Lobby group to fight higher taxes on US expats

A UNITED States tax policy is affecting American expatriates working in Singapore and elsewhere so badly that a group of American chambers in the region has headed to Washington to campaign for a change.

The unhappiness among American expats and companies in Singapore stems from a 2006 tax law that has resulted in higher taxes for those who work outside the United States.

There are about 15,000 Americans working in Singapore. In 2006, US investments in the Republic grew to US$60.4 billion (S$83.6 billion).

Unlike citizens of most countries, Americans are taxed based on their worldwide income.

Last week, the Asia-Pacific Council of American Chambers of Commerce, a group of various US chambers in the region, launched in Washington a coalition representing Americans working abroad.

The Alliance for a Competitive Tax Policy seeks to eliminate what it sees as the unfair taxation of American expats that has resulted in the biggest tax increase for them in 30 years.

Senator Jim DeMint from South Carolina and Representative Gregory Meeks from New York are sponsors of this legislation. They were joined by the president of Amcham Korea, Ms Tami Overby, and representatives from several Washington-based business associations.

Ms Kristin Paulson, the chairman of the Asia-Pacific council, said: 'The changes in the tax law that Congress passed in 2006 have increased the tax burden on Americans working abroad by as much as US$25,000. This is simply unfair and discourages Americans from taking jobs outside the United States.'

According to Amcham Singapore, about four million Americans worldwide are affected.

'These tax law changes are detrimental to America's global competitiveness, and it is more expensive to hire Americans relative to hiring Europeans or Australians than previously.'

What the 2006 revision to the tax law did was to push many Americans working abroad into a higher tax bracket, even though their salaries and benefits remained the same.

The income tax deduction for housing costs was capped at a lower level. High tax rates were levied on payments made by employers, even though these were payments to reflect the higher cost of living overseas.

Simplistically, under the previous regime, a housing benefit of US$12,000 was taxed and additional housing costs were tax-free. The 2006 tax bill reversed the situation, giving a mere US$12,000 in tax-free housing benefits and taxing the rest. That hit expats hard in places like Hong Kong and Singapore, where housing costs are relatively higher.

Previous lobbying has seen the tax-free amount rise to about US$56,000 now for expats in Singapore. This is still untenable for many of them.

Take a standard American family who gets about $120,000 a year for housing. Deducting the tax-free amount of US$56,000 means that about $40,000 is still taxable. At the top rate of 38 per cent, an expat needs to shell out an additional $14,000 in taxes.

Mr Landis Hicks, a former chairman of Amcham Singapore, told The Straits Times: 'The realisation of the impact of the law has really hit home over the last year or so since the tax bills arrived.

'There is mounting concern among the American business community that the number of Americans severely affected by the cost of the tax will rise.'

'We are very concerned for the long term, that this will reduce the number of Americans working outside the US. We are trying to bring awareness to lawmakers of the serious impact on American competitiveness that the tax has.'

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'This is simply unfair and discourages Americans from taking jobs outside the United States.' - MS PAULSON, chairman of a group of US chambers in the Asia-Pacific, on the effects of a 2006 tax law on Americans working outside the US

Foreigner factor in property here to stay

Rising rents, influx of foreign talent set to spur demand for homes, say analysts

THE attraction to foreigners of buying a non-landed home in Singapore isn't expected to wane in the mid- to longer-term, say property experts.

Jones Lang LaSalle's head of research (SE Asia) Chua Yang Liang expects the ratio of foreign buying to be maintained in the short term - because of sub-prime uncertainty - but to increase moderately in the medium to longer term.

'A key factor is that residential rents have moved up quite a fair bit, and the low interest rate environment will encourage more foreigners and PRs (living here) to consider taking up home ownership,' he added. This, of course, is assuming that they can get loans.

Another factor that will contribute to the trend is the government's policy of encouraging more immigration into Singapore to power the Republic's economic growth, say market watchers.

Knight Frank executive director (residential) Peter Ow notes that non-PR foreign investors were last year a major buying force especially in the Core Central Region (CCR), drawn by the story of Singapore's transformation into a global city and its ambitions to be a hub in many fields - including financial, healthcare, education, R&D.

'The implication is that Singapore's property prices, especially in CCR, will be more affected by events in the rest of the world such as the sub-prime crisis which is now unfolding.

'But that's not necessarily a bad thing. If the situation worsens overseas and international investors view Singapore as a safe haven, that could draw more foreign funds to the local property market, especially in the CCR,' Mr Ow reckons.

'Increasingly, we may see more foreigners who will be able to afford properties in CCR. That also explains why some high-end residential developers are feeling pretty confident that prices will not slide in the luxury tier, as demand is being supported by foreign investors looking for a place to park their monies,' Mr Ow said.

A 12 percentage-point slide in Singaporean buyers' share of private apartments/condo purchases in the Outside Central Region - which covers mass-market suburban locations, the staple of Singaporean upgraders - between 2000 and 2007 revealed in JLL's study may have implications on that perpetual Singaporean dream - of upgrading to a private condo.

'The authorities may have to ramp up supply of the high-end of public housing, like the Design, Build and Sell Scheme (DBSS), and executive condos (ECs) to cater to local home buyers,' Mr Ow suggests.

ECs are condominium housing that have resale and other restrictions in the first 10 years, while DBSS are public housing flats designed, built and sold by private sector developers.

DTZ executive director Ong Choon Fah also says these housing types will help meet the aspirations of Singaporeans who feel priced out of private housing. 'There's a right product for everybody. We must understand that in a global economy, there is open competition. We must embrace meritocracy. Anybody can buy the product if they can pay. To survive, Singapore must keep attracting the best.'

Source : Business Times - 27 Mar 2008

Rising tide of foreigners snapping up Singapore property

S'poreans buying more private homes but their share is still falling as foreigners outpace them

Take a walk down some of the poshest parts of Singapore and your eyes will confirm precisely what the numbers say. With its immigration-friendly policies and its growing attraction for wealthy individuals across the world, Singapore is seeing more foreigners than ever before parking their funds in private property here - especially in the Core Central Region (CCR).

Singaporeans, too, are buying more private property but, in relative terms, their share is dwindling because of the foreign influx.

Result: From a 77 per cent share in the purchases of private apartments and condo units here in 2000, Singaporeans have seen their slice drop to 63 per cent in 2007, according to a study by Jones Lang LaSalle. This is their lowest share since 1995, which is as far back as the caveats captured by Urban Redevelopment Authority's Realis system go.

Conversely, foreigners (including permanent residents) accounted for 29 per cent of non-landed private homes purchased here last year - nearly double their 16 per cent share seven years earlier and also their highest ever.

Companies account for the remaining purchases.

Market watchers expect the trend to continue in the mid- to long-term. 'We need the external talent to support Singapore's economic growth in the long term, as the citizen population has not been replacing itself sufficiently,' says JLL's head of research (SE Asia) Chua Yang Liang.

JLL's study shows the trend of declining ratio of Singaporeans among non-landed private home buyers was most apparent in CCR - which has been a hotbed of purchases by foreign investors.

Here, Singaporeans accounted for 47 per cent or less than half the caveats lodged for the purchase of non-landed private homes last year, while foreigners (including PRs) had a 41 per cent share, nearly double their 21 per cent share back in 2000, according to Jones Lang LaSalle's analysis.

Foreigners who are not PRs have shot up the buying charts. They picked up 26 per cent of non-landed homes that changed hands in CCR last year, compared to their 11 per cent share seven years earlier. CCR includes the prime districts 9,10 and 11, Downtown Core location and Sentosa Cove.

DTZ executive director Ong Choon Fah likens the luxury residential sector in CCR to Central London, with a high proportion of foreign ownership. 'We'll have to accept that Singapore will be open to international competition, with funds and high net-worth individuals coming in. People who cannot afford to live in these areas will have to find alternative locations,' Mrs Ong says.

JLL's study showed that even in the Outside Central Region (which covers suburban locations and is a realm dominated by typical Singaporean home upgraders), the share of foreign buyers (including PRs) went up to 22 per cent last year from 13 per cent in 2000.

In the Rest of Central Region, which covers the mid-tier market, foreigners' (including PRs') share increased from 18 per cent in 2000 to 29 per cent in 2007. The percentage of non-landed homes bought by Singaporeans in the area fell from 74 per cent in 2000 to 61 per cent last year.

Jones Lang LaSalle analysis covered caveats lodged for the purchase of non-landed private homes in both primary and secondary markets (including subsales).

Overall, the absolute number of such properties purchased by all categories of buyers has increased over seven years. The total caveats lodged for purchases of apartments/condos more than tripled, from 9,347 in 2000 to 30,576 last year. Even though Singaporeans bought more than they did in 2000, their share fell as purchases by foreigners saw higher percentage gains.

Islandwide, the number of private apartments/con- dos bought by Singaporeans jumped 165 per cent from 7,225 units in 2000 to 19,154 units last year.

Over the same period, the number of private apartments/condos bought by foreigners (counting PRs as well) leapt 496 per cent from 1,491 units in 2000 to 8,884 units in 2007.

The increase was due partly to the influx of foreign talent into Singapore. 'As birth rate of the citizen population is below replacement level, in-migration has been necessary to sustain economic growth. As at end-2007, Singapore's total population stood at 4.588 million, with well over a million foreigners. This is a 33 per cent increase from the 750,000 foreigners as at-end 2000,' JLL says.

Source : Business Times - 27 Mar 2008

Foreigners snap up homes as rents start to bite

Their purchases could account for half of 2007 transactions on the secondary market.

A record number of foreigners here have opted to purchase homes instead of renting them at ever-climbing rates.

According to an analysis of transactions of private residential properties by DTZ Debenham Tie Leung, foreigners bought 6,536 non-landed homes from the secondary market in 2007 - the largest number since 1995.

They could account for more than 50 per cent of the secondary market transactions last year.

That is because while more than 20,000 non-landed homes were sold on the secondary market last year, this number includes the units from more than 100 collective sales. DTZ’s analysis does not include en bloc units - though earlier reports had put this figure at around 6,000 for the first half of 2007 alone.

Purchases by foreigners on the secondary market represent a 105 per cent increase in volume compared to 2006.

DTZ research senior director Chua Chor Hoon said that while some buyers were investors, there were also those who ‘are not on company budget and find it more worthwhile to buy rather than face escalating rentals, especially if they are going to be in Singapore for more than a couple of years’.

DTZ’s figures for 2007 reveal that rents of prime apartments and condominiums increased 45 per cent year-on-year in 2007 to average $4.80 per square foot (psf). This was attributed to the influx of expatriates and a tight supply of prime apartments, as numerous prime developments were demolished or slated for redevelopment after being collectively sold.

The percentage of foreigners buying non-landed property from the primary market (developer sales) was lower at 25.4 per cent, or 2,314 transactions out of a total of 9,089, reinforcing the assertion that foreigners are more inclined to buy a home for immediate occupation.

Indonesians and Malaysians remain the biggest foreign buyers here, accounting for 23 and 17 per cent of all foreigners in 2007 respectively, but Indians (12 per cent), Britishers (8 per cent), Chinese (7 per cent) and Koreans (7 per cent) are also well represented.

While foreigners bought non-landed homes in record numbers last year, boosting demand in the process, their absence in the landed homes sector (because of restrictions imposed by the government) did not stop a record number of landed homes being sold in the secondary market.

DTZ’s analysis reveals that of the total 5,211 landed homes sold in 2007, 4,823 were from the secondary market.

Apart from the bullish sentiment which ’spilled over’ from the non-landed sector last year, the landed sector also saw demand rise as it was still considered comparatively good value.

DTZ’s figures show that average capital values for non-landed freehold homes in the prime districts increased by 55 per cent year-on-year to $1,480 psf.

For freehold landed homes in the prime districts, average capital values of detached homes increased 31 per cent year- on-year, while average capital values of semi-detached and terrace homes rose 29 and 27 per cent respectively.

The situation was also exacerbated by the tight supply of new launches of landed homes in the year, estimated at around 650 units.

DTZ’s Ms Chua also believes that with speculation less rampant in the landed housing sector - ‘most buyers are owner-occupiers’ - prices are expected to be more stable and could even prove ‘more resilient’ if the downturn in the global economy is protracted.

However, DTZ expects future supply of landed homes to be relatively low at just 3,100 units over the next few years, so this could push up demand and prices for both primary and secondary market landed homes.

Speculation, defined by the number of subsales, was rampant among developer sales of non-landed homes last year, hitting an all-time high of 4,631 transactions - a 312 per cent year-on-year increase over 2006.

Interestingly, while subsale transaction volume in 2007 was just 27 per cent higher than during the previous peak of 1996, the value of subsales was almost twice as high, hitting $7.9 billion.

The fourth quarter, however, marked a shift in sentiment in the property market. Only 3,947 non-landed homes were transacted in the quarter, of which just 846 were sold by developers, reflecting a 64 per cent quarter-on-quarter drop. This was one of the worst performing quarters in the last three years.

Source : Business Times - 12 March 2008

Singapore is most liveable city in Asia

Europeans and Americans view country as best in region while Asians say it is world’s top spot.

SINGAPORE has hit another home run with expatriates - Europeans and Americans reckon it is the best place in Asia to live, while Asians say it is the top spot anywhere in the world.

The annual survey, which has a major influence on luring foreign talent, compares living standards in 254 locations across the globe.

For the sixth straight year, Asian expatriates have named Singapore as the best city worldwide for quality of life.

Its fine infrastructure and health facilities, cosmopolitan population, and low health risks and crime rates scored the Republic plenty of points among those surveyed, according to the poll by human resources consultancy ECA International.

Singapore trumped the Australian cities of Sydney and Melbourne, which were ranked the second and third most attractive places worldwide for Asians to call home .

Europeans and Americans were also sold on Singapore, ranking it as their preferred choice in Asia, although on a global scale, they opted for Copenhagen. The Danish capital also ranked as the fifth best place worldwide for Asians to live in.

About 1,500 companies globally buy the report, so the ranking can greatly influence hiring policies.

ECA recommends that companies do not need to pay any ‘hardship’ allowances to their workers assigned to Singapore. This allowance, which can comprise up to 30 per cent of an expat’s salary, is paid to workers in countries where the standard of living is lower than in their home base.

The more comfortable the location, the lower the allowance and Singapore’s is set at zero.

However, there were some negatives this year with scores for air quality in Singapore hit by the smoke haze.

The Republic’s score for availability of quality accommodation also declined slightly, primarily due to the collective sale fever which has ‘reduced the supply of decent-standard accommodation in Singapore, irrespective of cost’, said Mr Lee Quane, ECA International’s general manager.

This narrowed the gap between Singapore and other locations such as Hong Kong, which jumped eight places in the rankings to No. 4 on the list of Asian cities with the best quality of life for Asians.

Hong Kong’s scores improved, thanks to significantly better scores for personal security.

Mr P.Maran, an Indian national in his 40s working for a technology multinational firm here, said Singapore was ‘by far the best place for Asians to live as it is safe, clean and is closer to home than other locations such as Australia’.

But he noted that the cost of such high-quality living comes at a price. ‘The cost of everything from rental to transport to children’s education is shooting up,’ he said.

While this survey did not rank Singapore in terms of cost of living, an ECA study last November showed that the Republic rose 10 places in a global survey of the most expensive places for expatriates to live.

But despite the jump, Singapore, at No. 122, is still significantly cheaper for expats than Hong Kong and other key global centres, such as London - at No. 10.

Popular choices Top 10 locations in the world for Asians to live

1. Singapore
2. Sydney (Australia)
3. Melbourne (Australia)
3. Kobe (Japan)
5. Copenhagen (Denmark)
6. Canberra (Australia)
7. Vancouver (Canada)
8. Wellington (New Zealand)
9. Yokohama (Japan)
10. Dublin (Ireland)

Source : Straits Times - 5 Mar 2008

Singapore tops among Asian expats: survey

The Republic is the best place for them to live worldwide; Baghdad ranks last

The Republic ranks as the best place for Asian expatriates to live worldwide, according to the latest survey by human resources consultancy firm ECA International.

Singapore surpasses cosmopolitan cities such as Sydney, Melbourne and Copenhagen in Asian expatriates' view, the survey showed. These cities are ranked second, third and fifth respectively in the top 15 locations for Asian expatriate living.




















Meanwhile, Kobe (joint third with Melbourne), Yokohama (eighth), Tokyo and Hong Kong (both 15th) are the only other Asian destinations that made it to the top 15 list.

Conducted annually, the Location Ranking Survey compares living standards in 254 locations globally, taking into account climate, air quality, health services, housing and utilities, isolation, social network and leisure facilities, infrastructure, personal safety and political tensions.

'High quality infrastructure and health facilities, combined with low health risks, air pollution, crime rates and a cosmopolitan population, make Singapore a very appealing location for Asians to live in,' said Lee Quane, general manager of ECA International.

'Although we did see a small deterioration in some factors, such as air quality and accommodation in 2007, it still retains its status as being the location with the best quality of living for assignees in this region.'

He explained that Singapore 'was much more affected by haze in 2007' compared with the preceding year, causing it to lose points in the air quality category. Meanwhile, 'recent market developments in en bloc (property sales) had an impact on the supply of standard accommodation'.

Nevertheless, Singapore has consistently been ranked the best location for Asian expats to live for a decade, said Mr Quane, who believes that it will retain that spot despite 'Hong Kong moving up our rankings' this year after sliding for several years, due to improved personal security scores and the movements of locations around it.

'We now see the narrowing in quality of living between Singapore and Hong Kong, but it is unlikely that Hong Kong will match Singapore. The main reason is (Hong Kong's) air pollution, which is unlikely to go away any time soon,' he explained.

At the other extreme, Baghdad is the least favourable place for Asian expats to live in, followed by Kabul (Afghanistan), Karachi (Pakistan) and Port-au-Prince (Haiti), due to the locations' risk to personal security and their lack of suitable facilities, according to the survey.

Source : Straits Times - 5 Mar 2008

Survey finds Singapore the best place to live for asian expats

When it comes to work and play for Asian expats, Singapore is the number one choice.

This is according to a recent survey by ECA International, a global human resources organisation.

Singapore has maintained the top spot for ten years now but regionally, it is getting tough competition from Japan and even Hong Kong.

The survey found that Singapore's infrastructure, low crime rate and lack of social and political tensions were the main factors behind its draw.

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"For us, it's very peaceful and we don't feel any hassle or difficulties. So I think for us it's the best place," said an expatriate.

"Growth is planned. That's one of the reasons we feel we have more value for money here," said another.

But there are some factors that Singapore needs to address if it wishes to remain at the top spot.

Firstly, it has to counter the haze issue caused by forest fires in neighbouring countries.

It also has to make sure that property and rental prices are affordable for Asian expats.

"It's pretty good to work here and earn money but not for retirement," said an expat.

"It's not like Australia is any worse than Singapore, so I would say it's personal choice at the end of the day," said another.

Sydney came in second in the rankings, while Melbourne and Kobe tied in third place.

Hong Kong went up the rankings by eight spots to reach the 15th position this year.

Most Chinese cities, like Beijing, while they are not in the top 100, they have risen quite rapidly in the rankings over the last five years.

But this progress may soon plateau. Lee Quane, ECA International's general manager in Hong Kong, explained: "Pollution levels in mainland Chinese cities are consistently high....the highest among the cities which we include in our rankings."

Air quality is one factor considered in the rankings. - CNA/ir

Source : Channel NewsAsia - 4 Mar 2008

Expats vote Singapore, Copenhagen best for living

Asian expatriates have ranked Singapore as the best place to live in the world for its safe and clean environment, while Europeans chose Copenhagen, a survey showed on Tuesday.

Asian expats chose Singapore over Hong Kong (15th place) and Shanghai (78th place) and placed Sydney, Melbourne and Canberra as well as two Japanese cities Kobe and Yokohama in their top ten list of favourite locations, said ECA International, a human resource consultancy for multinationals.

Lee Quane, general manager of ECA International, said that Singapore's solid infrastructure, low crime rate and clean air made it a favourable place to live.

'While Hong Kong has seen an improvement in some categories, such as personal security, air pollution remains the biggest cause for its lower rankings relative to Singapore,' he said in a statement.

Singapore is competing with Hong Kong as a location for banking and financial services.

For locations in China and India, Shanghai and Chennai (138th place out of a total of 300 locations) came in top for Asian expats, said the annual survey.

European expats ranked Copenhagen as their top choice to live in the world. They placed three Swiss cities - Geneva, Basel and Bern - and three German cities - Dusseldorf, Bonn and Munich - in their top ten.

East European cities such as Bratislava and Bucharest have made improvements in this year's survey because of advances in security, housing and health, the survey said.

European expats rated Bratislava, the capital of Slovakia, as their 20th choice and Romania's capital of Bucharest in 14th place.

In the Middle East, Manama, the capital of Bahrain, ranked top in the region along with Dubai and Muscat. Baghdad, in last place globally, lost marks for poor security, the survey said.

Top 10 best locations in the world for Asian expats

1. Singapore - Singapore
2. Australia - Sydney
3. Japan - Kobe
4. Australia - Melbourne
5. Denmark - Copenhagen
6. Australia - Canberra
7. Canada - Vancouver
8. Japan - Yokohama
9. New Zealand - Wellington
10. Ireland - Dublin

Source : Business Times - 4 Mar 2008

Survey ranks Singapore as best place to live for Asian expats

Singapore is the best city in the world for Asian expatriates to live in due mainly to its quality of life and low crime rate, a survey released Tuesday by ECA International showed.

Sydney was rated second in the survey, with third spot shared by Melbourne and Kobe in Japan, the human resources firm said.

Rounding out the top 10 list for Asian expatriates was Copenhagen in fifth spot, followed by Canberra and Vancouver. Wellington and Yokohama shared eighth spot, with Dublin next.

ECA said Singapore, Southeast Asia's most advanced economy, was also ranked above the other cities because it offered Asian expatriates a similar feel to their home countries.

"Since quality of living is relative to where someone comes from and to where they are going, our scores take into account the home and destination country," said Lee Quane, ECA International's general manager in Hong Kong.

Hong Kong, Singapore's long-running regional rival as a business hub, was ranked 15th in the global cities list, with the territory's air pollution cited as a drawback.

Among Chinese cities, Shanghai was seen as the best place for top Asian professionals while Xian ranked as the worst location, according to the survey, which compared living standards in 254 locations worldwide.

Beijing, host of the 2008 Olympic Games in August, fared worse than other Chinese cities such as Nanjing and Tianjin because of its notorious air pollution, the survey showed.

ECA International's annual survey is based on categories such as climate, air quality, health services, housing, political tension and personal safety.

Within Asia, Hong Kong and Tokyo were ranked joint fourth behind Singapore, Kobe and Yokohama, the survey said.

Trailing in sixth spot was Taipei, followed by Macau and Bangkok, with Malaysia's Kuala Lumpur and Georgetown cities sharing ninth spot while Shanghai and Seoul were in 11th and 12th places, respectively.

Brunei's Bandar Seri Begawan was in 13th place in Asia and 89th place globally.

Manila was ranked 24th in Asia and 133 globally, while Jakarta was in 39th place regionally and 190th worldwide.

Chennai was the highest ranked Indian city within Asia, in 26th spot, with Mumbai in 30th and New Delhi 37th. - AFP/ir

Source : Channel NewsAsia - 4 Mar 2008

DPM Wong Kan Seng says S'pore attracting more new PRs, citizens

Singapore has been increasingly attracting new citizens and permanent residents (PRs), who help sustain the country's economic growth.

Deputy Prime Minister Wong Kan Seng said local Singaporeans alone are still not sufficient to meet the manpower demands here.

He revealed the latest immigration statistics during the debate on the Prime Minister's Office budget on Wednesday.

According to the figures, more foreigners have decided to call Singapore home for good.

Last year, Singapore saw over 63,000 new PRs, an 11-per-cent increase from 2006; and the city-state also welcomed more than 17,000 new citizens, a 30-per-cent jump.

Mr Wong said, however, there were only 760 more babies born last year compared to 2006.

He added that Singapore must continue to keep an open-door policy, both to new immigrants and foreign talents, although citizens remain the core of the population.

"For now, Singapore is a talent magnet for many. However, the global competition for talent is intense. Whether we like it or not, those who are capable and talented will be drawn to places with better opportunities and where they feel welcomed. And if Singapore does not welcome them, they will simply look elsewhere and they will then compete against us," said Mr Wong.

On integrating new citizens into the society, the minister cited some who have adapted to Singapore and are contributing to the city-state.

One of them is Kim Jin Ju from South Korea, a prefect at Yu Neng Primary. She participated in MediaCorp's Roving DV competition in 2006 and her school's entry came in first.

While he acknowledged MPs' concerns over the pace of immigration and social integration, Mr Wong said attracting immigrants will remain a key strategy to ensure the country's long-term growth and prosperity.

"So let us open our doors, minds and our hearts. We must work together, be welcoming to new immigrants and help integrate them into our community. There is a need for mutual acceptance, adjustment and respect. We can then live as one harmonious family to create even greater possibilities for ourselves, and our children and our future generations to come," Mr Wong said.

He also said schools, companies and the People's Association have implemented programs to help promote integration. But he noted that more can be done to break down barriers and dispel unwarranted biases.

Mr Wong added that Singaporeans based abroad are not forgotten. The government has been trying to engage them actively through events such as the Singapore Day. The inaugural event, held in New York last April, saw some 6,000 attendees.

He said another Singapore Day will be held in Melbourne, Australia this October. - CNA/ac

Source : Channel NewsAsia - 27 Feb 2008

R&D carrot may be ideal diet for some outfits

Estate duty abolition may also help banks and push up property prices.

It was a Budget that failed to excite the stock market very much, but analysts said that some of the initiatives announced could benefit research-intensive firms and companies in the healthcare, technology, finance and property sectors - mostly in the longer term.

Shrugging off Friday’s Budget announcement, the benchmark Straits Times Index fell 5.34 points - or 0.2 per cent - to close at 3,083.3 points yesterday.

As UOB Kay Hian predicted at the start of the day: ‘Concerns over a slower earnings growth and higher inflation will limit any euphoric market rally.’

But contrary to what was suggested by the market, some listed companies here will be better off due to the Budget, analysts said. Singapore’s bid to move up the R&D value chain could perhaps have the most impact, the analysts added.

OCBC Investment Research said that Biosensors International, LMA NV and ST Engineering could benefit as Singapore increases its yearly R&D spending to $7.5 billion, or 3 per cent of GDP, by 2010.

The firm also said that Venture Corporation and Chartered Semiconductor - both of which spent a substantial proportion of their operating expenses in R&D - stand to benefit in particular as the R&D tax deduction is increased from 100 per cent to 150 per cent and an R&D tax allowance of up to 50 per cent of the first $300,000 of taxable income is given.

‘Both Venture Corporation and Chartered Semiconductor spent a substantial proportion of their operating expenses in R&D,’ OCBC’s research unit said in a note yesterday. ‘Venture spent about $29.6 million on R&D in FY07, while Chartered spent about $159.8 million. We can expect both companies to see significant tax reductions in the coming years.’

UOB Kay Hian similarly identified Creative Technology, Venture Corp and Biosensors as listed companies that could gain from the R&D push.

Also expected to have a major impact is the abolition of estate duty, which analysts said could boost Singapore’s competitiveness as the region’s wealth management hub and attract more foreign investment.

‘We think the removal of estate duty is good news for the Singapore property market, as real estate is a natural choice for some of this money to be invested, especially with high inflation and negative real returns,’ said Lehman Brothers in a note yesterday.

The research firm noted that property prices generally gain in the 12 months following the removal of estate duty. The note said: ‘Malaysia abolished the estate duty in late 1991 and home prices rose 12 per cent on average in the ensuing 12 months. More recently, Hong Kong abolished the estate duty in early 2006 and property prices were up 6 per cent on average in the following 12 months. We think this could be more than coincidence.’

UOB Kay Hian, on the other hand, said that the clearest beneficiaries from the removal of estate duty would be financial institutions. The firm reiterated its ‘buy’ calls on DBS, OCBC and Hong Leong Finance in view of this.

UOB Kay Hian also said that listed medical plays such as Raffles Medical Group and Parkway Holdings will benefit from the government’s commitment to implementing means testing - which allows for a gradual shift of high-income patients from government hospitals to private hospitals.

However, there is a consensus among analysts that any boost from this Budget is expected to kick in only in the longer term.

‘The business-related Budget initiatives are part of the government’s ongoing efforts to transform the Singapore economy into a knowledge-based economy and grow the services sector, in our view,’ Deutsche Bank summed up in a note. ‘While positive in the long term, these moves are unlikely to have a tangible impact in the near term.’

Source : Business Times - 19 Feb 2008

Singapore population hits 4.6 million

Number of foreigners increasing faster than citizens, PRs

SINGAPORE'S economic planners think the country can hold 6.5 million people, a size they feel will be ideal to keep the economy humming.

Minister Mentor Lee Kuan Yew, however, feels the optimum population size for tiny Singapore might be smaller, between 5 and 5.5 million.

The latest numbers released yesterday by the Singapore Department of Statistics - after some refinements that exclude persons who were away for at least 12 months continuously, in line with United Nations guidelines - show that Singapore is just less than one million people away from hitting that figure recently suggested by Mr Lee.

Singapore's total population has swelled to 4.6 million - and that was seven months ago.

The drive to attract foreign talent to make up the local shortage is apparently bearing fruit. The number of foreigners who work and live here has crossed the one-million mark.

In the past five years, the figure grew three times as fast as the number of Singaporeans and permanent residents.

The result: foreigners made up 22 per cent of Singapore's total population as at June 2007, up from 18 per cent in 2003. From 2006 to 2007, the number of foreigners jumped nearly 15 per cent to 1,005,500.

Locals and permanent residents rose by less than 2 per cent to 3,583,100.

Source : Business Times - 4 Feb 2008

Tax climate in Singapore ranked third best in region for expats

FOR expatriates considering a posting to Asia, the personal tax climate in Singapore is third best in the region, behind Hong Kong and Taiwan. And unlike elsewhere, it makes little difference here whether the taxpayer is single or married, with or without kids.

According to Mercer's survey of 32 'expatriate hotspots', the United Arab Emirates, Russia and Hong Kong are among the world's 'most benign' personal tax environments, while Belgium, Denmark and Hungary are the most onerous.

The findings also show that in general, married employees are better off than single employees tax-wise, and married employees with two children fare the best.

But the difference in tax liability is not too great in a few countries, including Singapore, while employees in China and India pay the same tax regardless of marital status.

Says Guo Xin, deputy regional head of Mercer, Asia: 'Within Asia, Hong Kong and Taiwan have the most gentle tax systems regardless of marital status. The toughest personal tax regimes can be found in India and Australia, with Indians paying more tax than Australians if they are married with two children.'

And through its Central Provident Fund scheme, Singapore has one of the highest social security contributions - second only to Japan - at 11.4 per cent. Social security payments in Hong Kong, for instance, amount to barely 2 per cent.

'If you exclude the mandatory CPF contributions, Singapore's tax rate for middle managers would be 5 per cent, making it the lowest rate in Asia,' Wong Su-Yen, managing director of Mercer Asean notes.

Except for Russia, European countries fill the bottom rungs of the rankings.

Apart from taxation, other key considerations for expatriate allowances are housing, private schooling and local cost of living adjustments - all of which can add up to the high cost of a global expatriate work force.

Source : Business Times - 4 Dec 2007

En bloc millionaires to drive market

Around 5,700 homes were sold through collective sales in the first half of this year and the home owners who will have to look for replacement homes are expected to drive the property market.

A report by Savills Singapore estimates that if just two-thirds of those displaced by collective sales - about 3,900 of them - choose to buy replacement homes, their collective kitty could total $6 billion, representing the total payout to these en bloc millionaires.

Savills director (marketing and business development) Ku Swee Yong does not expect all $6 billion to be spent though. ‘About $4 billion could be channelled into new property acquisitions,’ he reckons.

And developments in the fringe and suburban areas such as Bukit Timah, Upper Bukit Timah, Clementi, Novena/Thomson, and Upper East Coast will be their targets.

Savills projects that only two-thirds of the en bloc millionaires will be in the market for a new home because it believes many already own second homes, if not more.

Savills’ analysis reveals that of the 2,795 home owners affected by the collective sales in Q2 2007, up to 2,159 owned homes in the prime districts of District 9, 10 and 11.

And Mr Ku reckons that half of these home owners already own at least one other home.

Interestingly, Mr Ku believes that only 20 per cent of the displaced home owners from homes outside the prime districts have second homes. But the number of en bloc millionaires could taper off if collective sales continue to fall. In Q3 2007, only 13 en bloc deals worth about $1.1 billion were done, down from $6.4 billion for 45 sites in the previous quarter.

Yet, en bloc millionaires are also expected to support the already buoyant residential market.

Savills says that assuming that 30 per cent of owners (or their tenants) affected by collective sales require rental accommodation, 974 units would have been needed to meet the demand over the last nine months. Savills added that the situation is expected to worsen in 2008, with some 800 units needed per quarter to accommodate displaced owners (or their tenants).

Savills does expect most demand for rental units to come from an increase in the number of foreigners working here.

Its report highlighted that foreigners working here grew by 14.9 per cent, from 875,500 last year to just over one million thus far, representing the highest year-on-year growth in the last 10 years. ‘With a low unemployment rate and high job creation rate, the number of foreigners working in Singapore is expected to grow sharply,’ it added.

Its analysis of data reveals that average rents of all non-landed residential properties in the prime districts rose by 13 per cent to $3.70 per square foot (psf) a month between Q2 and Q3 in 2007, while high-end residential rents climbed even higher to $6 psf a month.

Savills also noted that rents in Districts 8 and 12, on the fringe of the city, have risen by 35 and 23 per cent respectively to about $1.90 psf a month.

Source : Business Times - 21 Nov 2007

Foreigners snap up 87% more landed homes in first half: DTZ

Companies make 265 buys in H1 2007 vs one in H1 2006.

Foreigners, including permanent residents, bought 232 landed homes here in the first half of this year, up 87 per cent from the same period last year, according to DTZ Debenham Tie Leung’s analysis of caveats.

But foreign buyers’ share of total caveats lodged for landed homes in H1 2007 was about 7.6 per cent, down slightly from a 7.9 per cent share in the same year-ago period.

Nearly 90 per cent of these foreign buyers in the first six months of this year were Singapore permanent residents.

Malaysians accounted for the biggest share or 23.7 per cent of foreign buyers of landed homes in H1 2007, followed by United Kingdom nationals (18.5 per cent) and Australians (7.8 per cent).

The number of landed homes picked up by Singaporeans in H1 2007 was up 76.3 per cent year-on-year, though Singaporeans’ share of total caveats for landed homes fell to 83.7 per cent in H1 2007 from 92.1 per cent in H1 2006.

The decline was due to a surge in the number of landed homes bought by companies, to 265 in H1 this year from just one in the same period last year.

In all, 265 caveats were lodged by companies for bungalows, semi-detached houses and terrace homes in H1 2007, compared with just one caveat in H1 2006. The companies include both local and foreign corporations, and could possibly reflect the effect of some investors including individuals or small groups of investors who made purchases through companies, market watchers reckon.

‘There have been small developers and contractors buying up stretches of landed houses in places like Telok Kurau and Kembangan, with the aim of tearing them down and redeveloping the site into a small block of apartments,’ says Knight Frank executive director Peter Ow.

DTZ’s analysis, which was based on caveats captured by Urban Redevelopment Authority’s Realis system, also showed that the most popular landed housing districts sought after by foreigners in H1 2007 differed from those pursued by Singaporeans.

The top location for foreigners (including PRs) who bought landed homes during the period was District 10 (which covers areas like Grange Road, Tanglin, Chatsworth, Jervois, Bishopsgate, Holland Road, Swettenham Road and Laurel Wood Avenue), followed by Districts 15, 11 and 19.

District 15 covers Katong, East Coast and the Meyer Road locations; District 11 includes the Bukit Timah and Dunearn vicinity, Gilstead Road and Gentle Drive; and District 19 includes Serangoon Gardens and Lorong Chuan. Other popular locations included Districts 21 (which covers the Upper Bukit Timah area) and 4 (Sentosa Cove).

In contrast, among Singaporean landed home buyers, the most popular district was 19, followed by Districts 15, 10, 16 (part of Bedok and Tanah Merah), 20 (including Sembawang Hills and Upper Thomson) and 28 (which covers locations like Seletar Hills and Mimosa Place).

‘Foreigners seem to be zooming in more on traditional residential property investment locations, such as prime Districts 10 and 11 and the traditionally popular District 15,’ said a market watcher.

Among companies which bought landed homes from January to June this year, District 15 was the most in demand, followed by Districts 19, 10 and 14.

The 232 landed homes that foreigners purchased in the first half was just 11.5 per cent shy of the 262-unit figure for the whole of last year. The record was set in 1999, when foreigners picked up 347 landed homes on the island.

In Singapore, foreigners have to be PRs before they can receive permission to buy landed homes on mainland Singapore, and Sentosa Cove is the only location where foreigners who are not PRs are allowed to purchase landed property. Even then, foreign would-be buyers must seek permission from the Land Dealings (Approval) Unit under the Singapore Land Authority.

Typically, it takes about four weeks for approval to be granted, but on Sentosa Cove, the time has been cut to less than 48 hours under a special fast-track approval scheme.

Foreigners, including PRs, can at any one time own only one landed home in Singapore and must occupy it themselves rather than renting it out.

Source : Business Times - 25 Sep 2007

Locals dwarf home-buying spree by foreigners in Q2

Foreigners, including permanent residents, bought a record 2,864 private homes in Singapore in the second quarter, up 34 per cent from the preceding quarter and more than twice the 1,221 private homes that they invested in during the same period a year ago.

But even this brisk buying was dwarfed by Singaporeans, who accounted for 68 per cent of caveats lodged for private home purchases in Q2 this year, up from 65 per cent in Q1.

In contrast, foreign buyers’ and PRs’ share of total private home purchases slipped to 25 per cent in Q2 2007, from 27 per cent in Q1 2007.

Companies, meanwhile, accounted for the remaining 7 per cent of private home buyers in Q2 2007, reflecting strong collective sales as well as acquisitions by numerous funds investing in residential property, according to DTZ Debenham Tie Leung’s analysis of caveats captured by Urban Redevelopment Authority’s Realis system.

DTZ’s report also showed Koreans are growing in prominence and accounted for 6 per cent of foreign buyers in Q2, their highest share ever. Koreans’ share among foreign buyers has been growing steadily over the past year.

The figure used to be around one to 2 per cent in 2004 and 2005, but rose to 2 to 4 per cent in various quarters last year. Koreans hardly featured as buyers in the 1990s.

The 185 private homes Koreans bought here during April to June 2007 reflected a 76 per cent quarter-on-quarter increase.

Growing purchases by Koreans reflect not only acquisitions by Korean nationals residing here, some drawn to Singapore by their children’s education, but also efforts by major Singapore developers to market their projects in Korea, DTZ executive director Ong Choon Fah observed.

Indonesians and Malaysians continued to be the largest groups of foreign buyers, accounting for 22 and 18 per cent respectively of overall private home purchases by foreigners in April to June 2007. This was followed by buyers from India, United Kingdom and China.

Nearly 96 per cent of the 2,864 private homes foreigners picked up in Q2 were private apartments/ condos, with landed homes making up the remaining 5 per cent.

The 2,743 apartments/ condos foreigners bought in Q2 comprised 2,062 units purchased in the secondary market - up 44 per cent from Q1 and a record quarterly figure - and 681 units acquired from developers in the primary market.

A further split of the secondary market purchases showed that 455 units were acquired in the subsale market and 1,607 units in the resale market. The latter figure was up 37 per cent from the preceding three months and a fresh high.

Resale deals are secondary market deals in developments that have received their Certificates of Statutory Completion, while subsales involve projects that have yet to do so.

DTZ attributed the strong foreign interest in resale properties to the current buoyant leasing market. Given the tight supply of rental properties in the prime districts, many expats are choosing to buy homes. Their preference is for completed properties that they seek to occupy themselves.

The 455 subsale apartments and condos that foreigners bought in Q2 represented a 32 per cent quarter-on-quarter increase and was the second highest quarterly figure ever - trailing only the 485 units snapped up in Q4 1995.

The Sail @ Marina Bay, Sky@eleven and Icon were among the projects popular with foreign buyers in the subsale market in Q2.

In the resale market, the most highly-sought after developments among foreigners included Sanctuary Green, Pebble Bay and Water Place (all in the Tanjong Rhu area), Queens and Valley Park. In the primary market (units purchased directly from developers), Casa Merah, RiverGate, One-north Residences and The Solitaire were among foreign buyers’ favourite projects.

Mrs Ong predicts that foreign buying will continue to be steady in the second half of 2007.

‘Sub-prime has taken some froth out of the market; but this affects more the specuvestors (who buy for capital gains but don’t mind holding on to the property, waiting for its price to rise). Foreign buyers, however, are purchasing more for owner occupation or long-term investment, drawn by Singapore’s success in reinventing itself. Property prices here are higher than two years ago, but then Singapore today is very different. It is a very desirable place to invest and live in,’ she said.

Source : Business Times - 19 Sep 2007

60% of The Marq buyers are foreigners

SC Global Development Ltd, which sold homes at its The Marq apartment project at a record price last month, said foreigners made up about 60 per cent of the buyers.

SG Global will price its penthouses, twice the size of its regular apartments at the development, at about $5,000 per square foot (psf), matching the record $5,100 achieved in other units, chief executive officer Simon Cheong said in an interview yesterday.

Singapore home prices are surging, driven by the longest economic expansion in a decade and the world’s fastest-growing population of millionaires. Investors paid between $11million and $31 million for the first 21 homes sold at The Marq, a five-minute walk to the main shopping district of Orchard Road. The units fetched an average price of $4,137 psf, the company said on June 28.

‘Singapore’s becoming more and more of a global city, and our buyers are well travelled and well heeled, and they compare our product against those in other gateway cities around the world, and they find the prices to be reasonable,’ Mr Cheong said.

SC Global shares were unchanged at $6.70 at the 5.05 pm close. SC Global’s stock almost tripled this year, compared with the 37per cent average gain for Singapore property index.

Source : Business Times - 17 Jul 2007

Keep it open to foreigners

Resentment over foreign purchases pushing up apartment prices is still only murmured about, but it will be out in the open if the price spiral continues at its present clip. The agencies tracking the property market will then face pressure to restrict sales to non-Singaporeans. The property firm Colliers International reckons that seven in 10 of these deals done this year in the upper price band were for investment and not occupation, a fact that could only harden opinion against outsiders feasting at the table. It is to be hoped public sentiment never gets that misguided. It is conceded the resentment is instinctive and quite natural, as happened when the pre-Hong Kong handover immigration wave in the 1990s stoked price pandemonium in the favoured Asia-Pacific destination cities of Vancouver, Sydney and Auckland. Any clamour to curb foreign interest in strata-title developments in Singapore should be resisted as counter-productive. It would be bad for the market, a blow to the economy and ultimately harmful to Singapore’s reputation for being welcoming of capital and talent. Foreign interest in any metropolitan city’s residential scene is a crucial stimulus not only for enhancing real estate value, but also for its catalytic effect of making a striving city a throbbing one and of keeping a great city great. Singapore in fact would gain a premium if foreign buyers of condominiums extended beyond South-east Asians to include more Japanese, Europeans and North Americans. That would be a triple-A rating in the confidence stakes.

Unlike limited landed property for which restrictions on foreign buyers should on no account be relaxed, the supply of apartments is ample. This makes the price frenzy an irrational one. First-time buyers, assuredly a constituency the Government must watch over, are not in the market for those luxury residences that keep setting new psf benchmarks and average transacted prices. But their worry that high-end price behaviour will influence the mass market of condos starting at about $600 psf will need careful tending by the Government. Some 23,000 condos due for completion by 2010 are unsold in this crazy market, but first timers’ jitters persist. Why? The answer may lie in the anxiety whipped up by news of ever more en bloc sales removing supply and upping sellers’ replacement cost. To get through this boom cycle without mishap, it is preferable that collective sales slow down until replacement supply appears in four to five years. There are signs these sales are decelerating as a new realism about illusory riches takes hold. The best thing that could happen now is an end to the en bloc round through natural attrition.

Source : Straits Times - 17 Jul 2007

More foreigners apply to buy landed homes

The number of applications by foreigners (including permanent residents) seeking approval from the government to buy landed properties in Singapore rose 30 per cent in 2006 against the preceding year, according to Singapore Land Authority.

‘This was possibly due to the strong economy, a favourable property market and interest in Sentosa Cove,’ an SLA spokeswoman said.

Foreigners including PRs face restrictions in buying landed properties in Singapore and need prior approval from the authorities before they can purchase such properties. Foreigners have to be PRs before they can receive permission to buy landed homes on mainland Singapore; Sentosa Cove is the only location where foreigners who are not PRs are allowed to purchase landed property.

Apart from an applicant’s PR status, sanction to buy landed property depends on his qualifications and economic contributions to Singapore, SLA’s spokeswoman stressed.

SLA declined to say how many applications were made by foreigners/PRs to buy landed property, and how many were approved.

However, based on DTZ Debenham Tie Leung’s analysis of caveats captured by the Urban Redevelopment Authority’s Realis database, foreigners including PRs bought 93 landed homes or 8.4 per cent of the total 1,108 landed homes transacted in Q1 2007, covering both primary and secondary markets, as well as completed and uncompleted properties.

These figures are higher than those for Q1 2006, when foreigners including PRs bought 43 landed homes, or 6.1 per cent of the total 706 landed homes that were transacted. During Q2 1996, at the height of the 1990s property bull run, PRs/foreigners purchased 31 landed homes, or 2.6 per cent of the total 1,188 landed homes that changed hands during the period.

DTZ’s analysis showed that for Q1 this year, PRs bought 86 landed homes while non-PR foreigners purchased seven such homes. The most popular landed homes among foreigners as a whole were terrace houses (45 units), followed by semi-detached (26 units) and detached houses (22 units).

Private apartments/condos - a class of properties where there are no restrictions on purchases by foreigners/PRs (unless they want to buy up an entire development) - made up the majority of private homes bought by foreigners in Q1 this year. In all, foreigners/PRs bought 2,008 non-landed private homes, accounting for 30.3 per cent of the total condos/apartments bought in the period.

In Q1 this year, foreigners/PRs bought 27.2 per cent of the overall 7,731 private homes (comprising both landed and non-landed homes) that changed hands. This share is almost double their 14.1 per cent share back in Q2 1996, when foreigners/PRs purchased 975 of the total 6,932 private residential properties transacted.

DTZ executive director Ong Choon Fah said the growing foreign buying of landed homes in Singapore reflects that many foreigners/PRs are raising their families here.

‘They may find that condos are too small. Very often they buy landed homes in locations close to the foreign/international schools that their children attend, for instance, in Lorong Chuan, where the Australian International School is located, and in the West Coast near the Japanese School,’ she added.

‘Many of these foreigners and PRs say Singapore is a very ‘liveable’ place. If they believe in the future of Asia, they’d want to raise their families in Asia, and Singapore is a good location, from which they can get exposure to China and India because of our connectivity,’ she added.

Since 1973, foreigners (including PRs) have been prohibited from buying landed property without prior government approval. All would-be buyers must seek permission from the Land Dealings (Approval) Unit under the SLA. Typically, it takes about four weeks for approval to be granted, but in the upscale waterfront locale of Sentosa Cove, the time has been fast-tracked to less than 48 hours.

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.

However, being a PR does not automatically mean one’s application to buy landed property will be approved. For instance, if the PR does not have the recognised qualifications or expertise/working experience required by Singapore or has not made any investment in the type of industry/service sector being promoted in Singapore, the application may be turned down. Even PRs who have set up businesses promoted by Singapore may find their applications rejected if their company’s paid-up capital and turnover do not meet certain requirements.

Source : Business Times - 14 Jul 2007

Foreigners buying homes: Should it be made easier or harder?

The spotlight has fallen on foreign buyers of private homes, after a recent call by Goldman Sachs for a liberalisation of rules governing their purchase of landed property. LYDIA LIM and SUE-ANN CHIA look at foreign buyers’ impact on the home-owning aspirations of Singaporeans

FOREIGNERS who buy real estate run the gamut from the fabulously wealthy looking for a place to park their money, to rich couples with plans to spend part of their retirement years here, to middle-income professionals in need of a stable roof over their head.

Not all of them have deep pockets, says Australian journalist David Fogarty, 41, who has worked here for 10 years.

He lived in rented apartments for most of that time but finally bought a place in a condominium in the River Valley area last year.

After being asked to vacate two rented homes in fairly quick succession, due to a collective sale and a buyover by a landlord’s daughter, he says he ‘got tired of living in other people’s property’.

‘The decision was based purely on the need for a place to live, not the prospect of making money,’ he tells Insight.

Still, there is concern among young home buyers like lawyer Aaron Kok that foreigners are nudging out Singaporeans to the suburbs for more affordable property.

But even in the suburbs, the 27-year-old feels the heat of the activity in the upper end of the property market. In the past six months, Mr Kok has seen the price of a new two-bedroom condominium he is eyeing in the east soar from $580,000 to over $700,000.

It is now out of his reach.

At the same time, he and his girlfriend do not qualify for a new HDB flat as their combined monthly income exceeds the $8,000 income cap.

‘With Singapore wanting to attract more and more foreigners here, properties in the prime locations will be snapped up and they will start to look at suburban areas. This means Singaporeans will be pushed to the periphery,’ he says.

Demand from foreigners has been on the rise since last year. Their share of private home purchases rose to 27.2 per cent in the first quarter of this year, a peak surpassed only once during the last boom, when the figure hit 32 per cent in the fourth quarter of 1995.

Buyers from traditional markets Indonesia and Malaysia continue to dominate, but demand is coming in strongly from other quarters as well - notably Indian nationals.

Foreign interest in landed homes is also on the rise, with applications to the Singapore Land Authority for permission to buy up 30 per cent last year, from the previous year.

Last week, Minister Mentor Lee Kuan Yew observed that demand for high-end offices and homes has increased with new inflows of financial sector professionals. He warned that rising rents must be kept in check or Singapore will lose its competitiveness.

Given the combination of soaring prices and looming anxiety among some first-time buyers, one view emerging is that it is time to review foreign ownership of residential properties.

Then again, a contrarian argument was put forth a fortnight ago by a property analyst of investment firm Goldman Sachs, in which he urged that rules on foreign buying be eased as it would spur the drive to draw foreign talent.

What is at stake in this nascent debate? Will foreigners lift the property market and the economy to greater heights? Or will more Singaporeans find themselves priced out of parts of their city, the way natives of other big cities found themselves elbowed out to the suburbs because of foreign buying?

No foreign hoarding of land

A CLOSER reading of the Residential Property Act, which regulates foreign buying, reveals that the Government’s concern is less over foreign ownership of homes than their holding and control of land.

Foreigners can buy as many private homes as they wish, but they cannot do the same with land.

The Act states that only permanent residents (PRs) can buy landed property, and they must first seek permission from the Law Ministry. Each PR can buy one landed property and only for his own occupation.

For apartments and condominiums, foreigners cannot, without prior approval of the Law Minister, buy every single unit in a particular development. That is the only way for an individual to gain control of a piece of land governed by strata title.

Apart from that restriction, foreigners are free to own as many units as they wish.

Underlying these rules is a simple matter of scarcity - homes can be built a lot faster than land is made.

Property analysts say the law is designed to prevent ‘land hoarding’ by foreigners. Without it, there is a risk that foreigners could acquire large tracts of land in Singapore and manipulate supply and pricing to their advantage, not to mention obstruct the Government’s urban renewal plans.

One outcome is that in the 30 years since the law was enacted, prices of luxury condominiums have outstripped those of bungalows, as foreigners are largely confined to the former category of homes.

Goldman Sachs analyst Leslie Yee estimates the price gap to be around 35 per cent. In his report, he called for these rules to be relaxed, ‘on the grounds of accelerating Singapore’s drive to attract foreign talent and bulk up its population’.

He argues that such a change will not detract from the national objective of widespread home ownership, as there is a ‘world-class public housing system’ in place to cater to the needs of 80 per cent of Singaporeans.

The Law Ministry responded quickly to say it has no plans to ease the curbs on foreign ownership of landed homes.

Mr Yee’s call was also met with consternation by other property analysts, who said the market is already bubbling and in little need of such a catalyst.

Mr Nicholas Mak, head of consultancy and research at Knight Frank, says any such relaxation would ‘open the floodgates too wide’.

Foreigners bought 249 landed homes last year, 65 per cent more than in 2005, according to an analysis by property firm DTZ Debenham Tie Leung.

Of these, 105 were in prime districts 9, 10 and 11.

Of the 68,402 landed homes here, only 10,526 are in these prime areas.

With many rich foreigners from the region waiting in the wings to snap up landed homes, Mr Mak says an easing of rules will serve mainly to profit property developers.

The big losers will be middle- and upper-middle class Singaporeans who aspire to own landed homes, as they will be ‘priced out’, he warns.

Moving up the property ladder

WITH public housing accounting for 79 per cent of homes here, most Singaporean home buyers are protected from foreign competition.

Only foreigners who are PR can buy HDB homes, but only on the resale market.

However, the top 20 per cent of families are not eligible to buy new HDB flats as their monthly household income exceeds the $8,000 ceiling.

They will be in the market for private homes and may find themselves up against foreigners with deeper pockets.

It was concern for this group that led to the Government’s first clampdown on what it termed ‘land speculation’ by foreign buyers in 1973.

It said then that if it did not step in, young middle-income earners such as engineers, teachers, junior executives and officers in the police and armed forces, who were not eligible to buy HDB flats, would find ’suitable housing beyond their means altogether’.

Thirty years on, this remains a concern, with a booming economy causing the tide of foreign interest in Singapore real estate to rise again.

Foreigners accounted for 27 per cent of all private property deals in the first quarter of this year. But for top-end luxury apartments, their share has now risen to around 60 per cent.

Ms Tay Huey Ying, director of research and consultancy at Colliers International, estimates that 70 per cent of these foreign purchases are for investment and 30 per cent for living in.

The impact of such strong foreign demand on prices bears watching, she says.

‘Although the high-end and luxury tier is most attractive to foreigners at this time, the very strong foreign demand has led to a spate of collective sales at this end.

‘This creates a supply crunch at this tier. Demand then filters down to the lower tiers, causing prices to go up,’ she adds.

Such a cascading effect is apparent in the latest Urban Redevelopment Authority flash estimates, which show that in the second quarter, home price increases spread beyond the high end to other parts of the market, including mass-market private condos and the HDB resale market.

Mr Charles Chong, who chairs the Government Parliamentary Committee on National Development, says there could be a political cost if more Singaporeans find themselves priced out of mass-market properties.

But he stresses that the rise in prices affects both Singaporeans and foreigners alike, as both groups include those in need of a home.

‘With rising prices, people need to put the blame somewhere and foreigners are a convenient place to park the blame,’ he says.

If the current surge in demand were to result in a short-term dearth of homes, property regulations may need to be tweaked, he adds.

But Professor Ong Seow Eng, deputy head of research at the National University of Singapore department of real estate, cautions against restrictions that may be seen as anti-foreigner.

‘I do not think it is appropriate for a government policy to protect local ownership, not if we truly want to become an international hub of choice,'’ he says.

‘Foreign ownership is a vote of confidence in Singapore,’ he adds.

Concurring, Mr Mak says he finds the current rules on foreign ownership ‘quite balanced’.

Unlike landed property, there is less need to restrict foreign buying of condominiums since supply is flexible, he argues, with government planners able to raise the plot ratio of land parcels should the need arise.

Property analysts also question the appropriateness of singling out foreigners for blame, given that the speculative activity of Singaporeans contributes to the price spiral as well.

Calming fears of S’porean buyers

THE Government has been at pains to reassure Singaporean buyers on two counts.

First, it has said that supply of new private homes is more than enough to meet demand.

This is unlike the situation in cities such as London, where a real estate boom coupled with a huge shortfall in housing supply has resulted in many locals being priced out of parts of the city.

London and Hong Kong also have no restrictions on foreign buying of real estate, whereas Middle Eastern states tend towards the other extreme, banning such purchases apart from exceptional cases. Singapore’s laws are in between these two extremes.

Second, National Development Minister Mah Bow Tan said two weeks ago that rapid price escalation is still confined to the luxury tier whereas prices of HDB resale flats are appreciating at a sustainable rate, in line with economic growth.

Even young home buyers like businessman Tan Sin Yat, 32, acknowledge that there are still affordable private homes to be had.

‘But you may have to look harder,’ he says.

The consensus appears to be that there is no urgent need to change existing rules on home purchases by foreigners, for now.

But the situation remains one that bears watching lest a speculative bubble builds up through a combination of local and foreign investor activity.

AS SINGAPORE draws more foreigners to work and invest here, how concerned are you at the impact this might have on property prices?

What do you think can be done to help Singaporeans and foreigners in search of affordable housing?

Source : Straits Times - 14 Jul 2007