Govt monitoring ABSD reimbursing

 

Several developers are reimbursing the hefty additional buyer's stamp duty (ABSD) in a bid to move sales in selected projects.

And the practice, which has created concerns about the possible distortion of property and loan values, has drawn the attention of regulators and raised the possibility of intervention should it get out of hand.

These "discounts" could distort property prices as they are given only after a buyer has completed the transaction. This means sales caveats may not reflect the actual purchase price of the property, unlike upfront discounts which are worked into the reported transacted price.

Said one property consultant, who declined to be named: "The ABSD reimbursement is being made in this way so that it does not affect the pricing. If they give a discount on the price, then their pricing is affected, and the developers don't want that because it may upset their earlier buyers who did not get to enjoy the discount."

Developers which have been reimbursing the ABSD include Cheung Kong (Holdings) Ltd, Far East Organization, Allgreen Properties and Aspial Corporation's World Class Land.

Some offer to reimburse fully the additional stamp duty charges, while others cover a part of it.

Aside from price transparency, the practice of reimbursing the ABSD has raised the concern that it could distort loan values.

When contacted, MAS said: "When taking up a housing loan, the consumer is required to disclose to the bank whether he has received any rebates or discounts from the seller or any other party, and if so, the amount of the rebate or discount. The bank will deduct any discount, rebate or any other benefit offered from the purchase price before calculating the loan amount."

Source: Business Times – 30 April 2012

HDB may stop releasing all COV data

THE Housing Board may be relooking its policy of releasing official cash-over-valuation (COV) figures of resale HDB flats, according to top executives of some property companies.

They say the board has signalled through its actions and in private conversations its intention to stop publishing these figures altogether, a move that would put the final nail in the coffin of a measure that is criticised for pushing up prices in the resale market.

With COVs stable, realtors like Mr Eugene Lim believe it is 'the best time' to hold back this last measure.

Mr Lim, who is key executive officer at ERA Realty, explained that in a bull market with COVs soaring, not having an official figure to refer to will intensify the escalation of cash premiums, as figures will be tossed around willy-nilly by agents.

COVs have now dropped one-third from their 2011 peak to average around $25,000 to $30,000, said realtors.

The fall is due largely to an aggressive set of measures to cool the property market, and rules being tweaked to let more people buy new flats from HDB.

In fact, calls have grown from realtors over the past few months for the HDB to get rid of its COV figures.

These figures put agents under pressure in a softening market, because sellers tend to take them as a base for the cash premium they desire regardless of the individual peculiarities of their property.

Buyers and sellers will still seek the information from their agents, as this would leave property agency’s data as the only source of COV information.

Source: The Straits Times – 27 April 2012

Leasing demand for S'pore residential properties remains robust

Source: Channel NewsAsia.  24 April 2012  By Wong Siew Ying.  

SINGAPORE: Leasing demand for residential properties in Singapore remained robust in the first two months of this year as transactions hovered above 3,000 each month, according to Savills Research.

Its data showed that there were 3,446 leasing transactions in February 2012, down 5 percent on-month. But Savills said February's transactions were still higher than the 2,767 transactions recorded a year ago.

Based on deals closed by Savills, the average rent for studio apartments and one-bedroom units was S$6.21 per square foot per month in Q1 2012.

Savills said selected small-format units were seen fetching attractive rents, particularly for the centrally-located properties. 

These included a 600-square-foot unit at The Suites at Central along Devonshire Road, which was rented for S$5,000 per month.

It was followed by two 592-square-foot units at Martin Place Residences along Martin Road, which were let at S$4,200 per month.

By square footage, the highest rent was for a 458-square-foot studio apartment at Iluminaire on Devonshire which was rented at S$8.73 per square foot per month.

Savills said rents were equally attractive among the smallest units. 

Three 334-square-foot units at Prestige Heights along Balestier Road were let for between S$2,200 and S$2,450 per month or between S$6.40 and S$7.34 per square foot per month.

Based on data released by the Urban Redevelopment Authority, island-wide median rents of all non-landed properties, excluding executive condominiums, continued to rise to S$3.53 per square foot per month in February, increasing 1 percent on-month and 8 percent on-year.

Savills said the leasing transaction value for the first two months has reached S$35 million, 15 percent higher than the previous year.

The average monthly rent of high-end non-landed residential properties tracked by Savills was S$5.17 per square foot per month in Q1 2012, dipping 2 percent on-quarter.

On a year-on-year basis, prime rents fell 5 percent from S$5.45 per square foot per month in Q1 2011.

Savills added that with a continual relocation of expatriates from troubled economies in the West, leasing demand continues to strengthen in Singapore, putting greater upward pressure on rents.

Condo adds luxury fittings to woo buyers

A LUXURY condominium here is fitting some units with high-fashion brands Kenzo and Fendi, in a bid to attract more buyers as it relaunches this weekend.

The Lumos, a 53-unit completed condo at Leonie Hill, first came on the market here in 2007.

Since then, 18 units have been sold. But the developer halted sales in recent years to wait for the property market to pick up and review marketing strategies. Now, the project is back on the market at what the developers deem more 'attractive' prices.

In a collaboration between the developers - Koh Brothers Development and Heeton Land - and the brands, one unit at The Lumos will be furnished with Fendi casa furniture and another unit with Kenzo maison trimmings. They will feature imported items such as sofas, beds, tables and rugs.

The Lumos, when first launched, was the first condo to have bathroom windows made of liquid crystal glass, allowing users to change the glass from frosted to clear using a switch, among other things.

In addition, both brands contributed interior design ideas for the two units, which will be ready in July.

Mr Danny Low, chief operating officer of Heeton Holdings, estimated that prices of the two exclusive units could be between $5 million and $7 million. Although the developers declined to say if they had cut prices, it is likely that the figure will be more attractive than previously, given that the units now come with the furnishings.

Mr Koh said market sentiment in the mass market will remain resilient but the high-end sector will be slow, in part due to tough cooling measures which affect foreign investors more acutely.

It is not the first time condo units have been sold fully decked out with luxury trimmings. Last year, luxury homes developer SC Global said it was collaborating with French brand Hermes to do up a five-bedroom unit at The Marq on Paterson Hill.

Other condos are also stepping up their sales pitch. Paterson Suites, for instance, offered a 5 per cent guaranteed rental yield a year at its relaunch last week.

Source: The Straits Times – 25 April 2012

Inflation hits 5.2% in March

INFLATION shot up an unexpectedly high 5.2 per cent last month as vehicle prices and housing rentals continued to escalate while rising wages added to health-care and education costs.

The sharp increase in the consumer price index (CPI), which caught out economists, reverses the trend of moderating inflation seen in the first two months of the year.

Prices rose 4.8 per cent in January and 4.6 per cent in February. The March figure raises the spectre of a further period of painful price rises.

The latest inflation figure also raises the possibility of further moves by the Monetary Authority of Singapore (MAS), which announced last week it would let the Singdollar appreciate at a faster pace.

The MAS may need to allow the currency to rise further, which helps to combat imported inflation, said Citigroup economist Kit Wei Zheng.

But OCBC economist Selena Ling said allowing the currency to appreciate may not help bring inflation down as domestic inflation may continue to rise.

While the usual suspects, car prices and housing costs, were again the main inflation drivers, health-care and other domestic services saw higher than normal price increases, the Department of Statistics report showed.

The cost of private transport leapt 9.6 per cent year-on-year last month compared with 4.3 per cent in February.

Accommodation cost increases eased from 10.2 per cent in February to 9.8 per cent last month but still remained the single largest contributor to inflation.

Even when housing rents, which form a large part of accommodation costs, were taken out of the CPI gauge, March inflation still posted a 4.1 per cent increase.

Consumers were also feeling the impact of a tight labour market and rising wages.

Bank of America Merrill Lynch economist Chua Hak Bin, noted that about 60 per cent of inflation is imported.

Health-care inflation hit 3.9 per cent last month, largely due to the cost of medical treatment, which was up 5.2 per cent from March last year.

Noting that the health-care sector employed many foreign workers, DBS economist Irvin Seah said the cost increases were due to measures to tighten the inflow of foreign workers. This will raise foreign labour costs, which will get passed on to consumers, he said.

The MAS and Trade and Industry Ministry said in a joint statement yesterday that inflation could average about 5 per cent year-on-year in the first half of this year before 'easing gradually' in the second half.

Economists said the easing would be due more to the fact that car price and rental increases probably will not go much higher.

Source: The Straits Times – 24 April 2012

107 new home buyers backed out in March

BUYERS of 107 new private homes had a change of heart last month and returned their units to developers.

The numbers, contained in a report from Goldman Sachs, show that even in a hot market, some people get cold feet. The same report also stated that 100 homes were returned the month before.

That means these buyers have paid an option fee but have chosen not to exercise the option and go ahead to complete the purchase.

If the buyer chooses to back out, he forfeits a quarter of the option fee, or 1.25 per cent of the purchase price.

The 107 units returned in March could have been bought in either January or February.

Analysts were not surprised by the high number of options lapsing, as the number of options lapsing tends to be correlated to the number of sales made.

Buyers bought 4,289 units in the first two months of the year.

In March, most of the returned units came from the mass market, but this could be because more projects were launched within the sector.

The Straits Times looked at a sample of 15 upcoming projects and found, for instance, 11 units were returned at the 689-unit Parc Rosewood in Woodlands.

Watertown, a 992-unit mixed-use development in Punggol, had 17 units returned.

Bartley Residences and The Hillier, both had nine units returned.

Since no new cooling measures have been introduced in the market since last December, which means many buyers could be pulling out because of personal reasons.

Some may have bought in haste while other buyers might have been attracted to better choices elsewhere.

Source: The Straits Times – 23 April 2012

Home sales to foreigners dive 78 per cent

HOME purchases by foreigners plummeted 78 per cent in the first quarter as the effects of the 10 per cent additional buyer's stamp duty hit hard.

Most foreigners have retreated hastily from the market, buying just 293 homes in the first three months of the year.

This is 78 per cent down from the 1,358 homes bought by foreigners in the fourth quarter.

Permanent residents (PRs) are not included as foreigners in these figures.

Among PRs, home purchases dipped just 7.5 per cent to 790 units, while Singaporean purchases fell 12 per cent.

Experts say the implementation of ABSD has caused foreigners to pull out of the market in a knee-jerk reaction as they reevaluate their options. They say some foreigners might still see long-term potential in Singapore's property market and are attracted by rebates offered by some developers to cushion the impact of the tax, but others are simply watching and waiting. Uncertainty in global markets might have also taken its toll on foreign purchases.

Source: The Straits Times – 20 April 2012

Showflats to show fact, not fiction, come May

The days of "artificially" enlarged showflats decked up with made- to-measure furnishings are numbered, following changes to the Housing Developers Rules (HDR) yesterday.

Developers will now need to provide drawn- to-scale location plans and a breakdown of a unit's floor area by its various components - comprising bedrooms, balconies and bay windows - to help buyers better visualise the amount of usable space.

In addition, developers will also need to obtain a buyer's consent for any alterations to the layout of a property (such as changes in the location of facilities) and offer more information on the project before the option-to-purchase is issued.

Shoebox units have become increasingly popular and there are concerns about whether buyers - who predominantly hold HDB addresses - truly understand how small these units really are.

It is widely known that many of such showflats do not demarcate the living space, planter and balcony area clearly, giving an inaccurate impression of a unit's actual size.

Developers are also unlikely to build showflats for all the different unit types in a development as it would not be practical. Hence, much is left to the imagination of buyers.

Still, most consultants do not expect demand for shoebox units to take a big hit following these measures. Smaller units remain sought after as they are affordable - being priced around the $1 million mark - amid a low-interest-rate environment. A huge number of them will be rolled out over the next few years.

Other changes that will take effect come mid-May include the need for developers to offer buyers details on their past projects in Singapore, prior to the issuance of the option-to-purchase.

The amendments to the HDR will apply to sales of all private residential properties with effect from May 18, regardless of the launch date of the project.

URA noted that some of the changes proposed previously, such as directions on setting up showflats, will require amendments to the Housing Developers (Control & Licensing) Act and will be implemented only in the later half of this year.

Source: Business Times – 19 April 2012

Harbour View Gardens up for sale

FREEHOLD residential development, Harbour View Gardens, is being put up for collective sale, with an indicative price of between $36 million and $38 million.

This translates to between $836 and $883 per square foot per plot ratio, based on the site area of 30,745 sq ft.

Under the 2008 Master Plan, the site is zoned for "residential" use, with a gross plot ratio of 1.4.

The three-storey residential development, which is located at 211/A to 223/A Pasir Panjang Road, comprises 14 units - seven maisonettes with an average floor area of 2,411 sq ft each and seven walk-up apartments with an average floor area of 1,195 sq ft each.

Upon success of the collective sale, each owner could receive between $1.6 million and $3.6 million.

The successful buyer could re-develop the site to accommodate a five-storey residential development comprising some 50 units of 775 sq ft each, subject to relevant authorities' approval.

Source: Business Times – 18 April 2012

Home demand rides the wave of new launches

Urban Redevelopment Authority (URA) reported a total of 2,393 private homes - excluding executive condominiums (ECs) - being sold in the month of March, a mere 1 per cent fall from February. Still, this number was 73 per cent higher than in the same period a year ago, reflecting strong underlying demand for new private homes.

This brings the total number of private homes (excluding ECs) sold to 6,682 in the first three months of 2012 - a record for quarterly sales since 1Q 1996 when quarterly data was first compiled and around 41 per cent of the total volume sold in 2011.

New launches have been driving demand, observers say. An eye-popping 2,582 units (excluding ECs) were launched in March.

Sales of ECs also remained at high levels, with 639 units sold in March, slightly lower than the 725 units in the month before, but still more than four times the volume transacted in the same period last year.

Including ECs, the total number of new private homes in March reached 3,032 units.

Units were snapped up in both new launches and projects launched earlier.

Among the new kids on the block, top-sellers included Ripple Bay (326 units sold at a median price of $883 psf), Palm Isles (102 units sold at a median price of $860 psf), Seletar Park Residence (98 units sold at a median price of $1,162 psf) and East Village (83 units sold at a median price of $1,309 psf).

Among projects launched earlier, The Minton (118 units sold), Riversound Residence (115 units sold), Archipelago (93 units sold) and Bartley Residences (86 units sold) saw strong demand.

Though no new ECs were launched in March, buyers - especially upgraders - continued to buy, with The Tampines Trilliant and Twin Waterfalls transacting 369 units and 153 units respectively.

The bulk of properties sold in March remained in the $1,000 to $1,500 psf range, similar to the month before.

The mass-market outside central region (OCR) continued to dominate demand, with a total of 1,825 OCR units (excluding ECs) sold, just seven units less than the 1,832 homes transacted in February.

Source: Business Times – 17 April 2012

Confusion over new property rule

Source: Straits Times. Sat Apr 14

THERE is confusion in property circles about how the new stamp duty will be applied to certain types of real estate.

The biggest grey area centres on whether commercial units such as shops or offices built within residential developments on residential-zoned land will be subject to the additional buyer's stamp duty (ABSD) and seller's stamp duty (SSD).

Industry players say it is unclear what defines a 'residential property' that would incur the duties: Is it the approved use of the units or the zoning of the land under the Urban Redevelopment Authority's (URA) masterplan?

They add that queries to the Inland Revenue Authority of Singapore (Iras) have generated varying replies, especially regarding units in mixed-use land zoning.There also seems to be difficulty pinning down exactly how the ABSD will be applied because the latest e-tax guide is unclear on this area.

An Iras spokesman said that 'in general, properties approved for commercial use on residential land should not be subject to the ABSD or SSD'. But there are exceptions. This would include property given only temporary approval for commercial use by the URA such as a residential shophouse being granted temporary approval as an office or shop space.

In such cases, the seller's stamp duty of up to 16 per cent applies. But commercial units in condominiums - minimarts, for example, or salons - on the ground floor of certain blocks that have obtained long-term approval for such use are unlikely to be slapped with either of the stamp duties.

The Iras spokesman added: 'When the use of the property is not residential on a land zoned residential, we will need to examine the facts of the case to determine if the property is residential property within the scope of ABSD and SSD.' The taxman did not elaborate on what exactly these criteria are.

While there are probably few commercial units that will be subject to the extra stamp duties, experts say the lack of clarity only throws up more questions within the industry as to what exactly the ABSD applies to.

Mr Lee Liat Yeang, a partner at Rodyk & Davidson's Real Estate Practice Group, said Iras should devise a clearer definition of 'residential property' for the application of ABSD.

The ABSD should be applied based on the approved use given by URA rather than the zoning of the land under the URA masterplan, he said. 'According to the e-tax guide, Iras seems to look at the masterplan zoning in order to determine whether the approved use is residential in whole or in part. 'But the masterplan shows only the general parameters of possible uses for the land upon which URA will then approve specific use for properties,' he added.

Mr Lee cited the fact that there are full commercial-zoned land sites such as Eon@Shenton that have attained URA approval for residential, office and retail uses. There are also approved commercial units built on land zoned fully or partially residential under the masterplan.

'Iras should quickly address this definition issue of residential property so that members of the public and lawyers are able to discern whether ABSD is payable in the purchase of specific property which has approved use different from the zoning,' he added.