUME PARK I SYMPHONY HEIGHTS SOUTHAVEN I SHERWOOD TOWER Area (sqft) 1,324 1,249 1,776 1,238 1,130 1,259 1,345 1,690 1,184 904 1,087 1,076 1,572 1,141 926 1,442 883 1,302 1,195 1,324 1,862 1,938 1,399 1,173 904 1,076 1,378 1,518 Transacted Price ($) 980,000 888,000 1,225,000 1,000,000 908,000 1,000,000 940,000 1,078,000 1,370,000 975,000 1,058,000 940,000 1,350,000 920,000 1,230,000 1,530,000 885,000 1,160,000 1,050,000 1,018,000 1,330,000 2,500,000 1,750,000 1,438,888 830,000 919,900 1,010,000 1,040,000 Price Tenure ($ psf) 740 FH 711 FH 690 FH 808 99 803 99 794 99 699 99 638 101 1,157 FH 1,078 FH 973 999 873 FH 859 99 806 99 1,329 FH 1,061 FH 1,003 99 891 FH 879 99 769 99 714 99 1,290 FH 1,251 99 1,226 99 918 FH 855 FH 733 99 685 99
Postal District 22 23 23 23 23 23 23 23 23 23 23 25 26 27 28 28 Project Name PARC VISTA HILLINGTON GREEN HAZEL PARK CONDOMINIUM HILLBROOKS YEWTEE RESIDENCES HILLVIEW REGENCY THE MADEIRA HILLTOP GROVE THE MADEIRA MAYSPRINGS REGENT HEIGHTS WOODGROVE CONDOMINIUM THE CALROSE ORCHID PARK CONDOMINIUM SERENITY PARK SELETAR SPRINGS CONDOMINIUM Area (sqft) 1,259 990 1,518 1,130 1,238 1,119 1,302 1,238 1,270 1,292 2,594 2,153 1,238 958 1,582 947 Transacted Price ($) 940,000 995,000 1,388,000 1,000,000 1,085,000 972,000 1,030,000 945,000 950,888 910,000 1,600,000 1,300,000 1,390,000 760,000 1,313,000 750,000 Price Tenure ($ psf) 746 99 1,005 999 915 999 885 FH 877 99 868 99 791 99 763 99 749 99 705 99 617 99 604 99 1,123 FH 793 99 830 FH 792 99

NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data.

Back to Contents

Page | 16