Issue 93

Copyright 2011-2012 www.Propwise.sg. All Rights Reserved.

CONTENTS
p2 p9 p10 p16
The 3 Critical Impacts of Budget 2013 for Property Owners Property Buying Tip #8: Property Tax Singapore Property News This Week Resale Property Transactions

FROM THE

EDITOR

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

Im 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

(February 13 February 19)

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SINGAPORE PROPERTY WEEKLY Issue 93

The 3 Critical Impacts of Budget 2013 for Property Owners

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

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SINGAPORE PROPERTY WEEKLY Issue 93 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 owneroccupied homes is as follows: The following new property tax structure will be phased in over two years:

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SINGAPORE PROPERTY WEEKLY Issue 93 The following table was presented to illustrate the impact of the different types of properties: Will this lead to a correction in GCBs? I dont 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 therell be no change for the other 67% or 112,000 non-owneroccupied properties. The current flat property tax rate of 10% of Annual Value for investment properties will

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.
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SINGAPORE PROPERTY WEEKLY Issue 93 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 nonresidential properties remains unchanged at 10%. The following table was presented to illustrate the impact of the different types of properties:

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SINGAPORE PROPERTY WEEKLY Issue 93 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). Currently, vacant properties or those undergoing repairs to get them fit for occupation can get refunds for the periods they are vacant for.

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.
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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
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SINGAPORE PROPERTY WEEKLY Issue 93 holding costs I think 99% of the homeowners will have no issues with #1, as its 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 dont think itll 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. Whats 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
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SINGAPORE PROPERTY WEEKLY Issue 93 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

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SINGAPORE PROPERTY WEEKLY Issue 93

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.

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SINGAPORE PROPERTY WEEKLY Issue 93

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 upgraders sales driven by HDB 17% increase from 2011s 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.
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48% or 17,590 of the 36,887 home sales were made by HDB upgraders in 2012, a
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SINGAPORE PROPERTY WEEKLY Issue 93 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. (Source: Business Times) Two 99-year confirmed list residential sites yielding 1,100 homes released 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.
(Source: Business Times) Prices of non-landed private homes rise in January According to NUSs 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.
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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
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SINGAPORE PROPERTY WEEKLY Issue 93 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 NonCentral 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. (Source: Business Times) 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 nonowner-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. (Source: Business Times)
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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
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SINGAPORE PROPERTY WEEKLY Issue 93 Commercial Four more strata office units in Samsung Hub up for sale 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. (Source: Business Times) Yio Chu Kang Rd Freehold space 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. (Source: Business Times)
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,
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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
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SINGAPORE PROPERTY WEEKLY Issue 93 authorities. The EOI exercise ends on March 27 at 4pm. (Source: Business Times) 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
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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.
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SINGAPORE PROPERTY WEEKLY Issue 93 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. (Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 93

Non-Landed Residential Resale Property Transactions for the Week of Feb 13 Feb 19
Postal District 3 3 4 5 5 5 8 9 9 9 10 10 10 10 10 10 11 11 11 12 14 14 14 15 15 Project Name THE ANCHORAGE ENG HOON MANSIONS MARINA COLLECTION GOLD COAST CONDOMINIUM VILLA DE WEST WEST BAY CONDOMINIUM CLYDES RESIDENCE THE METZ RESIDENCES AT 338A ASPEN HEIGHTS LATITUDE SOMMERVILLE PARK VALLEY PARK THE CORNWALL VIZ AT HOLLAND RIDGEWOOD CITY EDGE NOVENA COURT THE ARCADIA D'LOTUS COSMO BLISS VILLE SIMSVILLE MEYER RESIDENCE AMBER RESIDENCES Area Transacted Price Tenure (sqft) Price ($) ($ psf) 1,765 2,150,000 1,218 FH 1,421 1,400,000 985 FH 2,390 7,050,500 2,950 99 1,808 2,038,445 1,127 FH 1,378 1,520,000 1,103 FH 1,442 1,300,000 901 99 1,023 1,210,000 1,183 FH 581 1,600,000 2,753 FH 1,313 2,180,000 1,660 FH 1,582 2,430,000 1,536 999 2,680 5,219,800 1,948 FH 1,302 2,108,000 1,618 FH 1,109 1,680,000 1,515 999 2,110 2,700,000 1,280 FH 1,141 1,450,000 1,271 FH 1,744 2,000,000 1,147 999 1,152 1,750,000 1,519 FH 861 1,240,000 1,440 FH 6,566 7,650,000 1,165 99 807 1,050,000 1,301 FH 420 615,000 1,465 FH 1,249 1,450,000 1,161 FH 1,249 1,250,000 1,001 99 1,152 2,000,000 1,736 FH 1,249 1,990,000 1,594 FH

Postal District 15 15 18 19 19 20 20 20 21 21 21 21 22 23 23 23 23 25 27

Project Name EAST VIEW 18 EAST BAY GARDENS LIVIA BREEZY MANSIONS RIO VISTA SEASONS VIEW THE WINDSOR BRADDELL VIEW HIGHGATE SIGNATURE PARK SPRINGDALE CONDOMINIUM SHERWOOD TOWER PARC OASIS HILLVIEW RESIDENCE THE MADEIRA CASHEW HEIGHTS CONDOMINIUM REGENT GROVE CASABLANCA NORTHWOOD

Area Transacted Price Tenure (sqft) Price ($) ($ psf) 1,173 1,050,000 895 FH 1,711 1,260,000 736 99 2,680 2,110,000 787 99 1,012 1,080,000 1,067 999 1,378 1,250,000 907 99 1,141 1,200,000 1,052 99 1,798 1,680,000 935 FH 1,615 1,450,000 898 99 1,636 1,750,000 1,070 FH 1,389 1,405,000 1,012 FH 1,152 1,050,000 912 999 1,830 1,320,000 721 99 1,227 1,190,000 970 99 1,249 1,300,000 1,041 999 1,270 1,223,000 963 99 1,658 1,500,000 905 999 1,259 1,068,000 848 99 1,119 960,000 858 99 1,335 1,235,000 925 FH

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.

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