MND regulatory framework for property agents

Ministry to launch industry and public consultation exercises from next month

(SINGAPORE) The Ministry of National Development (MND) said yesterday it will start consultations for a new regulatory framework for the real estate industry – a move that was widely welcomed.

Over the past few years, property agents here have come under fire for not having the right qualifications and for unethical practices.

In March this year, for example, Minister for National Development Mah Bow Tan said the status quo was ‘not tenable’ and the system was ‘not satisfactory’.

To tackle the problem, MND will launch an industry consultation exercise and engage various stakeholders from next month. Parties that will be consulted include industry associations, agency directors and individual agents, the ministry said.

There are two objectives: To help consumers better safeguard their interests and to boost the professionalism of the real estate industry.

This will be followed by public consultation. The entire consultation process is expected to be completed by November and key elements of a new regulatory framework are expected to be ready by December.

‘Over the past months, MND and other agencies have been studying ways to strengthen the regulatory framework, which include getting real estate agencies to take greater responsibility for the actions of their agents,’ MND said in a statement.

‘Other areas to be studied include qualifications and training requirements to increase professionalism, an improved dispute resolution mechanism and an enforcement framework against agencies with errant agents.’

MND’s move comes even as real estate agent groups here push to improve the professionalism of property agents. The industry is now largely self-regulated, but players have said the voluntary system is no longer working.

‘We have been looking forward to this consultation for a while,’ said Singapore Accredited Estate Agencies (SAEA) chief executive Tan Tee Khoon. ‘The real estate industry here has been fragmented and unregulated for a long time.’

He believes a basic regulatory framework from the government is essential so the industry can then use it to self-regulate. SAEA, for its part, has accredited about 7,000 of the estimated 30,000 property agents here.

But Dr Tan says more is needed. In particular, a dispute resolution system that can deal with complaints from the public and ensure that genuine complains against errant agents are addressed is essential, he said.

Property agencies also welcomed the consultation. PropNex, which employs more than 5,000 real estate agents here, said a central registry of agents – from which those with a black mark can be struck off – is a must.

‘We all know that the current state of affairs is not adequate,’ said PropNex chief executive Mohamed Ismail. ‘Agents who have flouted the rules at one agency can just join another now. There is no way of stopping them from practising.’

In its statement, MND said that while the government works on a new regulatory framework, individual tenants and home buyers must also exercise greater care and responsibility.

‘Working with other agencies, MND will look into various public education efforts to equip consumers with the knowledge to conduct their real estate transactions prudently and with due diligence,’ the ministry said.

Source: Business Times, 21 Aug 2009

DC rates poised to change amid churn

Commercial DC rates may dip while rates for landed homes may go up in some areas

(SINGAPORE) With revisions to development charges (DC) due on Sept 1, some property pundits say that the Chief Valuer (CV) may have a challenge on her hands, given the shift in the direction of the residential property market.

‘Chief valuer employs historical data to revise DC rates that will be applied over the next six months. But these historical transactions may be too far off from the market conditions in the next half year,’ says JLL’s head of SE Asia research Chua Yang Liang. ‘In short, the CV has the difficult task of balancing past decline and future growth. The key question is: How much weight should she place on the current market sentiment?’

Agreeing, Colliers International director Tay Huey Ying says: ‘The main challenge facing the CV in assessing DC rates this round would be to assess accurately the conditions of the various sectors of the property market for the next six months.’ And while the economic outlook remains clouded, the residential market is showing signs of recovery.

DC rates, payable for enhancing or intensifying the use of some sites, are tracked in property circles as they reflect land values. The rates – revised on March 1 and Sept 1 every year – are specified according to use groups across 118 geographical sectors. They are also significant because they are an indication of government’s reading of land values.

Most market watchers feel that commercial DC rates will ease as office market fundamentals are still weak. Credo Real Estate managing director Karamjit Singh reckons that commercial DC rates in the CBD may decline about 10-15 per cent.

CB Richard Ellis executive director Li Hiaw Ho is predicting a marginal decline while JLL’s Dr Chua expects a reduction of around 10 per cent mainly in the CBD core areas where prime office capital values have corrected some 38 per cent from the peak in Q2 2008 – while DC rates have fallen much less.

Colliers’s Ms Tay expects a drop of up to 5 per cent in the average commercial DC rate.

Ms Tay suggests industrial DC rates will stay largely unchanged despite the bullish bids received for a site in Kaki Bukit at a recent state tender, as the manufacturing sector outlook remains uncertain.

CBRE predicts selective increases in rates for landed residential use in prime areas, citing a surge in Good Class Bungalow deals in Q2. This may marginally push up the overall average DC rate for this use group.

But the rates for non-landed residential use could remain largely unchanged until the economic condition becomes clearer, says Colliers’ Ms Tay.

JLL’s Dr Chua suggests a 0 to -10 per cent change in non-landed residential DC rates, with the maximum cut mainly in Districts 1 to 4 (including the financial district and Sentosa). There’s room for further DC cuts as median prices for transactions in completed projects in these locations have fallen an estimated 40 per cent from the Q4 2007 peak to Q4 2008, while DC rates fell relatively less.

When the collective sales market was active, non-landed residential DC rates were keenly watched as some sites had a considerable DC component payable to the state to build a bigger project on the site. Things are different now as most en bloc sale projects are in their early stages. The next DC revision will be more significant to en bloc sellers as they approach their marketing phase, says Credo’s Mr Singh.

Another discussion topic on DC rates is whether the Ministry of National Development (MND) will revert to the pre-July 2007 DC calculation formula which creams off 50 per cent of the enhancement in land value instead of 70 per cent currently.

‘We feel MND should consider reverting back to 50 per cent. We believe the 50 per cent formula is principally equitable and had worked well for 22 years before 2007. Under this arrangement, the state and developers co-share the upside when a property’s potential is maximised,’ says Mr Singh.

However, others are not holding their breath for MND to make the change just yet. ‘With the revision enforced only in July 2007 as well as recent improved sentiment in the real estate market, we do not expect any major changes to the DC formula,’ says Dr Chua.

Agreeing, Colliers’ Ms Tay says: ‘Market conditions for assessing DC rates were likely to have been at their worst for the March 2009 review exercise. Yet the government did not revert to the previous DC formula.

‘In view of the fact that some segments of the property market are showing nascent signs of recovery, it will be even more unlikely government will see it necessary now to revert to the previous DC formula,’ she said.

Source: Business Times, 20 Aug 2009

Leng Beng muses on govt’s market cooling options

Scrapping IAS, reviving confirmed list possible, but care is needed

(SINGAPORE) City Developments Ltd’s (CDL) executive chairman Kwek Leng Beng reckons that the government may abolish the interest absorption scheme or reintroduce land sales through the confirmed list if it is concerned about a property bubble building up.

However, the authorities will deliberate carefully before introducing any measures to cool the market, given the government’s cautious economic outlook for the second half, Mr Kwek said yesterday.

‘In an uncertain time, you press the wrong button, (it may be) disastrous. I’m a strong believer that whatever the government wants to do, I think they’ve got to think very carefully – and they will,’ Mr Kwek said in response to an analyst’s question during CDL’s Q2 results briefing yesterday.

National Development Minister Mah Bow Tan last month observed that there are signs of speculation in the property market, and said that the government will act if it overheats. He also urged home seekers to buy only within their means.

The minister’s comments followed a strong pick-up in private home sales, with queues forming at some property launches and developers raising prices for some projects.

Yesterday, Mr Kwek noted that while ‘some amount of speculation is good for the market, excessive speculation can lead to disaster’. Like some other developers, he argued that the resurgence in housing sales ‘should not be viewed as over-exuberant or extraordinary, bearing in mind that developers had put on hold many launches last year’. He also said that ‘to-date, property prices for the low and mid-tier market have yet to recover since its peak of 1996′ – a point on which some market watchers begged to differ.

Mr Kwek attributed the strong home sales seen in the market in the first-half of this year to pent-up demand; developers’ willingness to trim prices to more realistic levels to move stock; low interest rates on home loans and fixed deposits; and property remaining a good hedge against inflation; among other factors. ‘Moreover, foreign investors are slowly returning to Asia, with increased confidence in its prospects.’

He acknowledged that the fast pace of recovery in overall market sentiments had taken even him by surprise.

In its results statement, CDL said that it has ‘always advocated that property investors should take a medium to long-term perspective and be able to service their loans’. It added: ‘With all the readily available statistical data about the property market and its transactions, home buyers today are more savvy and far-sighted, and they should be able to make discerning decisions about their investments.’

Last October, amid the global financial crisis, the government suspended sales of sites through the confirmed list – under which land parcels are launched for tender according to scheduled dates. However, sites remain on offer through the reserve list, under which the state will launch a plot for sale only upon successful application by a developer which undertakes to offer a minimum price acceptable to the state. In his pronouncement on the private residential market in late July, Mr Mah said that the government is considering whether it should reintroduce the confirmed list for first-half 2010.

In October 2007, the government scrapped the deferred payment scheme (DPS) amid complaints that it had fuelled property speculation. However, the now-popular interest absorption scheme (IAS) that is being offered by developers and banks mimics DPS in that buyers do not make any payments beyond the initial 20 per cent until the project is completed. However, IAS buyers have to sign up for a bank loan immediately and hence undergo a credit assessment for better risk management.

Mr Kwek yesterday was enthusiastic about the Urban Redevelopment Authority’s survey to establish lifestyle needs and trends here. Singapore will have ‘a different platform when the two integrated resorts are ready’, he said, as they will attract different types of customers, some of whom will want to buy residential property in Singapore, citing the experience in Macau.

The luxury residential market here will recover ‘when the casinos open and are performing reasonably well, and the world economy is more or less recovered to a good extent’, he added.

The increase in overseas visitor arrivals expected to be generated from the IRs’ casinos and the conventions business is also expected to create spillover demand for other hotels on the island.

Source: Business Times, 14 Aug 2009

A bubble that’s a gleam in specuvestors’ eyes

Mah Bow Tan’s caution aimed at averting pain later, property market watchers say

(SINGAPORE) Better to suck out the froth now than to burst the bubble later – that was what market watchers saw as the government’s intention in warning against rash property purchases.

National Development Minister Mah Bow Tan said on Wednesday that there are signs of speculation in the property market, and the government will act if it overheats. He also urged home seekers to buy only within their means.

On the surface, the message may seem puzzling. By most accounts, speculators from the boom years – those who ‘flipped’ their freshly bought units in the subsale market for a quick profit – have yet to make a huge comeback. Price increases have surfaced only at some projects, while several others still registered price falls.

At CapitaLand’s results briefing yesterday, group president and CEO Liew Mun Leong also observed that home demand is ‘healthy’, supported partly by home seekers whose estates were sold en bloc.

But dig deeper and the cause for concern becomes more apparent. Some industry watchers acknowledge that a group of ‘specuvestors’ is emerging. These are buyers who are prepared to keep and lease out their properties over the longer term, but are also open to selling them for capital gains if the opportunity comes along.

Although Singapore’s economy is shrinking, several factors are working in specuvestors’ favour. Notably, interest rates on bank loans are low, and more small apartments going for less than $1 million have become available. Many of them are also lucky enough to still have jobs, and some could have made a killing from the recent stockmarket rally.

These investors, together with genuine homebuyers, have raised market activity to a level that authorities feel is out-of-sync with weak economic fundamentals. The fear? That some would not be able to repay their loans if they lost their jobs, or if banks raised mortgage rates in the future.

‘I have seen sufficient cases in my Meet-the-People sessions, where people have over-committed and now find themselves in difficulty,’ Mr Mah recounted on Wednesday.

CIMB economist Song Seng Wun said in a note on Wednesday that Singapore’s Q2 09 jobless rate is expected to cross 5 per cent. The unemployment rate for Singaporeans and permanent residents rose to 4.8 per cent in Q1.

Falling rentals would also test buyers’ ability to support home loans, said Chesterton Suntec International’s research and consultancy director Colin Tan.

So to several industry watchers, the government is sounding a note of caution, just in case. As a developer told BT: ‘What if the green shoots turn brown?’ The formation of a bubble – particularly on shaky ground – would require overt intervention and the consequences are unlikely to be pretty.

Take a look back at 1996, when the government introduced a surprise anti-speculation package to curb sharp spikes in private home prices. Tighter credit, a tax on gains and higher stamp duty caused sentiment to sink and transaction volumes to plunge. This is history that most would not want to see repeat itself.

The key is whether the government’s words will help calm the buying frenzy at this stage. Here, views are mixed.

Some people may cool off, said Wheelock Properties (Singapore) CEO David Lawrence. ‘I think (Mr Mah is) more focusing on the greedy people who overgeared, took on too many liabilities, and he’s just saying ‘be careful’ . . . I think that’s a reasonable message to the market.’

But some also think the buying will continue as long as money from savings, banks or stockmarket winnings is around. A developer also suggested that a few people might bring forward their purchases in anticipation of anti-speculation measures coming on. ‘Singaporeans are a bit ‘gan cheong’ (panicky),’ he joked.

At Optima, where people started queuing days before the showflat was due to open, developer TID has conducted a ballot for the 120 units planned for release. All units have been tentatively accounted for with prices starting from $790 per square foot. TID is a tie-up between Hong Leong Group and Mitsui Fudosan. A Hong Leong spokesman said that the balloting process helps to sieve out genuine buyers and the crowds have thinned. BT understands that there were already plans to conduct a ballot when a queue first formed, before Mr Mah spoke to the press on Wednesday.

Market sources also say that around 80 units have been sold at Centro Residences, out of around 110 released.

Source: Business Times, 31 July 2009

Every transaction should be taxed

THE tweak to property tax announced last week – from Jan 1 next year, individuals who have sold a property in the prior four years will be subject to income tax on any subsequent home sales – is more than equitable.

In fact, taxes should be imposed on every property transacted irrespective of the number of times a sale is carried out.

I was recently invited to a property launch only to be informed that all units had already been sold.
True to form, the in-demand units were advertised openly the following day for $100,000 more than the price at which the developer had sold them – when the project had not even been built.

What is capital gains tax compared to this sort of profit? It’s a pittance!

Many other countries have a capital gains tax policy. Singapore should also have such a policy or property prices will continue to skyrocket when the economy rebounds.

The four-year period where taxes are to be paid if more than one property is transacted should be reviewed periodically to ensure that house prices stay under control.

A check on the Internet shows that a 1,000 sq ft condominium unit in Australia or Canada goes for between $200,000 and $300,000, while in Singapore we might pay close to $1 million for an average home.

Could such prohibitive property prices be part of the reason why our brightest talents choose to move abroad or why expatriates fail to sink roots here?

It is time the authorities rethink Singapore’s housing policy so that a roof over our heads becomes more competitive and affordable.

Gilbert Tan Hee Khian

Source: Today, 20 July 2009

In a class of their own

Some 1,000 Singaporeans are said to own the majority of Good Class Bungalows here

VERY few people live in landed homes in Singapore and even fewer live in Good Class Bungalows (GCBs), which probably explains why they are so desirable. There are about one million or so homes here. These comprise terrace houses, semi-detached houses, bungalows and of course high-rise homes – condominiums, apartments and public housing flats.

But GCBs stand quite far apart from all of these in that they not only have to sit on land that is of a certain size – not less than 1,400 square metres – but also have to be located in areas that have been specially designated for them. Indeed, there are estimated to be less than 2,500 GCBs in Singapore.

GCB areas were officially gazetted in 1980 with 39 areas formally safeguarded. A spokesman for the Urban Redevelopment Authority (URA) explained that the purpose of the gazette was to ‘protect the high environmental quality of these established large bungalow areas from the intrusion of more intensive forms of housing such as semi-detached or terrace houses’.

Walk or drive around these GCB areas and often you will notice not only stately houses but stately trees as well with many protected for posterity. There are two zones in Singapore under the National Parks Board’s Tree Conservation Areas with the main zone covering central Singapore where most of the GCBs are located.

To control development in these areas, URA set certain guidelines for planning purposes. For instance, the minimum plot size for any newly created bungalow within the 39 GCB areas must be at least 1,400 sq m. For this reason, a GCB plot cannot be developed to accommodate more intensive forms of housing. And unless it is at least 2,800 sq m in size, it cannot be sub-divided into two GCB plots either.

Of the GCB areas, the best known are the Nassim, Cluny, Bishopsgate and White House Park estates. While it is not inconceivable that there could be more GCB areas added in the future, given the need to intensify land use in Singapore, the likelihood is slim.

URA’s spokesman said: ‘In drawing up our land use plans for Singapore, we aim to provide a variety of housing options for Singaporeans, from waterfront housing to garden living to city living.
This includes low-density and landed housing, such as those found within existing GCB areas. The detailed housing form for future landed housing areas will be determined when the area is ready to be developed.’

URA said that there are currently no plans to release new sites or designate new areas as GCB areas. ‘Nevertheless, there is scope for the number of GCB plots within existing GCB areas to increase, for example through sub-division of larger GCB plots into several GCB plots, so long as each bungalow plot meets the minimum land size of 1,400 sq m,’ URA added.

Big GCB plots do not come by often. In 1994, a plum site in the Tanglin GCB area came up for sale by public tender. The 194,000 sq ft parcel was the official residence of the Australian high commissioner at White House Park/Dalvey Road. Property valuers had estimated that the site could fetch as much as $70 million, or around $400 per square foot (psf). The site eventually sold for $98 million or $505 psf.

In 1997, developer Wharf Group sold five units of the 11-unit development of GCBs at an average of $14.1 million each. Ten years later, in 2007, a house in this development sold for $28.8 million. There have been other public tenders of large sites.

In 2000, Hongkong and Shanghai Banking Corporation (HSBC) sold a 201,782 sq ft freehold bungalow site it owned since the 1960s in Jervois Road for $60 million, or slightly over $330 psf. Then in 2003, HSBC sold a 276,112 sq ft site at Bishopsgate for $69.8 million. Together, all three sites would have yielded less than 40 new GCBs.

Occasionally, individual GCB sites will come up for auction. In 2008, the Singapore Land Authority auctioned a site at Ridout Road which saw 34 bids lodged by three prospective buyers. The winning bid came in at $8.96 million or $579.55 psf. This was 22.6 per cent above the opening bid of $7.31 million or $473 psf. Being fresh government land sale sites, however, it came with a 99-year lease.

SLA also said that recently, three parcels of land have been sold under the Sale of Infill Sites programme on 99-year leases. ‘The owners have to comply with URA’s GCB guidelines as the land parcels are within GCB areas,’ it added.

Because the environment is an important factor in GCB areas, there are guidelines that control how big the house can be. For instance, the house cannot cover more than 35 per cent of the site. This is to ensure that there are adequate green buffers between each house.

There are also more prosaic restraints – childcare centres are not allowed in GCB areas for instance. But perhaps the most important constraint on GCB ownership to note is that foreigners are not allowed to own these, thus reducing the buying pool of GCBs.

Some 1,000 Singaporeans are said to own the majority of GCBs here and are mostly intent on holding on to them as long-term investments. If you have bought one through the open market, you can count yourself lucky indeed.

Source: Business Times, 16 July 2009

In a class of their own

Some 1,000 Singaporeans are said to own the majority of Good Class Bungalows here

VERY few people live in landed homes in Singapore and even fewer live in Good Class Bungalows (GCBs), which probably explains why they are so desirable. There are about one million or so homes here. These comprise terrace houses, semi-detached houses, bungalows and of course high-rise homes – condominiums, apartments and public housing flats.

But GCBs stand quite far apart from all of these in that they not only have to sit on land that is of a certain size – not less than 1,400 square metres – but also have to be located in areas that have been specially designated for them. Indeed, there are estimated to be less than 2,500 GCBs in Singapore.

GCB areas were officially gazetted in 1980 with 39 areas formally safeguarded. A spokesman for the Urban Redevelopment Authority (URA) explained that the purpose of the gazette was to ‘protect the high environmental quality of these established large bungalow areas from the intrusion of more intensive forms of housing such as semi-detached or terrace houses’.

Walk or drive around these GCB areas and often you will notice not only stately houses but stately trees as well with many protected for posterity. There are two zones in Singapore under the National Parks Board’s Tree Conservation Areas with the main zone covering central Singapore where most of the GCBs are located.

To control development in these areas, URA set certain guidelines for planning purposes. For instance, the minimum plot size for any newly created bungalow within the 39 GCB areas must be at least 1,400 sq m. For this reason, a GCB plot cannot be developed to accommodate more intensive forms of housing. And unless it is at least 2,800 sq m in size, it cannot be sub-divided into two GCB plots either.

Of the GCB areas, the best known are the Nassim, Cluny, Bishopsgate and White House Park estates. While it is not inconceivable that there could be more GCB areas added in the future, given the need to intensify land use in Singapore, the likelihood is slim.

URA’s spokesman said: ‘In drawing up our land use plans for Singapore, we aim to provide a variety of housing options for Singaporeans, from waterfront housing to garden living to city living.
This includes low-density and landed housing, such as those found within existing GCB areas. The detailed housing form for future landed housing areas will be determined when the area is ready to be developed.’

URA said that there are currently no plans to release new sites or designate new areas as GCB areas. ‘Nevertheless, there is scope for the number of GCB plots within existing GCB areas to increase, for example through sub-division of larger GCB plots into several GCB plots, so long as each bungalow plot meets the minimum land size of 1,400 sq m,’ URA added.

Big GCB plots do not come by often. In 1994, a plum site in the Tanglin GCB area came up for sale by public tender. The 194,000 sq ft parcel was the official residence of the Australian high commissioner at White House Park/Dalvey Road. Property valuers had estimated that the site could fetch as much as $70 million, or around $400 per square foot (psf). The site eventually sold for $98 million or $505 psf.

In 1997, developer Wharf Group sold five units of the 11-unit development of GCBs at an average of $14.1 million each. Ten years later, in 2007, a house in this development sold for $28.8 million. There have been other public tenders of large sites.

In 2000, Hongkong and Shanghai Banking Corporation (HSBC) sold a 201,782 sq ft freehold bungalow site it owned since the 1960s in Jervois Road for $60 million, or slightly over $330 psf. Then in 2003, HSBC sold a 276,112 sq ft site at Bishopsgate for $69.8 million. Together, all three sites would have yielded less than 40 new GCBs.

Occasionally, individual GCB sites will come up for auction. In 2008, the Singapore Land Authority auctioned a site at Ridout Road which saw 34 bids lodged by three prospective buyers. The winning bid came in at $8.96 million or $579.55 psf. This was 22.6 per cent above the opening bid of $7.31 million or $473 psf. Being fresh government land sale sites, however, it came with a 99-year lease.

SLA also said that recently, three parcels of land have been sold under the Sale of Infill Sites programme on 99-year leases. ‘The owners have to comply with URA’s GCB guidelines as the land parcels are within GCB areas,’ it added.

Because the environment is an important factor in GCB areas, there are guidelines that control how big the house can be. For instance, the house cannot cover more than 35 per cent of the site. This is to ensure that there are adequate green buffers between each house.

There are also more prosaic restraints – childcare centres are not allowed in GCB areas for instance. But perhaps the most important constraint on GCB ownership to note is that foreigners are not allowed to own these, thus reducing the buying pool of GCBs.

Some 1,000 Singaporeans are said to own the majority of GCBs here and are mostly intent on holding on to them as long-term investments. If you have bought one through the open market, you can count yourself lucky indeed.

Source: Business Times, 16 July 2009

Property plays fall on tax concerns

Uncertainty over how tax proposal will hit top-end of residential market

A PROPOSED tax change designed to make the rules clearer on profits made from the sale of property was still creating a stir yesterday about a week after news of it first broke.

Even though the Government has clarified that the proposal is not intended to stifle speculation, traders are still concerned that it might have a detrimental impact on the property sector.

Under the proposed change, an individual will escape tax on gains made from selling a property if he has not sold any other property over the preceding four years.

But there remain lingering fears among analysts that home buyers might interpret it negatively, despite government assurances that there are no plans to change the tax treatment of individuals selling more than one property within a four-year period.

Market watchers spent the weekend carefully gauging the mood at showflats. And, going by the carnival atmosphere witnessed by many, some analysts have concluded that sentiment remains positive – especially for condos targeted at mid-range buyers and HDB upgraders.

This positivity, however, has not allayed concern that the planned tax change – set to become law in January – may well dent the top-end of the residential market, where condos are invariably bought for investment purposes.

So it was not surprising to find property counters caught in a fierce tug-of-war between the bulls and bears as the tax-change debate continued to rage.

Among the property sector’s big losers of the day were City Developments which fell 20 cents to $8, CapitaLand which lost eight cents to $3.31, United Overseas Land which slipped nine cents to $3.21, and Wing Tai Holdings which was down four cents at $1.23.

Elsewhere, local banks were hit by selling activity as investors looked forward with some apprehension to United States lenders, such as Citigroup and JPMorgan Chase, reporting their quarterly earnings later this week.

DBS Group Holdings fell 22 cents to $11.42, United Overseas Bank lost 16 cents to $14.42, and OCBC Bank was down 20 cents at $6.86.

Given somewhat reduced investor appetites, even the telcos – which were being snapped up last week because of their high dividend yields – came under selling pressure. SingTel lost four cents to $3.12 and StarHub fell six cents to $2.13.

The general sell-off caused the benchmark Straits Times Index to plummet 41.34 points, or 1.8 per cent, to 2,266.64. Because of the lacklustre investor interest, only 1.05 billion shares worth $863.2 million changed hands.

Across the region, a general state of uncertainty saw both Hong Kong’s Hang Seng and Japan’s Nikkei-225 dropping about 2.6 per cent each.

Citigroup Investment Research noted in a report yesterday that funds investing in Asian markets suffered a net outflow of US$365 million (S$534 million) last week. Although trifling when compared to the second-quarter net inflow of US$13.2 billion, the outflow raised fears that it might signal the shape of things to come.

Source: Straits Times, 14 July 2009

No fear of property gains tax on show

Investors, home seekers throng property launches over weekend

FEAR and uncertainty over how gains from property sales would be taxed vanished as quickly as they came last week.

Home seekers still thronged showflats over the weekend and smaller apartments remained popular picks.

Turnout at property launches was healthy, observed DMG & Partners Securities analyst Brandon Lee, who visited a handful of showflats in the last few days.

News that the government could change income tax laws on profits from property sales did not seem to have an adverse impact, he said.

Word got round last Wednesday of a proposal to make current laws clearer – by guaranteeing that anyone who sells only one property in any four-year period will not be taxed on the gains.

This left many industry players wondering if sellers who failed to meet the criterion would automatically be taxed. Their fears were eased when the government said that this was not the case.

Given how much property prices have fallen, there is still a chance to profit – with or without taxes – said Mr Lee in a note last Thursday. ‘Even if a maximum 20 per cent personal income tax rate is levied on profits, the seller should still reap healthy income.’

Investors seemed to recognise this and joined genuine homeseekers at showflats for new projects, such as Parc Imperial at Pasir Panjang, Ascentia Sky along Alexandra Road and Sophia Residence at Mount Sophia.

According to agents, buyers had taken up around 80 per cent of Parc Imperial’s 138 units by yesterday afternoon.

Studio and two-bedroom apartments at the freehold project were the most popular, with prices starting from $1,200 psf.

At Luxus Hills, a recently-launched 999-year leasehold landed development at Ang Mio Kio, 63 of 78 units have been sold. Prices ranged from about $1.75 million for intermediate terrace homes to $2.05 million for corner terraces.

Existing properties also found buyers. In four days, The Straits Trading Company sold 10 units at Gallop Green, a freehold estate near Farrer Road which received Temporary Occupation Permit in 2002.

Prices averaged $1,400-$1,435 psf and buyers comprised owner-occupiers and investors, said the company’s executive vice-president Eric Teng.

Source: Business Times, 13 July 2009

For semi-Ds, breaking up is hard to do

Redeveloping one unit into a bungalow will leave the remaining unit looking lopsided

The next-door neighbour of a couple, whose bid to divorce their semi-detached house from his failed, was surprised to see his home address make the news last week.

The man, who wanted to be known only as Mr Chow, did not know that his neighbours, Madam Borissik Svetlana and her husband Low Eng Pah, went as far as the High Court to get approval to turn their semi-detached house into a bungalow.

The application was rejected by the Urban Redevelopment Authority (URA), then a subsequent appeal was thrown out when Mr Low and Madam Svetlana took it to the courts.

‘We felt sorry for them for losing the case. We are indifferent actually. We wouldn’t have minded if they wanted to convert their house into a bungalow,’ said Mr Chow, who has been living in his two-storey house in Upper Thomson with his wife and two children for about two years now.

Current regulations require that adjoining houses each stand on at least 400 sq m of land – the minimum plot size for a detached house – before the redevelopment of semi-detached houses is allowed. The plots must also have a width of at least 10m.

Mr Low and Madam Svetlana’s semi-detached house at 2, Jalan Chengam sits on 419 sq m of land but Mr Chow’s house at 1A, Jalan Chengam has a plot size of only 244.5sq m.

The couple, who do not live in the single-storey house, had planned to convert it into a two-storey bungalow with a basement, attic and swimming pool. They declined to be interviewed.

The case has put the spotlight on a building guideline that was introduced in 1996 and revised in 2002.

The guideline allowed for existing semi-detached houses to be converted into bungalows if the minimum plot size is met. But it did not specify that a neighbouring unit had to adhere to a minimum size.

In 2002, however, URA issued a circular to professional institutes stating it had received much feedback on such conversions.

The key concern was that the redevelopment has caused the remaining half of an original pair of semi-detached units to be lopsided in appearance, the circular said.

To ensure that the adjoining semi-detached house is large enough to be redeveloped into bungalows, URA requires that its minimum plot be at least 400 sq m.
URA said it does not compile data on such applications.

A check with property consultants and construction firms showed that such breakaways, while not uncommon, are also not popular.

Mr Dennis Ng, director of DMX Construction, said he has handled only four such cases over the past 10 years.

He said neighbours are often upset by the conversion as they would have to put up with noisy construction and a ‘weird-looking’ house.

‘You seldom find both sides agreeing to redevelop at the same time,’ he said.

But Mr Dennis Wee, chairman of the realty company Dennis Wee Group, said the property value for both houses should go up as they would be classified as bungalows after the breakaway.
Still, in a soft market, it may be difficult to market ‘half a house’, he said.

‘The plot could be just over 400 sq m. That’s a bit small for a bungalow as people usually go for at least 600 sq m. It’s also not a very good sight as there will be a blank wall on one side of the house,’ he said.

Some affected home owners feel that the authorities should make it mandatory for affected neighbours to be consulted first before owners can go ahead with the redevelopment.

Under the current guidelines, applicants are ‘urged’ to keep their immediate neighbours informed of the approved plans.

Ms Phyllis Tan, who declined to reveal her age, was hurt when she found out that her neighbour, who has been her friend for 30 years, got approval to detach his single-storey semi-detached house from hers without informing her first.

She rallied 25 residents in Changi Park estate to sign a petition to the authorities.

‘I had a horrifying image of what the estate would look like in the future with several sliced-off semi-detached houses standing lopsided on their own,’ said the semi-retired lawyer, who has been living in her single-storey house for over 30 years.

Her neighbour went ahead with the conversion as the law had not been revised at that time. It was changed soon after Ms Tan’s feedback.

Today, Ms Tan said she has learnt to live with her ‘half-a-house’, even though it is dwarfed by two houses on both sides. The wall that used to connect her house with her neighbour’s, which is now a 21/2-storey bungalow, is concealed by a tall chiku tree.

While she remains friends with her neighbour, she is troubled that the law does not give affected home owners any defined rights over the approval of such upgradings.

‘The neighbour is affected by the breakaway and deserves to be consulted. It’s just common courtesy.’

But others feel home owners have the right to do what they please with their own house.

Mrs Chow from 1A, Jalan Chengam said: ‘It is private property after all. If the neighbours don’t like it, it will pile pressure on the owners. Not everyone is indifferent like us.’

Source: Sunday Times, 12 July 2009