(6) Good Class Bungalows (GCB) prices to climb further
In April 2007, a 15,075 sq ft GCB at Dalvy Road was sold for $1,091 psf or $16.45 million in absolute price. This is a record unit land price for a GCB since the turn of the millennium. Just a year ago, average land prices for Good Class Bungalows (GCBs) were between $500 and $600 psf. 

At Chatsworth GCBA, a private individual recently bought seven GCB land parcels from Hong Leong Group at one breath at prices of up to $800 psf or a total price of more than $80 million. This price is almost double the $408 psf set by the developer more than a year ago when it started to sell the collection of 19 freehold land parcels. It is believed that all the 19 land parcels have been sold out.

In the first quarter of 2007, a total of 26 GCBs were transacted and they totalled almost $292 million. This works out to be an average price of $577 psf, an increase of 15% from the $503 psf average for last year's 128 deals totalling $1.3 billion.

Since more than 70% of GCBs are owned by citizens, the activities in this market segment often acts as a barometer of the economy at large.

(7) Investment sales reach $21.4b in first 6 months
Investment sales in Singapore's property sector since January have totalled $21.4 billion, achieving yet another ground-breaking record. This is almost 50% higher than last year.

However, the value of sale done in the second quarter was slightly weakened at $9.7 billion, down from $11.7 billion in the first quarter of this year probably due to a higher development charge rate that was revised in March. It may be further weakened due to the sudden increase of DC rate in July this year.

The private sector accounted for 86%, or $18.5 billion. 68% of all investment sales so far had been done in the private residential sector. A whopping $7.9 billion from a total of 67 collective sales since January were responsible for the feat.

Office sales came in a distant second, accounting for 23% or $4.8 billion of the total sale; and Government land sale (GLS) programme made up the rest.  The figures below augur well for 2007.

Table 5

(8) Government revenues from Stamp duty up
The main contributor of stamp duty is real estate transactions. This year, due to the sharp rise in property prices, IRAS looks set to have a vintage harvest in stamp duty.

The $1.7 billion stamp duty collected in just the first five months of this year is already higher than the $1.3 billion collected for the whole of 2006. The all-time record in stamp duty collection was $1.8 billion in 1996. (There was no REIT in 1996)

Judging from the bullishness of the market, there might be more than 30,000 private homes transactions this year. The average value of each home is also likely to be higher than in the past and therefore pushing up the total revenue from stamp duty.

(9) Number of new homes headed for a record
As many as 47 projects with an estimated 7,000 units will be launched in the second half of this year – making this year a vintage year as far as number of units sold is concerned. In 2006, developers sold a record high of 11,147 new homes for the whole year.

So far, 9,100 new units have been sold this year. As such, experts predict that there will be at least 30% to 40% increase over last year’s sale figure.

However, some of the developers may hold back their launches for better prices next year as the economic forecast for next year is even better in the run up to the opening of the integrated resorts.

There are more and more foreign involvements in every aspect of Singapore’s recent development.

(1) Singapore is favourite among foreign investment funds
Up to late May this year, about US$1.1 billion of foreign investment funds was poured into Singapore’s stock market. It could be attributed to a strategy switch by foreign investors, which have been pulling money out of the over-heating China and Hong Kong in favour of a safer Singapore. In May 2007 alone, US$100.4 million was re-routed to Singapore related funds.

This explained the bull-run across the region, with the local Straits Times Index smashing records after records this year.

(2) Singapore-managed assets reached $891b
According to a MAS’ survey of the asset management industry, assets managed by Singapore-based fund managers reached $891 billion for the whole of 2006, compared to $720 billion a year earlier.

The influx of cash has also meant the entry of new firms to manage the funds, with a net increase of 16 asset management companies last year, bringing the total to 141.

The number of hedge fund managers based in Singapore rose sharply to about 190 at end-2006. In total, they managed more than $40 billion worth of assets - a 150% increase from 2005.

(3) More foreigners buying sub-sale units
In the first half of this year, a total of 241 units were sub-sold to Indonesians, Malaysians, Australians, British and Indians, in that order. The number of subsale units also reflects a 35% increase compared to the last quarter of 2006. It is also the highest number since the previous property bull-run which ended in 1996.

The Sail and Icon were more attractive to foreigners in the subsale market in the first quarter. Foreign buyers accounted for 36% or 24 of the total 67 subsale deals done at The Sail in the first quarter of 2007. Foreigners also made up 25% or 18 of the total 72 subsale deals done at Icon.

Indonesians accounted for 26% share of foreign buyers of subsale apartments/condos, followed by 21% share by Malaysians, 10% share by Australians, 8% share by United Kingdom nationals, 7% share by Indians, 5% share by Koreans and 3% share by US citizens and mainland Chinese.

Historically, the highest levels of foreign buying of subsale condos/apartments were recorded in the last quarter of 1995 (485 subsales), first quarter of 1996 (329 subsales) and third quarter of 1996 (321 subsales).

(4) Foreigners take a bigger slice of residential land here
So far in 2007, purchases by foreign investors already amount to 11.4% of a total of $7.13 billion. (Only 7.12% of a total of $8.17 billion in the whole of 2006). These investments include local-foreign joint venture in purchases of en bloc sites.

In absolute dollars, foreign investors have ploughed in $885.5 million into residential land purchases in Singapore so far this year. Last year’s 7.12% amounted to $651.84 million for the whole year.

Among the high profile acquisitions with foreign involvements include Horizon Towers whereby Hotel Properties Ltd (HPL) has teamed up with funds managed by Morgan Stanley Real Estate and Qatar Investment Authority. HPL also bought into CapitaLand's Gillman Heights site with two unknown private foreign funds. Another foreign fund is Wachovia Development Corporation from U.S. which teamed up with CapitaLand to buy Farrer Court in the record $1.3388 billion en bloc deal. Dubai Investment Group teamed up with Sing Development to buy Hillcourt Apartment at Cairnhill area.

(5) More foreigners seek approval to own landed properties
Foreigners including PRs bought 93 landed homes or 8.4% of the total 1,108 landed homes transacted in the first quarter of 2007. The 93 homes comprise 86 by PRs and 7 by non-residing foreigners.

The breakdown of the 93 deals include terrace houses (where 45 were transacted), followed by semi-detached (where 26 were transacted) and detached houses (where 22 were transacted).

Land policy in Singapore

Whether on mainland Singapore or Sentosa Cove, foreigners including PRs can at any one time own only one landed home in Singapore and must occupy it themselves rather than rent it out.

The number of applications by foreigners (including permanent residents) seeking approval from the Land Dealings Unit under Singapore Land Authority to own landed properties in Singapore shot up 30% in 2006 as compared to 2005.

In general, foreigners have to be PRs before they can receive permission to own landed homes on mainland Singapore for their own stay. However; in Sentosa Cove, there is no such restriction.

Apart from an applicant's PR status, sanction to buy landed property depends on his qualifications and economic contributions to Singapore. Every application is considered on its own merits. There were occasions whereby applications by PRs were turned down without any reasons given.

Foreigners will need to acquire approval from the relevant authorities to purchase the following restricted properties for own use:

1. vacant residential land;
2. landed property [i.e detached house, semi-detached house, terrace house (including linked house or townhouse); and
3. landed property in strata developments which are not approved condominium developments under the Planning Act.
4. shophouse which is not strata subdivided and is erected on land which has been zoned "residential",
5. all the apartments within a building or all the units in an approved condominium development without the prior approval of the Minister for Law

An "Approval-In-Principle (AIP)" application can be made even when the specific property is not found yet. The AIP, if granted, is valid for 6 months. It is not renewable. Once the 6-month period has lapsed, a fresh application must be made for another Approval In-Principle or for purchase of a specific property.

The following conditions are usually imposed if the application is approved:

• The foreigner cannot sell the estate and interest in the property within 3 years.
• The land area of the property should not exceed 1393.5 sq metres/15,000 sq ft.
• The property will be used solely by the foreigner for his own occupation and that of his family members as a dwelling house and not for rental or any other purpose.

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