Thursday, February 28, 2013

Samsung Hub's 14th floor up for sale at $43.3m

THE 14th floor of the Samsung Hub building in Church Street is up for sale at $43.3 million
The Straits Times - February 26, 2013

THE 14th floor of the Samsung Hub building in Church Street is up for sale at $43.3 million.

The 13,110 sq ft floor space is divided into four individual strata titles, with areas ranging from 2,906 sq ft to 3,875 sq ft.

The four strata titles will be sold to a single buyer because one tenant occupies the whole floor of the building in the Central Business District, said CBRE.

An American law firm has been renting the floor for more than three years. Its lease will expire at the end of next year.

Based on the asking price of about $3,300 per sq ft (psf), CBRE has estimated the annual gross yield to be 3 per cent.

The 16th floor was sold to a local fund for $39.4 million or $3,000 psf in September last year, setting a record price for the building.

The caveat was lodged in December.

"The market has gone up between September 2012 and February 2013," CBRE said.

The asking price of $3,300 psf for the 14th floor would set a new high for the building if it is realised.

Mr Jeremy Lake, CBRE's executive director of investment properties, said yesterday that the four separate strata titles would allow the buyers flexibility should they eventually decide to sell.

The building is owned by Church Street Holdings and was completed in 2005.

It has a total strata area of 299,753 sq ft across its 30 storeys as well as 177 carpark spaces.

The tender closes on March 28.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

Higher taxes on high-end and investment homes

THE well-off who own luxury residences and investment homes will pay higher property taxes
The Straits Times - February 26, 2013

THE well-off who own luxury residences and investment homes will pay higher property taxes.

These will be introduced in phases over two years, starting Jan 1 next year.

Most owner-occupied homes, however, will enjoy a lower tax rate, said Deputy Prime Minister Tharman Shanmugaratnam yesterday when he presented the 2013 Budget.

"This is fair. The property tax is a wealth tax and is applied (to homes) irrespective of whether lived in, vacant or rented out. Those who live in the most expensive homes should pay more property tax than others," he said.

So, owner-occupiers of landed homes in central areas with an annual value of $150,000, for instance, will stump out 69 per cent more in property tax or an additional $5,120 a year. The annual value is the estimated annual rent the property may fetch.

But mindful that some retirees may be cash poor while living in homes of significant value, Mr Tharman said the new tax structure will ensure that most retirees pay less in property tax.

The new tax structure, which he tagged a "more progressive property tax", will swell government coffers by an additional $53 million when it takes effect fully on Jan 1, 2015.

But it will allow the Government to achieve greater social equity without hurting Singapore's economic competitiveness or reducing the incentives for enterprise, the minister added.

Besides new tax rates, the tax bands will also undergo changes.

The zero property tax band will be widened to the first $8,000 of a home's annual value, from $6,000. This will allow 950,000 owner-occupied homes to enjoy some tax savings, he said.

Homes with annual values of $12,000, like a five-room Housing Board flat, will save $80, which works out to 33 per cent of their current bill.

These savings will reduce property tax revenue by $44 million.

Besides the existing zero, 4 and 6 per cent tax rates, five higher rates will be introduced: ranging from 8 per cent to 16 per cent.

This means the top 1 per cent of owner-occupied homes - or 12,000 units - will pay more taxes, contributing an extra $25 million in revenue. But the increases will be small except for those at the very top.

For investment homes, which are not owner-occupied, new marginal property tax rates of 12 per cent to 20 per cent will be levied instead of the current flat 10 per cent rate across the board.

So while homes with annual values of $30,000 and below will continue paying a 10 per cent tax, investment homes with an annual value of more than $30,000 will pay higher taxes of between 12 per cent to 20 per cent.

These properties belong to the top one-third of all non-owner- occupied homes, or the top half of private homes, said Mr Tharman.

However, most investment suburban condominiums will see a small increase in property tax of about $100 to $300 per year with increases only "significant" for high-end properties.

These changes for investment homes will net the Government $72 million more in revenue.

Property tax rates for nonresidential properties will remain unchanged at flat 10 per cent. Tax refunds on vacant properties will be removed to provide consistency and equity in tax treatment, said Mr Tharman.

Real estate investor Sameer Aswani, 37, who owns investment homes in such upmarket condominiums as The Sail and Marina Bay Residences, said that from a businessman's point of view, the higher taxes are obviously not preferred. "But from a government's point of view, in the light of inflation, they have to take care of the 80 per cent who own HDB flats.

"If you have the money to buy high-end homes then maybe it's fair that you pay more taxes."

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

Big-ticket homes to feel harsher tax heat

Non owner-occupied premises will see the highest rates in property taxes
The Business Times - February 26, 2013

OWNERS of high-end homes will face higher taxes, with investment properties bearing the brunt of the increase.

In a shift towards a more progressive tax structure, the tax band for owner-occupied homes was expanded from the current 0 per cent, 4 per cent, and 6 per cent tax rates, to encompass a a wider range of rates, ranging from 0 per cent to 16 per cent.

Under the new tiered rates, an owner-occupied landed property in the central area with an annual value (AV) - estimated annual rent - of $150,000 will see an increase in property tax of $5,120 per year.

Marginal property taxes for residential properties that are not owner-occupied and, therefore, owned for investment purposes, will be increased to 12 per cent to 20 per cent, from the current 10 per cent.

At the high end, a landed property in the central area with AV of $150,000 will see an increase in property tax of $9,000 a year (60 per cent increase). Suburban condominiums, on the other hand, will see a smaller increase of about $100 to $300 per year.

SLP International's head of research Nicholas Mak noted that while the percentage increase in taxes specific to luxury homes appears big, the quantum increase is "marginal" compared with the rental income received.

"Most high-end property buyers who can afford luxury properties will likely take the increase in property tax in their stride," he said.

Petra Blazkova, head of CBRE Research, Singapore and South-east Asia, said: "The graduated property tax on luxury properties... may put pressure on the holding cost of investment properties held by developers and investors. At an asset level we are likely to see yields compressing, even though only marginally."

Savills Singapore research head Alan Cheong too said he does not expect the new rates to impact rents significantly, given that rents are more dependent on demand and supply.

"However, taken in circumspect, it appears that with the higher marginal tax rates added on to personal taxes, owning a high-end real estate here for investment is becoming less of an attractive proposition than investing in one in a developed economy where taxes are higher. This will encourage more to take their capital overseas," said Mr Cheong.

Another possible effect is that property owners may switch to buying commercial properties given that property tax rates for non-residential properties remains unchanged at 10 per cent, said KPMG tax partner Leonard Ong.

"This will drive up the cost of commercial properties and overall business costs," said Mr Ong.

"We do not think this revision in tax rates will have any significant impact on the residential market. Some investors may choose mass market homes over the high-end segment as a result of the potential tax savings but we do not think there will be any general shift in demand," said Jones Lang LaSalle's head of research, South-east Asia, Chua Yang Liang.

The Budget is clearly about anchoring Singaporeans at the core, said Ho Mui Peng, tax partner with PricewaterhouseCoopers Services.

"The widening income disparity is managed somewhat with loading property tax increases, to the high-end property owners and increase in additional registration fees for high-end cars," she said.

Indeed, the more aggressive wealth tax means that the majority of owner-occupied residential properties will enjoy lower tax rates.

Specifically, some 950,000 owner-occupied properties will enjoy tax savings, with the widening of the 0 per cent property tax rate band from the first $6,000 of annual value, to $8,000. This means that homes with annual values of $12,000 (such as a five-room HDB flat) will experience tax savings of $80 (33 per cent of their current property tax bill).

All one- and two-bedroom HDB flats will continue to pay no property tax.

The revision in tax rates is a redistribution of tax liability from the cheaper asset class to the more expensive asset class, said Lee Liat Yeang, real estate partner at Rodyk & Davidson LLP.

"As long as the property is for owner-occupation, with AV below $55,000, you're not affected," he said. "With an AV of more than $50,000, your rental has to be pretty high, at least $7,000 per month... So it's a redistribution of tax liability and burden from the poorer class to the wealthy class."

The new tax structure for residential properties will be phased in over two years starting from Jan 1, 2014. The revised rates will take full effect from Jan 1, 2015.

Separately, the concession which provides tax refunds on vacant properties has been abolished, and will take effect from Jan 1, 2014.

Savills's Mr Cheong said: "This may have serious implications on the rental market in that it could force individuals or companies, to (dispose of) their vacant units onto the market at a time when rental budgets are constrained and the net number of employment passes issued have not been growing."

Added SLP's Mr Mak: "The impact is greater on owners who are holding on to properties for generating rental income, namely, real estate investment trusts. But the impact on the residential property market is minimal."

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

Woodlands to become waterfront metropolis

70ha of waterfront for business, lifestyle and residential uses; 30ha for retail hub
The Straits Times - February 25, 2013

RESIDENTS in northern Singapore may soon get their own mini-metropolis when Woodlands is transformed into a waterfront destination that is also rich in jobs.

These preliminary plans were unveiled yesterday by National Development Minister Khaw Boon Wan for the regional centre that will serve as a major commercial node in the north.

The centre, stretching from the north coast fronting the Strait of Johor to the centre of Woodlands, offers 100ha for development.

It will have two distinct precincts. The 70ha Woodlands North Coast, an area between Republic Polytechnic and Woodlands Waterfront, is slated to be turned into a lush waterfront environment with a mix of business, residential and lifestyle uses.

The other precinct - Woodlands Central - a 30ha area around Woodlands MRT station and Causeway Point mall, is envisaged as a pedestrian-friendly retail hub. Low-rise commercial developments will have activity-generating uses on the first storey to create a vibrant street experience.

Detailed plans will be unveiled later in the year as part of the Urban Redevelopment Authority's (URA) Draft Master Plan.

It typically takes 15 to 20 years for a centre to mature as time is needed to introduce detailed land-use plans, sell sites and build infrastructure. Success also depends on factors such as the economic climate and demand.

"We already have Causeway Point, but we need to build up much more. So there will be more shopping malls, more HDB (flats), BTO (flats), more private condos, executive condominiums and, of course, commercial activities and therefore jobs," said Mr Khaw. He was speaking to about 700 people who had turned up for a community event in Woodlands yesterday.

He added that jobs created will mean that "they don't have to travel very far to go to their workplaces".

Woodlands town now has about 230,000 residents.

Singapore's first two regional centres were launched in Tampines in 1992 and in Jurong in 2008. Plans for a fourth, in Seletar, will be announced in due course.

Regional centres, an idea announced in 1991, aim to decentralise Singapore to guard against congestion and over-development in the Central Business District (CBD) and the Marina Bay areas.

The Woodlands Regional Centre is also part of the new North Coast Innovation Corridor - a commercial belt from Woodlands and Sembawang to the future Seletar Regional Centre and Punggol.

Analysts said the new centre is likely to attract firms that complement labour-intensive industries across the Causeway.

"These could be companies that do research and development, or product design. That could be done here, but they may have their labour-intensive production and distribution arms in Iskandar," said Mr Danny Yeo, group managing director of property consultancy Knight Frank. Iskandar in Johor has been earmarked for projects such as retail, industry and education.

"It's the best of both worlds," he added, pointing to the new transport connections that could ease the flow of workers between both countries.

Sembawang GRC Member of Parliament Hawazi Daipi has high hopes that the plans will inject more life into Woodlands, which currently has only one mall.

He also suggested that the URA turn a temporary coastal promenade in Woodlands into a permanent feature, and that public courtyards be built.

Woodlands resident Vivekanand Ayyasami, 38, hopes the area will become a regional attraction. The IT professional and father of one, who lives in a three-room flat, spends 40 minutes getting to his CBD office by train. "If I could have a good job near my home, I would definitely consider it."

The URA has launched a website ( where the public can find out more and give feedback on preliminary plans.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)