B is for Budget and BT Property Week
FINANCE Minister Lawrence Wong delivered a Budget with broad-based personal tax reliefs and social support, as well as moves to ease Singapore-based companies into the coming BEPS regime. Homeowners will cheer at the revisions in annual value bands, which raise property tax thresholds and should result in “the same or lower” tax bills in 2025 for many.
Private property owners have baulked at seeing their property tax bills shoot up this year, after a two-tiered tax hike designed as a de facto wealth tax kicked in. #richpeopleproblems? Sure, but the suddenly bigger burden weighs heavily on a large number of Singaporeans who, as owner-occupiers, have not gained from rents surging over the last two years.
Also, for the demographic of older Singaporeans whose key assets are their owner-occupied homes, lack of cash flow strains their ability to pay for costs such as property tax. In his post-Budget commentary, Leslie Yee points out that lower property taxes help, but homeowners need to pay heed to the costs of holding property. Perhaps what’s needed is a cold-eyed assessment of whether one can afford to hang on to one’s private property, and sell to move to a “right-sized” home while one still has the energy to move house and age with dignity.
One concession in the Additional Buyer’s Stamp Duty (ABSD) regime rolled out in the Budget may help some make that decision. Singaporean seniors will be able to claim a refund on ABSD if they are downgrading to a lower-value property.
The government also trimmed ABSD payable for housing developers if they are not able to sell out their residential projects within five years. The small change looks like an “olive branch” extended to developers who have campaigned for years on this front. But it won’t offer much relief to market players facing a wall of increased supply and slower demand.
In case you missed anything, catch up on all our Budget coverage here. Is this an election Budget? It does look like it, writes Janice Heng.
BT Property Week 2024
It’s the second week of the Lunar New Year, and we have stepped into the Dragon’s den. Should you stay or should you go? Don’t miss what we’ve lined up for our BT Property Week 2024, to help you navigate the real estate markets this year. For a week from Wednesday (Feb 21), we’ll be publishing expert views and insights on all sectors of Singapore property, and having a look at where real-estate-tuned capital is moving to and from.
On Saturday (Feb 24), join BT senior correspondent Leslie Yee in conversation with Ismail Gafoor, PropNex CEO; Justin Quek, OrangeTee CEO; and Alan Cheong, Savills Singapore executive director of research and consultancy. Is this the right time to buy? Where should first-time buyers look? Should you pay ABSD? Residential, commercial, or industrial - which sector offers best prospects? Get these questions answered and unlock opportunities at our BT Property Outlook seminar this weekend.
State of market
Developers saw a slow start to the year, with the lowest January new home sales in 15 years. Launch take-up rates at the two new private condo projects marketed during the month - Hillhaven and The Arcady at Boon Keng - were below 30 per cent. Some 12,000 units are expected to be brought to market before the year is out. Two more projects in the Lentor Hills area are next. TID’s Lentoria started previews on Feb 17 at prices starting from S$1,965 psf, while GuocoLand’s Lentor Mansion will follow soon after, in March.
Higher ABSD rates rolled out last year have put a hard brake on sales. Foreign buyers and those considering property for investment redid their sums and stepped away. Residual demand from local househunters is feeding into the market at a fairly stable level. But new supply is set to ramp up, and it remains to be seen what a steady state will look like.
Certain locations undeniably appeal more to foreign buyers than locals seeking homes that are close to schools, local markets and inexpensive food. Leslie Yee makes a case for lower ABSD for foreigners buying into projects that may be less popular with locals, in areas such as Marina South, Sentosa and possibly parts of the Downtown Core. He proposes that the ABSD rate be halved from 60 per cent to 30 per cent for specific areas. Read why here.
Owners at Pine Grove have cut the reserve price for their en bloc bid by close to 9 per cent to S$1.78 billion. The condo’s most recent collective sale offer closed in November with no deal done. Pine Grove sits on a massive 893,218 square feet plot with potential to yield 2,000 new units. A land betterment charge (LBC) estimated at S$975 million would be payable to top up the 99-year lease and increase the land use, which would bring the land cost to about S$1,335 per square foot per plot ratio.
Oops!
The Securities Industry Council (SIC) disclosed on Feb 15 that Allen & Gledhill (A&G) and DBS had breached the Singapore Code on Take-overs and Mergers, while acting as advisers to the manager of Mapletree Commercial Trust (MCT) in the trust’s merger with Mapletree North Asia Commercial Trust in 2022. A&G was acting as legal adviser, and DBS, the financial adviser to MCT’s manager for the deal.
The breaches involved a whitewash waiver to make the general offer for a trust scheme of arrangement, which resulted in the merged entity known as Mapletree Pan Asia Commercial Trust today. A “key partner” of the A&G team advised MCT’s manager wrongly on Nov 24, 2021, by saying that a whitewash waiver was not required for the merger. Wrists were slapped, and while the SIC said “both A&G and DBS fell short of the standards expected of advisers”, no further action was taken as they took “prompt action” to mitigate the breaches.
