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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

Shared housing scheme may put children’s safety at risk

I refer to last Sunday’s article, ‘2 families under one rented roof’.

I think the Housing Board should be commended for having the interim rental housing scheme, which allows the down and out to maintain a roof over their heads.

However, I feel that having two families under one roof is not a good idea. The article states that measures have been put in place by the HDB to minimise conflicts between families.

But some points seem to have been overlooked. The married couples share a bedroom with their adolescent children. And the children have to share a home with an unrelated family.

Firstly, the children are put in a position where they may be vulnerable to sexual abuse.

Secondly, couples have to sacrifice their marital intimacy.

Families going through financial turmoil already undergo much hardship; more worries should not be added to their plate.

Veronique Galistan (Ms)

Source: Sunday Times, 2 Aug 2009

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Here’s a house – and a $50k mattress

(SINGAPORE) Hersing Corporation’s Harry Chua does not want to sell you just a house – he wants to sell you a mattress along with it, as well.

Two months after Hersing’s quiet opening of the Dozz Mattress showroom at its headquarters in Toa Payoh, the holding company of real estate agency ERA is going for gold.

At a private launch today with guests from the Ferrari and Lamborghini jet-set, it will be launching a mattress with a 22-carat gold cover from Italian brand Magniflex that will cost as much as $50,000.

This new venture will sit alongside Hersing’s eclectic assortment of dealings in the real estate, storage and money transfer industries.

In 2003, Hersing – which holds the local franchises for property broker ERA and remittance agency Western Union – set up a wholly-owned self storage firm, Storhub, which has since grown to five locations in Singapore.

To Jack Chua, Hersing’s president, the group’s move into mattresses makes perfect sense. ‘After buying a house, the customer needs a mattress. We’re just providing them with a customer service,’ he said.

With 18 mattress brands, the showroom has seen a 30 per cent increase in monthly revenue since its soft launch in May.

The group expects the showroom to break even this month, according to Hersing’s founder and chairman Harry Chua.

The latest feather in its cap where the mattress business is concerned is Hersing’s clinching of the exclusive distributor rights for the Magniflex brand for South-east Asia.

The group is currently looking into the mega-retail mattress store concept for its foray into the rest of Asia.

While $50,000 will get buyers a super king-sized Magniflex Gold – a personalised mattress with gold thread in its cover – normal Magniflex mattresses also retail at the showroom from a less eye-widening $1,298.

To date, more than 100 units of the Magniflex Gold have been moved globally, with the gold thread being touted for its anti-bacterial and anti-static qualities.

Despite the current downturn, Mr Harry Chua is unperturbed by the prospect of offering the Rolls Royce of mattresses to the Ferrari-owning crowd.

‘If you can pay a million dollars for a car, what is $50,000 for a mattress in which you spend eight hours a day? I think we will do very well. As well as Storhub,’ he said.

With the financial market currently displaying volatility, perhaps the monied classes can be persuaded to put their money in mattresses instead of under them.

Source: Business Times, 24 July 2009

KNOW THESE TERMS

Annual Value (AV): This is used as the basis to compute property tax for properties in Singapore. The tax rate for owner-occupied residential properties is

4 per cent a year. The tax rate for all other properties is 10per cent.

AV is the gross annual rental value that a property is expected to fetch when rented out, less what the landlord pays for expenses related to repairs and maintenance.

Caveat: A document that any person who claims to have an interest in the property may lodge against the title of property at the Registry of Land Titles.

Caveat emptor: Latin for ‘buyer beware’. It is a legal term meaning the risk in a transaction rests with the buyer, unless specifically stated otherwise or unless fraud or deception can be proven. Most countries now have strict laws protecting buyers from shoddy workmanship, finish and quality.

Cluster housing: Cluster housing is a hybrid development that combines conventional housing with the features of condominium housing, with strata titles, shared facilities such as swimming pools, landscaped gardens and other amenities. The buildings should not exceed four storeys.

Common property: Any premises not included in the strata lot but within the strata-titled development. Examples of common property include communal facilities such as the swimming pool and clubhouse, as well as areas like lift lobbies and staircases.

Detached houses/bungalow: A type of landed housing that comprises a detached dwelling house, usually not more than three storeys high. The minimum plot size is 400 sq m and the frontage is 10m.

Management corporation or MCST: A body established under the Land Titles (Strata) Act that consists of all the owners of the units in a strata-titled development. The management corporation owns, controls and manages the common property.

Plot ratio: Plot ratio determines the maximum gross floor area (GFA) allowable on a plot of land. A plot ratio of two means that the GFA allowable is two times the site’s area.

Townhouse: A residential building designed as a single dwelling house unit on the ground level, and forming part of a row of no fewer than three residential units with common ownership of land.

Vacant possession: Vacant possession is delivered when the buyer is allowed to use the property immediately without anyone else still living in it or using it.

Source: Jones Lang Lasalle

Source: Sunday Times, 12 July 2009

Love affair with property pays off

Senior bank officer’s early land purchases helped to build financial muscle for bigger investments
Korean-born Alice Waller has lived and worked outside South Korea, especially in Australia.

It is no wonder her love affair with properties is played out largely in Australia instead of her home country.

Her family moved to Australia when she was 10. She later studied in the United States and worked in South Korea for a few years before a 10-year stint in Singapore running a manpower services business.

She then spent 15 years at the National Australia Bank, based in Australia and New Zealand, till early last year. That was when she returned to Singapore to join Standard Chartered Private Bank as its senior director and global market leader. Her primary role is to reach out to the high net-worth Korean community worldwide.

Mrs Waller, 53, said her property investments have paid off handsomely.

She made her first property investment when she obtained her MBA from the University of California, Los Angeles, in 1982. She invested her savings of A$34,000 in two pieces of neighbouring land, each at 7,000 sq ft, in Adelaide, Australia. She sold them four years later when land prices doubled.

Armed with the sales proceeds and her savings, she bought another two pieces of land, this time costing her A$60,000. It helped that there was no capital gains tax in Australia then. Before long, her wealth had grown.

Now that she is more financially sound, she prefers to go for ‘blue chip’ property in prime locations because she believes that their values would go down last in a crisis but would go up first during good times.

Currently, she has two condo units in Melbourne and a farm in Victoria, Australia.

She is married to an Australian banker and has two children, Claire, 26, and Simon, 23, from a previous marriage. Mr Waller and her two children are based in Melbourne.

Q: Are you a spender or saver?

I am a saver. I spend 30 per cent and save 70 per cent of my income.

Q: How much do you charge to your credit cards every month?

I have three cards and I charge almost all my expenses, about $2,000, to them. I pay off the full amount so that I do not have to pay any interest. I withdraw $500 a month from the ATM.

Q: What financial planning have you done for yourself?

While I spend 30 per cent of my income, the balance is being invested in this manner – 20 per cent is channelled to pay off my mortgages, 30 per cent is invested in short-term products such as term deposits, and 20 per cent is parked in mid- to long-term investments such as unit trusts and capital guaranteed products. Of this 20 per cent, 15 per cent is invested in riskier products like derivatives while 5 per cent is invested in fixed-income products like capital guaranteed bonds.

I like to have more cash holdings now as I’m looking out for more opportunities to invest.

My target return is about 10 per cent per annum on my investments and 5 per cent per annum on property.

Q: Moneywise, what were your growing-up years like?

I come from a large family of seven kids. I am the fifth child. My dad was a businessman who manufactured safes and re-modelled antique cars. Because of his business ventures in Australia, my family lived in Adelaide between 1966 and 1970. They were in Brunei from 1970 to 1988. My mother was a teacher but she became a housewife when we left Seoul. I went for further studies in the United States when I was 18, so I learnt the importance of being financially independent from a young age. It was my father’s belief in owning land that inspired my interest in real estate.

Q: How did you get interested in investing?

After my graduation, I took my father’s advice and started to invest in property. Later, I diversified my investment into other financial instruments.

Q: What property do you own?

I own two properties which come with 24-hour concierge services in St Kilda Road, Melbourne.

I bought a three-bedroom unit at the Melbournian Apartment for A$1.9 million in 2004. Its annual rental yield is about 5.6 per cent. In January this year, I bought a 1,300 sq ft unit at the Metropolitan Apartment, also in St Kilda Road, for A$850,000 (S$970,000). My son is currently living there.

Back in 2000, I bought a 250ha cattle farm in Victoria for under A$500,000. The rental yield is about 4 per cent per annum. The returns are not high but we bought it for sentimental reasons because the farm used to belong to my husband’s family.

Q: What’s the most extravagant thing you have bought?

A fur coat which I bought in South Korea in the early 1980s that cost US$3,000. It was very expensive and it seemed like a good idea then. But my career has since taken me to Asia where I have little or no opportunity to wear it. I’ve worn it only twice. I regret buying it as I could have made better use of my money.

Q: What’s your retirement plan?

I am hoping to have my own home without any loan or repayment to worry about. I would like to have an income of S$10,000 a month after tax when I retire. I intend to stop work at 60 if my health permits and I hope I will be financially independent at 57.

When I do retire, I want to do charity work, just like my mum. My dream is to set up a home for the aged outside Seoul. It will be a small house with 20 rooms and a nurse. It will be free for the residents.

Q: Home is now…

A rented apartment at the Caribbean at Keppel Bay.

Q: I drive…

A silver Lexus IS250.

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WORST AND BEST BETS
Q: What has been your worst investment to date?

In 1982, I bought a small house sitting on a big plot of land in Adelaide for A$500,000 (S$575,000). I tore down the house and built eight bungalows on the same plot. It was named Claire Court, after my daughter, who was born in 1983.

However, it was a nightmare when the interest rate for the bank loan spiralled to 22.5 per cent from 14 per cent in 1983 due to the worldwide recession. I subdivided the land and sold the bungalows after five years, and managed to break even.

Q: And your best investment?

I invested a six-figure sum in an Australian commercial real estate investment trust fund in the late 1990s. It achieved 15 per cent returns every year so my capital sum doubled. I cashed out of the fund in 2004.

Source: Sunday Times, 12 July 2009

3 new industrial sites put on reserve list

THE Ministry of Trade and Industry (MTI) will continue to suspend the confirmed list for its industrial government land sales (GLS) programme for the rest of the year.

This would provide flexibility for the market to ‘adjust supply in accordance with the current economic conditions’, it said in a statement yesterday.

But the MTI has put three new sites on its reserve list to meet potential demand for industrial land.
Under the reserve list system, a site is offered for public tender only if a developer commits to bid at an acceptable price.

The three sites are a 3.2ha plot in Woodlands Avenue 12, a 2.99ha plot in Kaki Bukit Avenue 4 and a 1.24ha plot in Ubi Road.

All three have 60-year leases and are estimated to become available in the last quarter of this year.
In the first half of the year, two reserve list sites – in Woodlands Industrial Park E5 and Kaki Bukit Road 2 – were triggered.

The Woodlands plot went up for tender recently when an unnamed applicant undertook to bid at least $12.5 million or $18.57 per sq ft of potential gross floor area.

This tender closes next Tuesday.

Mr Colin Tan, Chesterton Suntec International’s head of research and consultancy, said the MTI’s announcement yesterday is unsurprising given the uncertain climate, but he added that buyers are starting to emerge.

‘There’s interest in industrial properties, especially from owner occupiers who want to own their own business space,’ he said.

Perhaps the perception is that prices are more reasonable and lower than at the peak, he added, suggesting that more industrial sites may be activated for tender before the end of the year.

The reserve list for the second half of the year comprises nine sites with a total area of 19ha, said MTI.

Source: Straits Times, 3 July 2009

Terrace house in HDB flat

Financial planner Sivakumar Arumugam tells Debbie Yong how an outdoor garden and country-style decor make his first-floor HDB flat feel more like a terrace house.

Sivakumar Arumugam, 37
Financial planner
Lives in a 148 sq m HDB executive maisonette in Bishan
Lives with his wife Raji, 36, a customer service manager

I love my home because…
It is very accessible. I also love my neighbourhood and the sunny garden we have created outside our main door as our unit is on the first floor.

My decor theme is…
Country. My wife and I lead hectic working lives and the moment we walk through the front door, we feel we’ve left the world of modern living behind, and that relaxes us. My friends always tell me they feel like they are in Australia or Europe when they visit our home.

My favourite corner is…
The dining room because it is so calming and relaxing. It is where we spend much of our time. We like to sip coffee and read the newspapers there, especially on Sunday mornings.

I am most proud of…
The decor. We have been approached several times to have our home featured in home decor magazines. Passers-by always comment that our home is more like a terrace house. We have travelled all through the United States, Europe and Australia and the antique clocks, vases and lamps displayed all over our house are the souvenirs we have accumulated over the past nine years.

Will I sell it?
No, I won’t sell it unless an irresistible offer comes along.

Source: Sunday Times, 28 June 2009