Monday, April 30, 2012

For Sale: Lagoon View Blk 5000N #16, Full Sea View

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Govt monitoring ABSD reimbursing

Business Times: Mon, Apr 30
[SINGAPORE] Several developers are reimbursing the hefty additional buyer's stamp duty (ABSD) - imposed by the government late last year to cool the residential property market - in a bid to move sales in selected projects.

And the practice, which has created concerns about the possible distortion of property and loan values, has drawn the attention of regulators and raised the possibility of intervention should it get out of hand.

"As long as they do not distort prices, there is no need for the government to intervene against such business decisions and practices. We will therefore continue to monitor the market closely for now to ensure transparency," the Ministry of National Development (MND) said in response to BT queries.

The Monetary Authority of Singapore (MAS) also reiterated that consumers, when taking up home loans, should disclose to the bank any rebates or discounts received from the seller or any other party in the transaction.

The latest sales ploy of reimbursing the ABSD is a step beyond the usual marketing gimmicks of handing out furniture vouchers and giving upfront discounts to defray the buyer's stamp duty. If isolated, such reimbursements may not have a serious impact. But on a wide scale, the practice could sabotage the government's efforts to promote transparency in the market, industry watchers say.

These "discounts" could distort property prices as they are given only after a buyer has completed the transaction. This means sales caveats may not reflect the actual purchase price of the property, unlike upfront discounts which are worked into the reported transacted price.

Said one property consultant, who declined to be named: "The ABSD reimbursement is being made in this way so that it does not affect the pricing. If they give a discount on the price, then their pricing is affected, and the developers don't want that because it may upset their earlier buyers who did not get to enjoy the discount."

The steepest ABSD rate of 10 per cent applies to foreigners buying residential property in Singapore. The offer to reimburse the ABSD in full could amount to a hefty discount that is not reflected in the Urban Redevelopment Authority's (URA) records, he added.

The Real Estate Developers' Association of Singapore (Redas) said it "supports MND's position on fair and transparent practices which will enable homebuyers to make an informed decision".

Developers which have been reimbursing the ABSD include Cheung Kong (Holdings) Ltd, Far East Organization, Allgreen Properties and Aspial Corporation's World Class Land.

Some offer to reimburse fully the additional stamp duty charges, while others cover a part of it.

The projects involved range from high-end to mass-market developments. They include Marina Bay Suites in the Marina Bay area, which Cheung Kong is developing jointly with Hongkong Land and Keppel Land; Thomson Grand in Upper Thomson; and Holland Residences on Taman Warna in the Holland Road area.

Thomson Grand is a Cheung Kong project, while Holland Residences is being developed by Allgreen.

A spokesman from Property Enterprises Development (Singapore), Cheung Kong's subsidiary, said: "The reimbursement of ABSD will be payable to the purchasers upon the payment of the 20 per cent of the purchase price, the proof of the Certificate of Stamp Duty on the Agreement and the duly executed sales-and-purchase agreement."

Since introducing its reimbursement scheme in February, Cheung Kong has sold about 165 units at Thomson Grand. Roughly 10 per cent were sold to foreigners, with unit sizes ranging from around 900- 1,400 square feet. The units were sold at $1,250- 1,450 per square foot.

An Allgreen spokesman also confirmed it was offering partial ABSD reimbursements to affected buyers of Holland Residences units.

At Fragrance Group's Parc Rosewood in Woodlands, sales agents said their commissions were high enough for them to offer ABSD reimbursements out of their own pocket.

Marina Bay Suites' manager, Raffles Quay Asset Management, would only say that "more than 70 per cent of the units have been sold and we continue to sell our apartments through private previews and regional road shows, some of which were done in partnership with marketing agents".

Keppel Land, however, said it does not offer ABSD reimbursements for its own projects.

Said Far East's chief operating officer of property sales, Chia Boon Kuah: "Our marketing programme seeks to build a stronger base of long-term buyers for the organisation. It could include discounts from the listed price, stamp duty subsidies and furniture vouchers.

"The amount varies according to different projects as well as marketing phases. For instance, some of our projects with stamp duty subsidies are Hillsta, The Scotts Tower and Seawind."

Aside from price transparency, the practice of reimbursing the ABSD has raised the concern that it could distort loan values.

"Developers may provide discounts, reimbursements or incentives such as furniture vouchers," said Ku Swee Yong, CEO of International Property Advisor (IPA). "Buyers who take loans should declare the value of such incentives to the banks when they apply for the loan by giving the bankers the Offer To Purchase and all other side letters. Otherwise, the loan-to-value ratios might exceed MAS's limit."

When contacted, MAS said: "When taking up a housing loan, the consumer is required to disclose to the bank whether he has received any rebates or discounts from the seller or any other party, and if so, the amount of the rebate or discount. The bank will deduct any discount, rebate or any other benefit offered from the purchase price before calculating the loan amount."..
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Team Marshe
Martin Koh/ Sherry Tang
9383-3992/ 9844-4400

Commercial space boom set to chug into KL Sentral

Business Times: Mon, Apr 30
THE transit hub of KL Sentral is expected to see a boom in commercial space this year, when three million square feet or 45 per cent of Kuala Lumpur's new office space comes onto the market.

An estimated 6.7 million sq ft of net lettable space is scheduled to be completed in the greater Kuala Lumpur area, with about 3.4 million sq ft located in suburban Kuala Lumpur, according to CBRE Malaysia.

KL Sentral will house 80 per cent of the suburban KL supply, the real estate consultancy said in a fourth-quarter 2011 report.

KL Sentral is a key beneficiary of the current trend where tenants are searching for cheaper rentals or less traffic congestion, and are relocating from the city centre to suburban offices. Projections indicate this trend is likely to accelerate in coming years.

Last year, KL Sentral gained over two million sq ft of office space.

As a transit hub - its train station is a major point for the commuter, light rail transit and KLIA Express - KL Sentral has grown exponentially in the past few years with multinational companies signing on and because of the area's Multimedia Super Corridor status. Firms based in the KL Sentral area are entitled to certain tax benefits if they meet the criteria.

Kuala Lumpur Sentral CBD, as it is called by government-linked developer MRCB, is a "fully-planned CBD" spanning 72 acres of integrated development comprising Grade A offices, hotels, retail and luxury condominiums.

Even so, the effect of so much commercial space coming onstream in a relatively short period remains to be seen...
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Team Marshe
Martin Koh/ Sherry Tang
9383-3992/ 9844-4400

Fall in UIC profit, SingLand's gain rises

Straits Times: Mon, Apr 30
REAL-ESTATE group United Industrial Corp (UIC) has posted a 6 per cent drop in first-quarter net profit to $44.3 million.

This was despite revenue for the three months ended on March 31 rising 19 per cent to $233.6 million.

The increase in revenue was due to higher sales of trading properties and improved revenue from hotel operations. This was partially offset by lower rental income.

Despite higher revenue, net profit fell owing to the absence of contribution from Park Natura and UIC Building.

On its residential projects, increased sales recognised for The Trizon were moderated by the absence of contributions from Park Natura, which was completed in May last year.

Earnings per share eased to 3.2 cents from 3.4 cents previously while net asset value per share grew by three cents to $3.16 when compared to Dec 31.

Meanwhile, subsidiary Singapore Land (SingLand) has reported a 14 per cent rise in first-quarter net profit to $55.5 million, on the back of a 41 per cent jump in revenue to $195.5 million.

The increase in turnover was due mainly to higher sales of trading properties.

Sales at The Trizon more than doubled to $104.2 million, thanks to additional units sold and a higher percentage of completion of the development.

Earnings per share swelled to 13.5 cents from 11.8 cents previously while net asset value per share firmed to $11.78 from $11.66 as at Dec 31.

Looking ahead, both UIC and SingLand said the growing supply of new and secondary office space amid an uncertain global economic outlook will continue to put pressure on office rental rates...
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Team Marshe
Martin Koh/ Sherry Tang
9383-3992/ 9844-4400