Singapore Property Weekly Issue 189

8/10/2019 Singapore Property Weekly Issue 189

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Issue 189Copyright 2011-2014 www.Propwise.sg. All Rights Reserved.
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CONTENTS

p2 Exposing the 5 Myths of Property Tax

p7 Singapore Property News This Week

p12 Resale Property Transactions

(December 17 December 23 )

Welcome to the 189th edition of the

Singapore Property Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR
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SINGAPORE PROPERTY WEEKLY Issue 189

Page | 2Back to Contents

By Property Soul (Guest Contributor)

On December 5, the Inland Revenue

Authority of Singapore (IRAS) announced the

reduction of property tax for HDB flats in

2015. Three days later, there was an article

titled "Property Tax cut for one in four privatehome owners" in The Straits Times. A week

after their announcement, a representative

from the IRAS further elaborated how annual

values are calculated in The Straits Times

Forum ("Annual values of homes reflect

market rents"; Dec 15).Below are my thoughts on this matter after

being a private home property tax payer for

twelve years.

Exposing the 5 Myths of Property Tax
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In this article I will attempt to demystify the

five common myths of property tax.

Myth #1 Lower annual valuesmeans

lower property tax

According to the IRAS, effective Jan 1 next

year, the annual values of 25.7 percent of

private homes have been reduced while only

1.4 percent of annual values have been

adjusted upwards.

However, the IRAS has implemented

progressive tax rates for owner-occupied

private residential properties since 1 Jan

2011. A property tax rate of 4 percent of

annual value applies unless the annual value

is over $65,000 (where a 6 percent tax rate

applies). For non-owner occupied properties,

new progressive tax rates are implemented

since 1 Jan 2014.

By the end of November 2014, property

owners should have received a letter from the

IRAS, informing them of the revised

progressive property tax structure for both

owner-occupied and non-owner occupied

private residential properties.

For rental properties, the brackets of annual

values are narrower, with an upward

adjustment on the percentages of tax rates

that ranges from 10 to 20 percent. Even if you

are one of the lucky ones with a lower annual

value for your property, you may still end up

paying more property tax next year.

Myth #2 Annual values are reviewed

annually

The December 8 article in The Straits Times

mentions that somefeel that the volatility in

the property market cannot be captured by

annual reviews.Together with the statement

from IRAS about the property tax relief of
http://www.iras.gov.sg/irashome/page.aspx?id=2378http://www.iras.gov.sg/irasHome/page04.aspx?id=2094http://www.iras.gov.sg/irasHome/page04.aspx?id=2094http://www.iras.gov.sg/irasHome/page04.aspx?id=2094http://www.iras.gov.sg/irasHome/page04.aspx?id=2094http://www.iras.gov.sg/irasHome/page04.aspx?id=2094http://www.iras.gov.sg/irasHome/page04.aspx?id=2094http://www.iras.gov.sg/irashome/page.aspx?id=2378http://www.iras.gov.sg/irashome/page.aspx?id=2378http://www.iras.gov.sg/irashome/page.aspx?id=2378


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property owners, it gives the wrong

impression that annual values of properties

are reviewed once a year. If there are

changes, they will be made effective at the

beginning of every year.

However, besides the end of the year, in the

past I have received notices from IRAS in

March, August and October about changes in

annual value. And it is not unusual to have

two adjustments in one year.

Myth #3 Owners will be notified of

changes in advance

Unlike a hike in bank interest rates for your

housing loans, you wontreceive a notification

telling you in advance the new rates and

changes in repayment amounts that will be

effective from the following month.

IRAS usually gives owners one months

notice. However, on two separate occasions,

the new annual value was made effective

immediately. One letter I received in mid-

December had the new annual value

backdated to November. Another one sent in

early March backdated the change toFebruary.

Myth #4 The annual value reflects the

performance of the rental market

Property tax is calculated by the annual value

of the property. And annual value is estimatedbased on the rental transactions of similar

properties nearby.

In other words, the annual value of your

property is determined by the rentals of

comparable homes, not the performance of

the prevailing rental market.

There are currently 285,000 private

residential properties in Singapore. From 1

Jan 2015, only 25.7 percent will have their


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annual value lowered. Do you think that only

one in four private property owners are

affected by the slowdown of the rental

market?

Below is a chart that shows the annual values

of four of my private residential properties as

compared to the URA Rental Index from 2002

to 2014. You can see that three properties

have their annual values reduced slightly only

once throughout the years. For most of the

time, they climb up in big steps.

Myth #5All private residential properties

are treated equallly

Property tax is a wealth tax based on property

ownership. The pricier the property you buy,

the higher the rental it can generate, and the

more property tax you need to pay.

Depending on the annual value, the new

property tax rate for non-owner occupied

properties ranges from 10 to 20 percent.

If your property is in an affluentneighborhood, there are chances that your

neighbors have newly renovated their flat or

built a swimming pool. The good rent they

fetch can inevitably result in a higher annual

value for your property.

In a bad economy, it is difficult to find tenants

with a good budget. High-end properties are

therefore most susceptible to high vacancy

rate in a slow rental market.


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However, the annual value is the same

whether a property is self-occupied, tenanted

or vacant. Despite the fact that you don't have

a tenant to help you pay for your mortgage

and maintenance fee, you still have to pay ahigh property tax.

From 1 Jan 2014, landlords of non-owner

occupied properties can no longer claim any

refund of property tax for an unoccupied

property. The same applies for properties you

are unable to rent out or that are undergoingrepairs.

Lastly, if you find the annual value of your

property unreasonably high, you can appeal

to the IRAS to raise your objection. However,

you have to be prepared that the subsequent

adjustment can be lower, the same, or even

higher.

As what Mr Leung Yew Kwong, Principal Tax

Consultant at KPMG Services, told the The

Straits Times,"It's not that the process is not

transparent ... it's impossible for IRAS to go

into every home to access the condition it is

in."

Remember the famous saying from Benjamin

Franklin?"In this world nothing can be said to

be certain, except death and taxes."

By guest contributor Property Soul, a

successful property investor, blogger, and

author of the No B.S. Guide to Property

Investment.

SINGAPORE PROPERTY WEEKLY I 189
http://propertysoul.com/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://www.anthonyrobbinssg.com/propwisehttp://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://propertysoul.com/


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Singapore Property This Week


Residential

S RP I f o r c o m p let ed s m al l u n it s f el l b y

4.4% in Nov 14

The National University of Singapores

Singapore Residential Price Index (SPRI) for

units smaller than 506 sqft has fallen by 4.4

percent in November 2014 from December

2013. In November 2014, the price index for

small units showed a 1.9 percent drop from

the previous month, this was the biggest

month-on-month fall this year. About 3.9

percent of the 78,877 completed non-landed

private homes that are accounted for in the

SRPIs basket are made up of units smaller

than 506 sq ft. 429 private residential projects

from October 2003 and September 2013 are

also accounted for in the SRPI basket.

Market experts believe that the weak price

index for small units will continue. This is

because by end-2015, the number of

shoebox units would stand at 11,000 units, up

from the 2,400 units in 2011. Nicholas Mak

from SLP International added that in 2015

and 2016, 6,200 shoebox apartments will

receive their Temporary Occupation Permit.

Mak predicts that rentals for such apartments

will fall by 5 to 9 percent in 2015. Ong

ChoonFah from DTZ said that owners of

shoebox units may find it difficult to lease out

their apartments and thus may be inclined to

dispose of their units sooner.

(Source: Business Times)

SINGAPORE PROPERTY WEEKLY I 189


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Q 3 201 4 H D B r es al e p r ic es f el l b y 6 .1%

year-on-year

HDB resale prices have fallen by 6.1 percent

year-on-year according to the Business

Times. Minister for National Development

Khaw Boon Wan said that a single digital fall

in resale prices in 2015 may be beneficial to

the market. Lee NaiJia from DTZ also added

that as the supply of new flats is expected to

fall from 22,400 in 2014 to 16,900 in 2015,thus it is unlikely that there will be a double-

digital fall in HDB prices. Lee added that

subsidies to increase income ceiling and

changes in policies directed at singles buying

public housing may improve demand and

hence moderate the fall in prices. Khawsaidthat there may be a possibility that some

cooling measures may be lifted in 2015.

Nonetheless, Khaw said that the total debt

servicing ratio framework will likely stay.

Khaw said that other central banks, such as

in Australia are also implementing similar

frameworks to monitor the housing market.

According to Khaw, the focus in 2015 is to

assist singles and low-income families whocannot afford flats and are renting houses.


URAs p ri v at e r es i d en t i al p r o p e rt y p r i c e

in d e x f a l ls b y 4 % in 2 0 1 4

Data from the Urban Redevelopment

Authority (URA) showed that the private

residential property price index had fallen by

4 percent in 2014. Market experts believe that

this decline will continue into 2015. Ong Teck

Hui from JLL said that developers are holding

back launches as they expect the government

to relax the current cooling measures. URAs

private home price index in Q4 2014 also

showed a one percent fall from the previous



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quarter. This was the fifth quarter that prices

have fallen. Particularly, flash estimates by

URA for Q4 non-landed private residential

properties in the city fringe or rest of central

region have suffered the biggest hit with a 5.2percent decline in prices in 2014. Also, prices

in the core central region fell by 4.1 percent in

2014. However, areas outside the central

region were the least affected with just a 2.2

percent fall in the price index for private

residential properties.


B e ll ew a ter s an d B e ll ew o o d s i n tr o d u ce s

C o S p ac e f l e x i c o n c e p t

To attract buyers, developers of Bellewoods

and Bellewaters have introduced a CoSpace

flexi concept and have offered units at a

discounted price without interior fit-outs or

floor finishing. In November 2014, Bellewoods

sold 79 of its 561 units at $800 psf while

Bellewaters sold 170 of its 651 units at $813

psf. The executive condominiums (EC) were

both launched in that month. A 5 bedroomunit may cost around $955,000 after discount,

according to the Business Times. Yet, Ong

Kah Seng believes this unique marketing

strategy may improve sales only slightly, as

some buyers may be unwilling or unable to

fork out additional amount for renovation. Ong

believes that a direct reduction in price to

$780 psf may be a better alternative. The

CoSpace flexi concept allows buyers to

merge the utility room and a study to create a

larger room. About 40 percent of those who

bought CoSpace units have opted to merge

their utility room and study.




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T e n d e r f o r S e n g k a n g E C t o c l o s e o n J a n

20

The closing of a tender for an executive

condo (EC) at Sengkang East has been

postponed to Jan 20, 2015. The EC is a 99-

year leasehold site. It is expected to be

developed into 525 EC units and will consist

of 88 bicycle parking spaces. The space

allocated for bicycle parking may be

exempted from the calculation of the gross

floor area. The bicycle parking facilities will be

kept for use by residents only. The inclusion

of a bicycle parking area is in line with LTAs

Land Transport Masterplan 2013 that was

previously launched, said Business Times.


Commercial

L e s s i n d u s t r i a l l a n d s i t e s u p f o r t e n d e r o n

H 1 20 1 5 co n f ir me d l ist

In H1 2015, the Ministry of Trade and Industry(MTI) has put up only 9 industrial land sites

for sale under the confirmed list. The 9 sites

will provide a total of 6.46 ha. This is about

half the amount of land that was put up for

tender in each half of 2014. MTI said that it

will be reducing land supply to support pricesand rentals. From 2010 to 2014, it has

released an average of 42 ha of industrial

land per year, including reserve list sites. This

is significantly higher than from 2005 to 2009

when an average of 32 ha of industrial land

per year was released. Ong Kah Seng fromRST Research said that this move will

reduce the probability of an oversupply.



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Nicholas Mak from SLP International added

that there will be a large supply of strata-titled

industrial developments in the next two years

as 10 large projects are expected to be

launched. As such, the move to reduce thenumber of units of strata development in H1

2015slist may benefit developers.


I n d u s t r i a l p r o p e r t y m a r k e t e x p e c t e d t o b e

weak in 2015

According to the Business Times, the

industrial property market is expected to be

slow in 2015 as JTC will further increase

supply of industrial land despite a weaker

manufacturing outlook. Particularly, demand

for multi-user factories and ready-built

factories are likely to be affected in 2015. This

is because such properties are typically

owned by players in sunset industries. Rental

of factories may also be affected by an

increase in supply of factory spaces in 2015.

According to the Business Times, about 2.6

million sqm of factory space is expected to bebuilt in 2015. Nonetheless, high specification

factories, business parks, warehouses and

niche developments may continue to

command stable rental prices due to

optimistic growth in biomedical and

petrochemicals industries. While NicholasMak from SLP International said that

developers may be unwilling to adjust prices

of launched projects downwards, Chia

SiewChuin from Colliers believes that

industrial property prices may fall by another

3 percent.




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Non-Landed Residential Resale Property Transactions for the Week of Dec 17 Dec 23

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

1 MARINA BAY RESIDENCES 743 1,795,000 2 ,417 99

1 THE SAIL @ MARINA BAY 667 1,274,000 1,909 993 TANGLIN VIEW 1,711 2,200,000 1,285 99

4 THE BERTH BY THE COVE 1,658 2,570,000 1,550 99

4 THE INTERLACE 1,873 2,730,000 1,458 99

4 HARBOURLIGHTS 764 1,060,000 1,387 FH

4 THE PEARL @ MOUNT FABER 1,356 1,620,000 1,194 99

5 CARABELLE 1,259 1,550,000 1,231 956

5 BLUE HORIZON 1,163 1,210,000 1,041 99

5 WEST BAY CONDOMINIUM 1,249 1,250,000 1,001 99

5 DOVER PARKVIEW 936 855,000 913 99

5 FABER CREST 1,744 1,500,000 860 99

8 TYRWHITT 139 463 720,000 1,556 FH

8 OXFORD SUITES 893 1,230,000 1,377 FH

8 CITY SQUARE RESIDENCES 1,496 1 ,920,000 1,283 FH

9 MARTIN NO 38 969 2,450,000 2,529 FH

10 THE GRANGE 1,744 3,550,000 2,036 FH

10 DRAYCOTT EIGHT 2,863 5,750,000 2,008 99

10 BOTANIKA 1,636 3,200,000 1,956 FH

11 MONTEBLEU 1,475 2,065,000 1,400 FH

12 BALESTIER POINT 883 950,000 1,076 FH

12 SCENIC HEIGHTS 1,292 1,300,088 1,007 FH

14 ESTA RUBY 1,130 1,530,000 1,354 FH

14 LE REVE 861 1,050,000 1,219 FH

15 SANCTUARY GREEN 786 1,083,000 1,378 99

15 RIVEREDGE 1,518 2,000,000 1,318 99

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

15 AMBER POINT 1,690 2,150,000 1,272 FH

15 SPRING @ KATONG 1,163 1,370,000 1,178 FH16 CASA MERAH 1,389 1,470,000 1,059 99

16 BAYSHORE PARK 1,173 1,130,000 963 99

17 FERRARIA PARK CONDOMINIUM 1,023 928,000 908 FH

17 AZALEA PARK CONDOMINIUM 1,335 1,150,000 862 999

18 WATERVIEW 1,141 1,260,000 1,104 99

18 LIVIA 1,270 1,185,000 933 99

18 LIVIA 1,270 1,150,000 905 99

19 THE SPRINGBLOOM 1,119 1,180,000 1,054 99

19 THE SPRINGBLOOM 1,302 1,350,000 1,037 99

19 THE QUARTZ 1,141 1,170,000 1,025 99

19 SUNGLADE 1,378 1,320,000 958 99

20 BISHAN PARK CONDOMINIUM 1,550 1,400,000 903 99

20 FAR HORIZON GARDENS 1,948 1,380,000 708 99

21 HIGHGATE 1,496 1,440,000 962 FH

22 THE CENTRIS 872 988,000 1,133 99

22 PARC VISTA 1,055 950,000 901 99

22 THE MAYFAIR 1,163 1,030,000 886 99

22 PARC OASIS 1,227 1,070,000 872 99

23 MAYSPRINGS 915 800,000 874 99

23 MAYSPRINGS 1,302 1,010,000 775 99

27 THE SENSORIA 1,270 1,140,000 898 FH

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

Documents

Singapore Property Weekly Issue 189