Developers say: Mass-market and luxury homes 'will all be hit'

[Musicwhiz]

The Straits Times
Dec 8, 2011
PROPERTY MEASURES
Developers say: Mass-market and luxury homes 'will all be hit'

By Magdalen Ng

THE measures announced yesterday will hit developers aiming for the luxury market but mass-market builders will not escape either, said analysts.

High-end developers such as SC Global and Wing Tai could see demand slip as foreigners, who generally account for more than half of the sales in the upper-price brackets, will be hit by the additional 10 per cent stamp duty.

This is over and above the existing buyer's stamp duty of 3 per cent.

Independent research firm Sabio Global director Alan Lok said: 'Traditionally, the Chinese buyers come here because Singapore is considerably cheaper than Hong Kong, but a stamp duty of 13 per cent is quite drastic.

'This will definitely make them (foreign buyers) think twice about buying property here.'

The mass market will also feel the impact as Chinese buyers have been steadily moving into the suburbs so the stamp duty levy is likely to cool their buying.

While a decline in demand is almost certain, analysts and developers believe the measures will not do much to dampen property prices given that land is still pricey and construction costs are rising.

Property developer Roxy-Pacific executive chairman and chief executive Teo Hong Lim said: 'Well, it doesn't mean that just because sales are slow, we have to sell at a loss, right? We still have to break even.'

However, he does not think that the measures will affect his business very much as 50 per cent of his pipeline is made up of commercial - mainly retail and office - units.

He also added that foreign buyers only make up about 10 per cent of his clientele on average.

Mr Wong Heang Fine, chief executive of CapitaLand Residential Singapore, said: 'Given the uncertainty in current market outlook, the latest measures on additional buyer's stamp duty were unexpected. We will study the details and take them into consideration.'

While share prices of all developers are likely to slide today, Kim Eng analyst Wilson Liew believes the impact will not be that great for those with a more diversified business model.

'There will be weakness in the short term, but Capitaland for example has significant businesses in China, and that will be a buffer for them even if their Singapore business is affected,' he added.

[brattzz]

'Well, it doesn't mean that just because sales are slow, we have to sell at a loss, right? We still have to break even.'

RIGHT from the horses mouth...

[yeokiwi]

'Well, it doesn't mean that just because sales are slow, we have to sell at a loss, right? We still have to break even.'

RIGHT from the horses mouth...

The statement showed the confidence of the local property developers. Most of them have booked their sales and basically transferred their risks to the banks.
Therefore, I do not forsee any significant drop in properties' prices due to developers' inability to hold on to the units unless there is a tsunami bigger than the last 2008-09 crisis.

As for the foreigners, they may not be able to buy the properties directly but that do not stop them from participating in the real estate investment in Singapore indirectly.

In short, the gov is right to hammer these blood suckers from doing further damage to Singapore economy in the long term.
Ireland is a great example of an economy that is destroyed by properties' bubbles despite that the people are diligent and providing good services and products to the world.

[wsreader]

The additional buyer's stamp duty is targetting at foreigners. However, as reported in straits times, citizens of five countries, including the United States and Switzerland, could avoid paying the additional stamp duty when they purchase a property in Singapore due to tax treaties with the city-state. With such a leaky policy, some foreigners may continue to pocket the fat profit from their speculation in sg property.

[Musicwhiz]

The additional buyer's stamp duty is targetting at foreigners. However, as reported in straits times, citizens of five countries, including the United States and Switzerland, could avoid paying the additional stamp duty when they purchase a property in Singapore due to tax treaties with the city-state. With such a leaky policy, some foreigners may continue to pocket the fat profit from their speculation in sg property.

Yes, I read about that too, with some incredulity no doubt. I was just somehow glad they didn't include China and Indonesia as well!

If things get worse, just slap on a capital gains tax like in 1996. That would really drive the nail in the coffin!

[kichialo]

I would welcome more of such treaties with countries like Japan whose citizens are generally better mannered. No such treaties with China, India or other third world countries please.

[Ben]

This is a good and timely policy. Singaporean should be given priority to have a share our tiny island. And I think the govt is also quite smart in implementing this policy right now, instead of waiting as the economy is expected to slow down significantly. By then, they will not have a strong justification to implement this policy. And when things do turn ugly next year, the govt can start to undo all these cooling policies implemented over the last few years. By doing that, they may avoid having to come out with new incentives which may need to dig into reserves.

No policies is carved in stone, I am sure about that.

[corydorus]

I've never believed in upping the price of home that we are staying to feel the wealth effect. Is utter rubbish .

Add huge stress on our future generation family to have a place to call their home and a SLAVE to it. Watch out for politicans and businesses who says otherwise. The potent potion comes when both of them come together.

Kudos to Khaw. He must be in the "hated list" of many developers and probably some politicians.

I am vested in Wing Tai and Capitaland but I am still Glad Singapore made the right decision.

[brattzz]

If Khaw is on the hate-list, then MBT must be on the FAVORITE LIST!!!

[corydorus]

i heard rumor before on so and so has good sales but maybe fake news just to drive up demand.
Is this true and commonly practised among developers ?