Real News‎ > ‎2013‎ > ‎January 2013‎ > ‎

26 January 2013

26th January, Saturday




Residential property buys via SPV may not escape ABSD

Source: Business Times

Corporate entities seeking to avoid paying the additional buyers' stamp duty (ABSD) by buying shares in special purpose vehicles that own properties could come under the scrutiny of the tax authorities.

The Inland Revenue Authority of Singapore (IRAS), in a letter responding to a Business Times article on such deals, said: "When the company buys a residential property, it will be subject to ABSD, and at the highest ABSD rate of 15 per cent. Under the Stamp Duties Act, the Commissioner of Stamp Duties may disregard or vary any arrangement to counteract any reduction in or avoidance of duty payable by that person.

"The Inland Revenue of Authority of Singapore audits stamp duty transactions to detect transactions that are conducted for tax avoidance purposes."


Links to the story:



URA Q4 stats show signs of speculative buys

Source: Business Times

The Urban Redevelopment Authority's (URA) fourth-quarter real estate statistics show evidence of the investment and speculative activity that drove various segments of the Singapore property market last year and led to the latest cooling measures.


Home buyers in the private housing market, for instance, picked up far more homes from developers last year (22,197 units) than in the previous year (15,904 units). However, fewer homes changed hands in the resale market, which covers secondary market deals involving completed properties, last year (12,811 units) than in 2011 (14,046 units).

"Investors would prefer to buy new homes from developers as they can make progressive payments on their purchase (according to the stages of construction) and at the same time, wait out the four-year period covered by the seller's stamp duty (SSD)," explains one analyst.

As for non-residential properties, she highlights that a disparity in performance of the URA's price and rental indices last year points to speculative demand.

Prices of offices and shops increased in 2012, albeit by a smaller magnitude than in 2011, despite falls in rents. The URA's All Industrial price index shot up by 25.8 per cent last year, outstripping a 10.1 per cent increase in rentals.

"This shows that the price growth for all three categories was not supported by rental income, suggesting that people were buying with the intention of making capital gains in future," she says.

Another analyst highlighted that in the non-residential space, strata factories chalked up the most subsale deals last year, followed by shops. Subsales refer to secondary market transactions of projects that have yet to be completed and are often used as a gauge of the level of speculative activity.

On the 2.7 per cent Q-o-Q drop in the URA index for multiple-user factory space in 4Q last year, after the index rose 10.1 per cent in 3Q, he said the dip was due to the lower proportion of sales from new projects in 4Q compared with 3Q. New project sales are higher in value than secondary market deals and help to lift the index. In 3Q, nearly half of the sales volume was from new projects, whereas in the fourth quarter, the proportion dropped to 35 per cent, he added.


Links to the story:



HDB resale prices seen remaining stable

Source: Business Times

Even as prices of resale flats hit new peaks in the fourth quarter of 2012, consultants say that prices should remain stable in the coming year, following the seventh round of cooling measures.

The Housing & Development Board's (HDB) Resale Price Index rose 2.5 per cent over the previous quarter to breach the 200-point price-index mark to hit 202.9 in the fourth quarter, resulting in a 6.6 per cent increase in resale flat prices for the whole of 2012.

According to HDB's data, Bukit Merah had the highest median resale price for a five-room flat at $765,000; Queenstown fetched the highest median price for a four-room flat at $710,000.

An analyst said the latest cooling measures should lower COVs as buyers have to contend with the lower MSR, and PRs dish out more in terms of ABSD. Specifically, COVs for bigger flats may face a downward pressure of 10-20 per cent, he suggested.

HDB said the cooling measures announced by the government on 11 Jan will help to moderate demand for HDB flats and stabilise resale prices.

In addition, some 110,000 new flats will also be completed in the coming years.

"HDB has ramped up its Build-To-Order (BTO) supply significantly over the past few years and we will keep up the pace of new flat supply into 2013. Coupled with the new cooling measures, this will help keep public housing affordable for Singaporeans," said HDB in a statement.

It plans to launch at least 23,000 BTO flats this year. The first batch of 3,346 BTO flats in Ang Mo Kio, Choa Chu Kang, Hougang, Kallang/Whampoa, Tampines and Yishun will be offered for sale later this month.


Links to the story:



OCR completed condos fared better

Source: Business Times

In the private residential segment, the prices of completed, non-landed private homes in the Outside Central Region (OCR) led fourth-quarter gains, rising 5.6 per cent quarter-on-quarter in the fourth quarter last year, compared to a 2.4 per cent rise for uncompleted homes in the OCR.

The OCR covers suburbs such as Punggol, Woodlands and Jurong, where mass-market condominiums are located.

This pattern - where the rise in price was higher for resale, non-landed homes than for uncompleted ones - was generally replicated across the island in 2012.

Prices in the OCR for completed homes climbed 8.8 per cent last year, double the 4.4 per cent appreciation for uncompleted properties. This also happened in 2011, when a 10 per cent surge in completed home prices was double the 5.1 per cent rise posted for uncompleted homes.

In the Core Central Region - which includes the prime districts 9, 10 and 11, the financial district and Sentosa - URA's completed non-landed home price index rose 1.5 per cent quarter-on-quarter in 4Q 2012. For uncompleted homes, the figure dipped 0.4 per cent.

For the full year 2012, completed home prices gained 3.2 per cent, against a 1.7 per cent decline for uncompleted properties.

In the Rest of Central Region, which covers city-fringe locations, prices for both completed and uncompleted homes rose an identical one per cent q-on-q in 4Q. Yet, for full-year 2012 and 2011, the prices of completed non-landed properties in the region still rose more than for uncompleted ones.


Link to the story:



Mixed-use developments draw homebuyers

Source: Business Times

Mixed-use developments integrating residential and retail components have become an attractive proposition for homebuyers, notably couples and young professionals, according to Far East Organization.

Chia Boon Kuah, chief operating officer for property sales, said this after a recent offering, the 99-year-leasehold The Hillier, sold its last residential units last weekend.

The homes at the 528-unit SOHO development at Hillview Avenue 2 commanded an average price of $1,474 per sq ft and should be ready by 2016, after launching for sale in January last year.

The Hillier comes with an adjoining two-storey mall known as HillV2, which was over 60 per cent leased as at Friday.

The success of The Hillier follows a trend for other similar mixed-use residential projects over the last few years from Far East. Its Tennery SOHO development at Woodlands Road, integrated with the Junction 10 Mall, sold all 338 homes within a year of its launch in December 2010.

Close to all the 319 units at the Greenwich in Seletar, as well as the 992-unit Watertown in Punggol have also been transacted since their launches in August 2010 and January 2012, respectively. Both projects come with a retail component.

Despite the latest round of property-cooling measures - many of which target the residential market - Far East is still upbeat about its prospects. “As the market adjusts to the new measures, we remain confident that the strong economic fundamentals and growth prospects of Singapore will continue to support a sustainable property market," Mr Chia said.


Link to the story:



Rentals keep up with rise in home prices

Source: The Straits Times

Rentals have kept pace with the rise in private home prices, but not across the board.

"Rental yields remain at 3.7 per cent islandwide," a stock broking firm said in a report that compared 2011 and 2012 rentals at projects with more than 10 rental contracts.

The minimal change in the figure indicates condominium rental rates have generally kept up with the increase in prices last year.

However, not all districts fared equally. The worst showings were in Newton and Sentosa, with yields compressing to just 2.2 per cent last year.

The chart-toppers were Woodlands, Jurong and Choa Chu Kang, which offered rental yields of 4.4 per cent last year.


Link to the story:





Hot interest in Alexandra sparks talk of boom

Source: The Straits Times

The popularity of retail units at Alexandra Central has pushed the neighbourhood into the limelight, with growing talk that it could become the new hotbed of commercial property investment.

Earlier this week, buyers thronged the project's showroom, snapping up almost all 116 shops, with some units commanding a staggering $8,000 per sq ft price tag. Agents The Straits Times spoke to say a 161 sq ft unit at the upcoming project could fetch $5,000 a month in rental, which translates to $31 psf a month.

This has sparked talk among shop owners and investors that commercial property in the area could be poised for rapid growth.

Last year, 13 strata-titled units were sold at the Queensway Shopping Centre, a jump from the four units sold in 2009, with prices over the years averaging $2,770 to $4,040 psf.

Some analysts said this could be the result of higher demand for retail space in the neighbourhood to cater to the growing resident population. But other analysts are convinced it stems largely from the swing in investor interest towards commercial property.


Link to the story:





First drop in industrial property prices in three years

Source: The Straits Times

Industrial property prices fell unexpectedly in the last quarter of 2012 - the first decline in three years and a sign that caution is taking hold among investors.

Prices dipped 0.7 per cent in the period compared with the previous three months after climbing for 12 straight quarters, according to the Urban Redevelopment Authority (URA) Friday.

Overall, the URA industrial property price index rose 25.8 per cent last year from the preceding year, lower than the 27.2 per cent year-on-year increase in 2011. The index is now 14 per cent above its previous historic peak in the first quarter of 1997.

Analysts said factory demand could have softened due to a weaker economic outlook. Manufacturing output has fallen sequentially for the past three quarters and anticipated factory orders have shrunk every month since July.

Investors may have been reluctant to buy as they were unsure about whether they could find tenants following a clampdown last year on unauthorised use of industrial space.

Analysts said they expect industrial prices to moderate or flatten in the short term, due partly to the seller's stamp duty. Analysts also flagged a possible oversupply this year and in 2014.

They pointed to the URA's quarterly report yesterday which said that 31.2 million sq ft of new supply will come onstream this year and 15.6 million sq ft next year. Noting that total new demand last year for factories and warehouses combined was only 9.1 million sq ft, one analyst expects industrial prices to fall by 5 per cent to 10 per cent this year.


Link to the story: