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In this issue:- The 3 Critical Impacts of Budget 2013 for Property Owners - Property Buying Tip #8: Property Tax- Singapore Property News This Week- Resale Property Transactions (February 13 – February 19)
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Issue 93Copyright © 2011-2012 www.Propwise.sg. All Rights Reserved.
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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
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
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 3Back to Contents
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:
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 4Back to Contents
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
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 5Back to Contents
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:
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 6Back to Contents
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
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 7Back to Contents
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
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 8Back to Contents
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
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 9Back to Contents
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.
SINGAPORE PROPERTY WEEKLY Issue 93
Singapore Property This Week
Page | 10Back to Contents
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.
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 11Back to Contents
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
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.
(Source: Business Times)
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.
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 12Back to Contents
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.
(Source: Business Times)
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.
(Source: Business Times)
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 13Back to Contents
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.
(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,
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
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
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 14Back to Contents
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
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.
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 15Back to Contents
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)
SINGAPORE PROPERTY WEEKLY Issue 93
Page | 16Back to Contents
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