RESIDENTIAL MARKET
Developers get more room for en bloc sites
Developers who buy residential en bloc sale sites are getting more time to meet the government's deadlines to finish developing their sites.
This is to take into account the time taken to get a collective sale order from the Strata Titles Board (STB) or the High Court.
The changes are in response to feedback from the industry which had asked for a fairer treatment of the rules, and are expected to give some breather to residential en bloc sales.
It takes several months for the collective sale order to be granted and this currently eats into the five-year deadline set for developers. The changes mean the deadline will start from the date of the en bloc sale order - instead of much earlier under current rules.
The changes involve two regulations under the ambits of the ministries of law and finance.
The first concerns foreign developers who buy residential en bloc sale sites for which they are given a five-year project completion period (PCP). The PCP currently starts from the date of the issue of a Qualifying Certificate (QC), which foreign developers must obtain from the authorities to buy private residential land in Singapore.
Under the change announced by the Singapore Land Authority (a statutory board under MinLaw), for QCs issued on or after July 1, 2012, the PCP for residential en bloc sites will now start from the date of the collective sale order.
The refinement "is to enable the developer to have the full PCP to complete the project", the SLA said yesterday in a circular to the Real Estate Developers' Association of Singapore (Redas), law firms and law organisations.
The Ministry of Finance (MOF) said that it would adopt the same approach as MinLaw with regard to the additional buyer's stamp duty (ABSD). To avoid paying the 10 per cent ABSD for the purchase of residential land, developers have to undertake to complete developing the project and selling all the residential units in it within five years of the date of contract or agreement to purchase the site. In the case of collective sales, this would be the date when the site is awarded by the en bloc sales committee.
Under the change, for residential sites bought through collective sales from July 1, 2012, "the start date of the five-year period for the completion and sale of all residential units to qualify for ABSD remission will start from the date of the collective sale order", MOF said yesterday.
The 10 per cent ABSD is payable by all developers - even those who do not have foreign shareholders or directors - and applies to all residential site purchases, including Government Land Sale plots bought on or after Dec 8, 2011.
Developers and en bloc sale agents have requested the authorities to make the changes.
Under the Residential Property Act, housing developers whose shareholders and directors are not all Singapore citizens have to get a QC from SLA's Land Dealings (Approval) Unit (LDAU) to buy private residential property for development. This rule is aimed at controlling foreign ownership of land here. One of the conditions of the QC is the five-year PCP.
A point to note about the tweaking of the start date of the PCP under a QC to buy residential en bloc sale sites is that it is aimed at fairness and equity of an existing policy. The current rules will continue to ensure that foreign companies which develop residential properties in Singapore dispose of the developed units and not hold on to them for investment.
Separately, SLA in its circular yesterday also made an announcement pertaining to developers who had responded to the government's call in 2008 and deferred redevelopment of en bloc sale sites they had bought and instead rented out the units in the existing development to alleviate a shortage of rental homes at the time. LDAU will grant a one-time extension of the PCP (upon application and without charge) based on how long these developers rented out their units.
Source: Business Times –4 December 2012
Muis sells four properties on 199-year leases
Four properties owned by The Islamic Religious Council of Singapore (Muis) have been put up for sale by public tender last week. However, they are all being sold on a unique leasehold of 199-years.
Such carved out leases are long-term investment strategies which are calculated based on the future needs of the organisation.
Two of the four properties are intermediate terrace houses located along Duku Road with an approximate land area of 2,000 sq ft.
According to information on Muis's website, the terrace houses were willed by Shaikh Ahmad Bin Bakar Bin Abdullah Jabbar in July 1947 and net proceeds from the property will be used to pay for expenses of Masjid Mydin, the mosque located at the corner of Jalan Lapang and Jalan Sayang.
Expenses include salaries of the clergyman, repair works, electrical bills and the maintenance and education of orphans of Muslim worshippers at the mosque.
The other two properties up for sale are inter-terrace conserved shophouses located at Rowell Road and Upper Weld Road.
Both shophouses have an approximate land area of 1,100 sq ft and an approximate built up area of 2,100 sq ft. The properties have been zoned for commercial use within the Little India conservation area.
The Rowell Road shophouse was purchased on behalf of the Omar Alkaff mosque in Yemen and net profits will be used for the general purposes and upkeep of the mosque in Tarim, Yemen.
The Upper Weld Road shophouse is part of a collective trust willed by Shaik Abdullah Bin Said Bin Omar Makarim in 1954 and includes two other properties in the Serangoon Road area.
Proceeds from the sale of the shophouse at 50 Upper Weld Road will be used to fund mosques and Islamic schools in Singapore which are in need of assistance as well as provided to the less fortunate in Mecca and Medina.
Source: Business Times –4 December 2012
INDUSTRIAL MARKET
Rising retail rents creeping into industrial sector
Far from the madding crowds of Singapore's glitzy shopping malls, Cynthia Neo runs a bridal boutique tucked away in a nondescript industrial building in an old housing estate, pushed off the high street by pricey retail rents.
The owner of J&C Bridal Collections pays one quarter of the rent she once shelled out for a shop in the heart of Chinatown, where a string of restaurants, hotels and retail shops meant a steady stream of shoppers.
But rising rents may be creeping into the industrial parks too. Industrial property prices have surged 27 per cent this year after a government crackdown on residential investment pushed speculators into factories and warehouses.
Residential property developers are starting to wade into the light industrial market too, trying out upscale "lifestyle" office parks that look like posh condominiums. Some established industrial players say that valuations are getting a bit too rich. "It's been our assessment that the market has started to get a little hot," said Nick McGrath, chief executive officer of Singapore-listed AIMS AMP Capital Industrial Reit.
"We've used the strength of the market in the last 12 months to sell properties rather than buy," Mr McGrath said, adding that the real estate investment trust has shifted its focus to upgrading existing assets instead of buying more.
Singapore's government has introduced six rounds of measures to cool rising home prices, including an additional stamp duty aimed at foreign buyers and a cap on tenures for all new residential property loans.
Those moves succeeded in capping property price increases this year - the residential market is up just 0.96 per cent through October - but they did not bring about the 10 per cent fall that some analysts had predicted.
Now the government is turning its attention to industrial property. To make land prices more affordable to businesses, in July, it capped lease terms for industrial sites sold under a government land sales programme at 30 years instead of 60.
Singapore's light industrial parks, typically simple mid-rise buildings with a few standard facilities such as cargo lifts and unloading bays, are home to small and mid-sized startups, wholesale businesses and back-end offices.
But rising shop rents have made them increasingly attractive to store owners who would normally prefer customer-friendly malls or pedestrian-filled shopping streets, and some have started converting part of the industrial space for retail.
The rising industrial property prices have not fully filtered through to rents in these buildings, which are up a relatively modest 6 per cent this year, but when long-term leases are renegotiated, tenants may be in for some nasty shocks.
Singapore Member of Parliament and entrepreneur Inderjit Singh asked the government last month what its plan was to keep industrial land affordable for small and medium-sized enterprises.
Local media reported that the response from Minister for Trade and Industry Lim Hng Kiang was that rising industrial rents have not dented Singapore's competitiveness.
Mr McGrath said that he has observed more investors speculating in the industrial market's strata subdivided space, where carved-up smaller units have commanded per square foot valuations some three to six times more than his warehouses.
The sharp rise in industrial property prices has rung alarm bells for some, but attracted interest from developers new to this space. Construction firm Hock Lian Seng Holdings Ltd won a bid in June to develop a site in an industrial area in Singapore's east.
Residential developers are also getting into the industrial game - and bringing some homey touches with them.
Oxley Holdings Ltd, which has built residential projects with units selling for $2 million apiece, started developing "lifestyle" industrial properties last year - complete with swimming pools, gyms and rooftop gardens.
It has launched four such projects, two of which have been fully sold, indicating strong demand for strata-title units despite high valuations.
Source: Business Times –4 December 2012
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