singapore property weekly issue 93.pdf

Issue 93Copyright © 2011-2012 www.Propwise.sg. All Rights Reserved.

http://www.propwise.sg/

ContributeDo you have articles and insights and articles that you’d like to share with thousands of readers interested in the Singapore property market? Send them to us at [email protected], and if they’re good enough, we’ll publish them here, on our blog and even on Yahoo! News.

AdvertiseWant 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.

CONTENTS

p2 The 3 Critical Impacts of Budget

2013 for Property Owners

p9 Property Buying Tip #8: Property Tax

p10 Singapore Property News This Week

p16 Resale Property Transactions

(February 13 – February 19)

Welcome to the 93th edition of the Singapore Property Weekly.

I’m glad to announce that the 2012Q4 URA data has been updated for PropertyMarketInsights.com members. >> Click here to find out more <<

Hope you like it!

Mr. Propwise

FROM THE

EDITOR

mailto:[email protected]

http://www.propwise.sg/advertise/

http://propertymarketinsights.com/


SINGAPORE PROPERTY WEEKLY Issue 93

Page | 2Back to Contents

By Mr. Propwise

The recently announced Budget 2013 was full

of controversial measures such as the Wage

Credit Scheme and higher Additional

Registration Fees for expensive cars. One of

the key themes was a system of more

progressive taxes targeting the rich, and

nowhere was this clearer as in the

announcement of the new tiers of property

taxes.

1. Increase in property taxes for the top 1%

of owner-occupied homes

The tax structure for owner-occupied homes

will be revised so that roughly 950,000 of

The 3 Critical Impacts of Budget 2013 for Property Owners



these homes that have an Annual Value of

less than $59,000 will enjoy tax savings of up

to $80.

In contrast, the top 1% or about 12,000

owner-occupied homes will pay higher

property taxes, with the very high end hit

exponentially harder.

The current property tax structure for owner-

occupied homes is as follows:

The following new property tax structure will

be phased in over two years:



The following table was presented to illustrate

the impact of the different types of properties:

The message is clear – most owner-occupied

homes will have flat to lower property taxes,

but for the very richest who live in centrally

located landed properties or Good Class

Bungalows (GCB) their property taxes could

go up by 70% or more.

Will this lead to a correction in GCBs? I don’t

think so. While the percentage increase is

large, the absolute quantum of increase

(around $5,000 a year based on the

illustration) is barely noticeable for someone

who is able to shell out $20 to $30 million for

a home.

2. Increase in property taxes for the top

one-third of investment properties

The impact of the increase in property taxes

for non-owner-occupied homes is more

broad-reaching, with an estimated top 33% of

such properties facing higher taxes from the

new structure, while there’ll be no change for

the other 67% or 112,000 non-owner-

occupied properties.

The current flat property tax rate of 10% of

Annual Value for investment properties will



be increased for properties with an Annual

Value of more than $30,000. The new

property tax rates will be phased in over two

years starting from 1 January 2014 based on

the following rates:

The property tax rate for land and non-

residential properties remains unchanged at

10%.

The following table was presented to illustrate

the impact of the different types of properties:



From this table we can see that even

investors of a centrally located condominium

unit will be hit with a 20+% increase in

property taxes. If we assume the Annual

Value is equivalent to the rental received (the

Annual Values generally tend to be lower than

the market rentals), that means 12% of your

rentals will be going to pay taxes (versus 10%

currently).

For centrally located landed properties,

property taxes could soak up 16% of your

rental versus 10% previously, a large

increase.

3. Removal of tax refund for vacant

properties means higher effective taxes

for investment properties

One other change announced was that

vacant properties would no longer enjoy

property tax refunds with effect from 1

January 2014.

Currently, vacant properties or those

undergoing repairs to get them fit for

occupation can get refunds for the periods

they are vacant for.

This will be removed and the net impact is

that the effective property taxes for investors

will increase as all investment properties will

experience vacant periods when they are

looking for tenants or between the end of one

tenancy and the beginning of another.

The impact of Budget 2013 on the property

market

I believe that the two bottom-line impacts of

the new property tax structure in Budget 2013

are:

#1 – Soak the very rich Singaporeans who

live in expensive landed properties

#2 – Discourage the ownership of high end

properties for investment by increasing the



holding costs

I think 99% of the homeowners will have no

issues with #1, as it’s basically a redistribution

of wealth from the top 1% to the bottom 50%

who will get slightly lower property taxes of up

to $80 per year. I don’t think it’ll have any

impact on the property market either as the

wealthiest Singaporeans will hardly notice the

$5,000 per year difference in property taxes

of their homes.

#2, though, could adversely impact the high

end market as the top one-third of private

properties is affected. Together with the

removal of the refund for vacant properties,

the impact on property investors could be

significant, with the lowering of the potential

return of the property. This will discourage

property investors from buying, leading to a

reduction in demand for such properties.

What’s the purpose of these measures?

In a way, these measures seem strange to

me as the bubbly segment of the market

seems to be the mass market as opposed to

the luxury segment, but these measures do

not affect the mass market at all. While #2

could lead to a softening of luxury home

prices, conceivably only the top 10% to 20%

of households will be able to afford them

anyway.

Some pundits have suggested that shoebox

homeowners could benefit as they will likely

have a lower Annual Value, but I imagine that

most buyers of these homes are investors

and not owner-occupiers, so on the margin

there will be no difference to them.

Furthermore, the tighter foreign worker

policies including higher levies, cuts in the

Dependency Ratio Ceiling and tougher



requirements to get an S Pass or

Employment Pass would mean that the

potential pool of renters for these units could

be shrinking.

On the whole, it seems to me that the new

property-related policies announced in

Budget 2013 are less about controlling the

property bubble and more about pleasing the

masses.

By Mr. Propwise, founder of top Singapore

property blog Propwise.sg, a Chartered

Financial Analyst and resident real estate

analyst at PropertyMarketInsights.com, a site

to help property owners and investors make

profitable decisions in uncertain times. Click

here to learn more

http://propwise.sg/

http://propwise.sg/

http://propwise.sg/













http://www.moneymatters.sg/



Property Buying Tip #8: Property Tax

(Reference: www.iras.gov.sg)

In Singapore, property tax on the ownership

of property is based on the gross annual

value of the property.

The gross annual value is determined on the

hypothetical assumption that the property is

vacant and to be let.

In most instances, the lawyers would

apportion the tax liability for the seller and the

buyer during the completion of sale of the

property.

For brand new property, it is liable for

property tax from the date of issue of the

Temporary Occupation Permit (TOP).

By Eileen Tan and Ui Wei Teck, property

investors and authors of Enjoying Mid-Life

Without Crisis. This tip and dozens more are

from their book.

http://www.iras.gov.sg/







http://aktive.com.sg/store/enjoying-mid-life-without-crisis/











Singapore Property This Week


Residential

Chee Hoon Ave GCB site sold for $22.9m

The 15,184 sq ft GCB plot located at 8 Chee

Hoon Ave had been sold for $22.9 million or

$1,508 psf of land area. It has a square

shape and a frontage of around 37m along

Chee Hoon Avenue. It is located near Botanic

Gardens, Cluny Court and Serene Centre,

and schools such Anglo-Chinese School,

Nanyang Primary and Raffles Girls' Primary.

(Source: Business Times)

Private home sales driven by HDB

upgraders

48% or 17,590 of the 36,887 home sales

were made by HDB upgraders in 2012, a

17% increase from 2011’s figure. This was

largely driven by sales in the primary market.

The increase in private home sales was

despite loan curbs in October 2011 and

mainly a result of the low interest rates and

the demand for private homes by HDB

upgraders.

Looking ahead, transaction volume is likely to

fall in the short term as a result of the latest

cooling measures, but will likely moderate in

the short term. Nevertheless, transaction

volumes is expected to hold since demand is

likely to remain strong as Singaporeans are

currently allowed to own both HDB flat and

private residential property, a policy which

may change in the future.



While mass-market private homes are likely

to remain affordable, rental yields may fall by

2-3% which may result in a fall in demand

from buyers looking for a high-yield

investment.


Two 99-year confirmed list residential

sites yielding 1,100 homes released

The first, a site at Kim Tian Road near Tiong

Bahru MRT station, can yield a potential of

500 units on its 473,000 sq ft maximum GFA.

The site with a maximum GPR of 4.0 is likely

to see five to 10 bids given its location, with a

top bid of $870-920 psf ppr or $411-435

million.

The second is a site with a maximum GPR of

3.0 at Sengkang West Way. It can potentially

yield 555 units on its 536,000 sq ft maximum

GFA. It is located along Sungei Punggol and

near Layar and Fernvale LRT stations, and

enjoys a waterfront location. Four to eight

bids are expected for the site, with a top bid

of $400-450 psf ppr, or $214-241 million.

The tenders for the sites close on April 18 and

April 11 respectively.


Prices of non-landed private homes rise in

January

According to NUS’s Singapore Residential

Price Index (SRPI), prices of non-landed

private homes saw a 0.3% increase in

January from December, with the prices of

small units (up to 506 sq ft) islandwide

increasing the most by 2.6%, compared to a

0.7% in December. This is likely a result of

the recent cooling measures, which may have

led to an increase preference for the more

affordable small units.



Resale prices of homes (excluding small

units) in the Central Region saw a 0.7%

increase in January, while the resale prices in

the Non-Central Region (excluding small

units) fell by 0.1%. The RPI is expected to fall

by 1-3% in 2013 as a result of the cooling

measures and weaker demand.

Nevertheless, the sub-index for the Non-

Central Region is likely to increase in the next

few months given the strong demand and

demand for resale homes will be supported

by the low interest rates and price gap

between resale homes and new homes.


Shoebox units to benefit from new tax

policy

The latest tax structure announced on Feb 25

could benefit shoebox units. Under the new

structure, the first $8,000 annual value (AV)

will not be subject to taxes compared to the

current threshold of $6,000 AV and the tax

rate for the next $47,000 AV will remain at

4%. Since most such shoebox units have

annual gross rental of less than $55,000, they

are likely to be subject to lower taxes under

the new policy. However, homes bought for

investment purposes will see higher taxes

imposed since the property tax rate for non-

owner-occupied residential properties and

vacant residential properties is now more

than twice the rate for owner-occupied

properties, assuming similar AV. High-end

homes will see not only higher property tax

rates since most have a gross annual income

exceeding $55,000 but also the increased

ABSD rates. Most HDB flats however, are

unlikely to be affected by the new tax rules

given that gross annual rental income are

usually under $30,000.




Commercial

Four more strata office units in Samsung

Hub up for sale

Following Church Street Holdings offer of six

strata units recently, four more strata office

units on the 14th floor of 999-year leasehold

30-storey Samsung Hub in Raffles Place

have been put up for sale at $3,300 psf or

$43.3 million, a gross yield of more than 3%

per annum. The strata area of these four units

ranges from 2,906 sq ft to 3,875 sq ft, with a

total of 13,110 sq ft. The tender will close on

March 28.


Punggol F&B site attracts nine bids

The 15-year leasehold 11,606.6 sq m site at

Punggol Point zoned for food and beverage

(F&B) use has attracted a total of nine bids,

with the top bid of $11.4 million or $352 psf

ppr or $3,789.6 per sq m of GFA from

Fragrance Group. Its maximum permissible

GFA which includes the outdoor refreshment

area is 3,000 sq m.


Yio Chu Kang Rd Freehold space up for

sale

The 13,394 sq ft freehold space at 158 Yio

Chu Kang Road which can be used for

transport facilities and parking of vehicles

such as transport depots, carparks and petrol

kiosks has been put up for sale. The owner is

also willing to consider the sale on a 30-year

leasehold basis. It has a frontage located on

a main arterial road between Serangoon

Gardens and Serangoon Central. It could

potentially be developed for other usage but

that would require approval from the



authorities. The EOI exercise ends on March

27 at 4pm.


Hotel and Commercial DC rates saw

highest increase in recent revision

In the latest revision of development charge

(DC) rates, the average DC rate for

residential landed use increased by 4% while

the rate for non-landed use remained

unchanged. The average DC rate for

industrial use increased 0.6%. The highest

increase came from the 26% increase in the

average DC rate for commercial use, followed

by 26% for hotel use, likely in response to

strong land bids at state tenders in the past

half year.

Specifically, the highest increase in

commercial DC rate of 39% was in

geographical sectors 114 and 115 (which

include Yishun, Sembawang, Woodlands,

Choa Chu Kang and Jurong West), followed

by a 33% increase in sector 60 (which

includes Thomson Road, Irrawaddy Road and

Moulmein Road), sector 106 (which includes

Seletar) and sector 107 (which includes

Upper Thomson and Sembawang Hills). The

smallest increase of 9% came from Sector 42

(near Orchard MRT Station). 116 of the 118

geographical sectors saw an increase in DC

rates while the two remaining sectors had DC

rates left unchanged.

The highest increase of 46% for the hotel DC

rate was in Sector 112 (which includes the

Jurong Lake District), followed by 42% in

Sector 60. Sectors 58, 61 and 62 each saw a

34% increase in DC rates. Like the above,

116 sectors saw an increase in the DC rates

while the remaining two sectors were left

unchanged.



4 sectors had their industrial DC rates

changed; of which there are sector 115 (26%)

and sector 114 (16%). The rest were

unchanged. For the landed residential DC

rates, there were increases of 7-15% in 41

sectors with no changes in the rest. The

highest increase of 15 per cent was in

Sectors 92, 93, 95, 96 and 97.





Non-Landed Residential Resale Property Transactions for the Week of Feb 13 – Feb 19

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.

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

3 THE ANCHORAGE 1,765 2,150,000 1,218 FH

3 ENG HOON MANSIONS 1,421 1,400,000 985 FH

4 MARINA COLLECTION 2,390 7,050,500 2,950 99

5 GOLD COAST CONDOMINIUM 1,808 2,038,445 1,127 FH

5 VILLA DE WEST 1,378 1,520,000 1,103 FH

5 WEST BAY CONDOMINIUM 1,442 1,300,000 901 99

8 CLYDES RESIDENCE 1,023 1,210,000 1,183 FH

9 THE METZ 581 1,600,000 2,753 FH

9 RESIDENCES AT 338A 1,313 2,180,000 1,660 FH

9 ASPEN HEIGHTS 1,582 2,430,000 1,536 999

10 LATITUDE 2,680 5,219,800 1,948 FH

10 SOMMERVILLE PARK 1,302 2,108,000 1,618 FH

10 VALLEY PARK 1,109 1,680,000 1,515 999

10 THE CORNWALL 2,110 2,700,000 1,280 FH

10 VIZ AT HOLLAND 1,141 1,450,000 1,271 FH

10 RIDGEWOOD 1,744 2,000,000 1,147 999

11 CITY EDGE 1,152 1,750,000 1,519 FH

11 NOVENA COURT 861 1,240,000 1,440 FH

11 THE ARCADIA 6,566 7,650,000 1,165 99

12 D'LOTUS 807 1,050,000 1,301 FH

14 COSMO 420 615,000 1,465 FH

14 BLISS VILLE 1,249 1,450,000 1,161 FH

14 SIMSVILLE 1,249 1,250,000 1,001 99

15 MEYER RESIDENCE 1,152 2,000,000 1,736 FH

15 AMBER RESIDENCES 1,249 1,990,000 1,594 FH

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

15 EAST VIEW 18 1,173 1,050,000 895 FH

15 EAST BAY GARDENS 1,711 1,260,000 736 99

18 LIVIA 2,680 2,110,000 787 99

19 BREEZY MANSIONS 1,012 1,080,000 1,067 999

19 RIO VISTA 1,378 1,250,000 907 99

20 SEASONS VIEW 1,141 1,200,000 1,052 99

20 THE WINDSOR 1,798 1,680,000 935 FH

20 BRADDELL VIEW 1,615 1,450,000 898 99

21 HIGHGATE 1,636 1,750,000 1,070 FH

21 SIGNATURE PARK 1,389 1,405,000 1,012 FH

21 SPRINGDALE CONDOMINIUM 1,152 1,050,000 912 999

21 SHERWOOD TOWER 1,830 1,320,000 721 99

22 PARC OASIS 1,227 1,190,000 970 99

23 HILLVIEW RESIDENCE 1,249 1,300,000 1,041 999

23 THE MADEIRA 1,270 1,223,000 963 99

23 CASHEW HEIGHTS CONDOMINIUM 1,658 1,500,000 905 999

23 REGENT GROVE 1,259 1,068,000 848 99

25 CASABLANCA 1,119 960,000 858 99

27 NORTHWOOD 1,335 1,235,000 925 FH

singapore property weekly issue 93.pdf

Documents