Busted: Money laundering and the lottery effect
ON TUESDAY, Aug 15, some 400 law enforcement officers descended on sprawling bungalows and luxury apartments nestled in gentrified neighbourhoods. In one fell swoop, they arrested 10 people allegedly connected to a Fujian money laundering syndicate.
Police seized 105 properties, 50 cars (many Bentleys), hundreds of watches and luxury bags (two rare Patek Philippes worth S$8 million each and umpteen Birkins), fine wines, and oh, some loose change (S$23 million in cash).
In so doing, they lifted the veil on what many have suspected for years - that illicit money had been flowing hard and fast into Singapore and was parked under our noses.
Two of the Chinese natives nabbed had 13 properties and not a few cars each to their names; holdings valued at roughly S$120 million each. Members of the group had picked up properties in prime projects like The Marq on Paterson Hill, New Futura, Gramercy Park, Wallich Residences as well as houses on Sentosa since 2017, Jessie Lim reports.
In the story so far, S$831 million in suspected proceeds of crime landed in real estate in Singapore, hidden in plain sight.
That this had been going on for at least five years before it was exposed raises more questions than it answers. There are rules in place for checks on fund flows and property deals, for both banks and the real estate trade.
The 105 property transactions surfaced so far - ranging in size from a relatively innocuous S$2 million, to deals in the S$20 million to S$40 million range, to an eyebrow-raising “bulk buy” of S$85 million - seem to have slipped through the net. How many more will be found out, and who will be held accountable?
Keeping it public
The government put out a clear message in its rework of Singapore’s public housing model, Ry-Anne Lim reports. HDB flats are to be reserved and priced for those looking for a home to live in; not to rent out, not to invest in, and not to flip for quick capital gains. Over the years, market values of both resale and new flats in popular mature estates zoomed up, and prices in some areas have in fact caught up with private property.
The new model is the latest in a series of interventions designed to tame housing prices as cries got louder that HDB flats were creeping into unaffordable territory and private property was out of reach. Many - justifiably - maintain that public housing must be accessible to all, the system must be fair, and those with means should not be allowed to profit from it.
Policy changes were also shaped to nudge a reset of the thinking that the road to wealth is paved with property.
The latest changes in HDB rules rightly emphasise that public housing homes are for living in. It’s undeniable, however, that property is a major tool for wealth creation. Leslie Yee discusses how the new HDB model will put a dent in households’ ability to move up the housing - and wealth - ladder.
The Standard/Plus/Prime framework and its rules attached could also see demand being funnelled into the existing HDB flats that are free from the new curbs. It may also shrink the upgrader pool for the private housing market.
Cooling measures in their various iterations have surely squashed sentiment in recent months. Easing prices and abundant supply are good news for househunters. For developers, not so much.
The combined pressure of higher land prices and construction costs, elevated interest rates and slowing property sales means risk has escalated significantly for property companies. Profit margins are thin. Some projects now face losses if they do not sell out within the five-year timeline that developers have before they have to stump up a payment of 35 per cent in stamp duty.
Instead of competing with one another to buy land and then find buyers for all the housing units in the project, it now makes sense for developers to collaborate, writes Kalpana Rashiwala in her Hock Lock Siew column.
Deals done
An office floor at the freehold Nomu building in Handy Road, next to The Cathay, is being sold for nearly S$24 million. An entity linked to IMC, the shipping business founded by the late Frank Tsao, is paying S$3,790 per square foot on strata area of 6,329 sq ft. Other business families are transacting shophouses. 5/5A Ann Siang Road is being sold for S$32 million, 60 Serangoon Garden Way for S$13.5 million, 41 Mosque Street for S$15.6 million, and 34 Keong Saik Road for S$15.5 million.
The Tampines North building that served as the headquarters of failed online luxury marketplace Reebonz was sold for S$39 million, after the company went into liquidation nearly two years ago. The buyer is company controlled by the Tan family behind Sunray Woodcraft Construction, one of Singapore’s biggest interior fit-out, addition and alteration works specialists.
News in Reits
Many listed real estate investment trusts (Reits) and business trusts are hungry for acquisitions, but have little retained earnings to fund purchases. With debt still very costly, some raise funds with new equity - some at below book value or prevailing market price - to the chagrin of investors. In The Level Ground, Leslie Yee spells out why Reits and business trusts should avoid raising new equity to fund acquisitions.
In other headlines:
CapitaLand Ascendas Reit acquires fifth UK data centre for £125.1 million
Dasin Retail Trust receives notice of default for loan facility of up to S$430 million
