An Australian who is the en bloc condominium owner who is facing the prospect of a collective sale, has taken to a forum to say why the collective sale is at best a “mixed blessing”.

The en bloc condominium owner said that Singaporeans are wrong when they say “oh you’ll be rich” with the en bloc sale. The “reality is that the premium paid (~25 to 35 percent) is not worth the issues it will cause.”

He said that he is a permanent resident and did not pay the Additional Buyer’s Stamp Duty (ABSD) when he bought his current property, but reckoned that he’ll have to pay a hefty ABSD when he buys a new property.

The ABSD was first introduced on 7 December 2011 to cool the residential market and was revised upwards on 12 Jan 2013 due to the further acceleration in the escalation of the price of residential properties. ABSD is applicable to certain groups of people who buy or acquire residential properties (including residential land). This duty, which is in addition to the existing buyer’s stamp duty, is applied as follows in most cases:

The Australian en bloc condominium owner pointed out that even if the property is successfully sold to a bidder, he will not be able to buy right away as he will need to wait for at least a year for payout, and for that one year he faces an uncertainty with “what looks to be a rising market.”

Paul Ho, the chief mortgage officer of icompareloan.com said that the Australian’s expectation of payout after sales completion is an underestimation. “En bloc sales process takes easily 18 to 40 months to complete, and in a rising market, the prices of properties could easily have risen by 5 to 10% a year, rendering the premium obtained from en bloc not worth it,” he said.

Another problem the Australian said he faced was that of getting another attractive long-term bank loan. “At 55, I’ll be lucky to get a 10 year loan, so I’ll be forced to pay cash which is painful and restricts my choices and/or take a mortgage with extremely high payments (e.g. $6,000 in monthly payments instead of $3,000).”

What the en bloc condominium owner is worried about is the Loan-To-Value (LTV) ratio. The LTV ratio is the amount of financing that the bank can provide. An LTV ratio of 80 per cent (the maximum possible for a home loan) means the bank can loan you up to 80 per cent of your property price or valuation, whichever is lower.

Not everyone will get the maximum LTV of 80 per cent. If you have an outstanding home loan, for example, your LTV can fall to 60 per cent. Likewise, older properties, the age of the borrowers, and your credit score can all cause the bank to lower the LTV.

To get the maximum LTV, you must meet two age-related conditions: first, your loan tenure must not exceed 30 years (for Condo and 25 years for EC) . Second, your loan tenure plus your age must not exceed 65 if you want 80% loan.

For example, if you are 43 years old, and you want to get 80 per cent LTV, you must have a loan tenure of only 22 years (43 + 22 = 65). If you are 23 years old and you want to get 80 per cent LTV, your loan tenure still must not exceed 30 years; even if your age plus the loan tenure would fall below 65.

At any rate, note that the maximum loan tenure for private properties is 35 years.

If your loan tenure plus your age would exceed 65, or your loan tenure exceeds 30 years, then the maximum LTV will fall to 60 per cent. If you also have outstanding home loans on top of this,  the maximum LTV will fall further to 40 per cent.

Unfortunately, the LTV may not be the only problem the Australian may face. Singapore’s home loan interest rates are expected to be impacted by the recent Monetary Authority of Singapore’s tightening of the Singapore Dollar exchange rate, as well as the Federal interest rates hike.

Home loan interest rates to be impacted by exchange rate tightening

The en bloc condominium owner further said that he does not want to downgrade to a Housing & Development Board (HDB) flat. “HDB is NOT an asset that appreciates (and (Singaporeans) are waking up to this – even their own (Government) admitted it,” he said.

He was probably referring to the the public uproar that ensued following HDB’s chief executive’s suggestion that home buyers should pay less for resale flats with shorter leases. “The price you pay (for your resale HDB flat) should (be) commensurate with the lease,” Dr Cheong Koon Hean said at her 2nd Institute of Policy Studies-Nathan lecture.

HDB chief suggests buyers should pay less for resale flats with shorter leases

Besides all these hassles, the foreign en bloc condominium owner may also be liable for taxes from the Australian Tax Office. Australian residents are generally taxed on any capital gains they make on overseas assets (for example, when they sell an overseas property, they must report the gain in their tax return).

As his wife is an American, he may use his wife’s name to purchase the next property. Under the United States – Singapore Free Trade Agreement (USSFTA), American citizens do not pay ABSD on the first property they purchase in Singapore. But he reckons that his wife may have tax issues with the Inland Revenue Authority Of Singapore if she does so.

The biggest problems for the en bloc condominium owner (as are with most buyers affected by the collective sale) are location and the size of his prospective new property. “The location we are in is hard to buy in again, and yet it’s an ideal location near my son and my daughter’s schools,” he said.

He added: “I have a large 1500 sqft place (and such large apartments) barely exist now.”

En Bloc Sales Process Singapore – A Definitive Step-by-step Guide

He pointed out that he would have sold his current apartment at some point in time, bu the en bloc attempt will force him to make a new purchase; and he would have to wait 3 – 4 years more before disposing of the new apartment, as he would be deterred by the Seller’s Stamp Duty.

Being a Permanent Resident, he is also bound by the Central Provident Fund (CPF) rule. This rule will be a big disadvantage for him. He explains:

“The CPF board will grab my housing monies to repay CPF and I will turn 55 in the process which means I cannot use CPF again for the next purchase as my Ordinary Account will become Retirement Account (which I can’t touch). That’s (almost $200,000) of purchasing power gone.”

He laments that his $50,000 renovation for his current condo unit is also wasted.

“The whole en bloc has been highly contentious and emotional, (leading to) broken friendships (which) brought calamity upon our heads,” he said.

He added that although his condo sales committee got 81 per cent to consent to the collective sale, they have forgotten that a relatively large number people in the condo do not want it.

—
If you are home-hunting, our Panel of Property agents and the mortgage consultants at icompareloan.com can help you with affordability assessment and a promotional home loan. Just email our chief mortgage consultant, Paul Ho, with your name, email and phone number at [email protected].

Colliers International expects the real estate investment sales market in Singapore to maintain its positive momentum and grow 15 per cent year-on-year (YOY) to $46 billion in 2018. The latest report by the leading property services company said that it expects real estate investment to climb a further 5-10 per cent YOY in 2019.
The report noted that property developers and investors shrugged off concerns over a global trade war and heightened equity market volatility in Q1 2018. They have injected a staggering $11 billion into the Singapore investment sales market – up by 89 per cent YOY. The robust investment figure in Q1 was predominantly driven by the residential sector. Residential land sales, including several large collective sale transactions, accounted for about $9.15 billion or 83% of the total investment sales in the quarter.

Notably, the five largest deals in Q1 2018 were all residential collective sales: Pacific Mansion which went for $980 million; Park West at $840.9 million; Pearlbank Apartments at $728 million; Goodluck Garden at $610 million; and Brookvale Park at $530 million.

Ms Tang Wei Leng, Managing Director at Colliers International, commented, “Interestingly, barely five months into 2018, the transaction value of residential collective sale deals has caught up with that of 2017. Colliers noted that there were 24 transactions amounting to $8.12 billion as at May 03, close to the $8.13 billion from 27 deals last year.”

She added: “The collective sale market is likely to remain buoyant this year, barring any unforeseen events. That said, to get a deal across the line, it is also key that owners set realistic asking price. Owners’ expectations have risen in tandem with the rising property market – particularly so of late, as the cost of buying a replacement home has increased.”

Investment sales from other sectors – industrial, commercial, shophouse and hospitality – made up the remaining 17 per cent (or $1.85 billion) of the total transaction value in Q1 2018. While they are unlikely to overtake residential investment sales any time soon, Colliers believes there are some upsides ahead as most of these sectors have bottomed.

Everyone wants to know how to make money from buying and selling properties or making a rental yield. For those interested in real estate investment, the decision is between jumping in and buying (and perhaps overpaying for reading the market wrongly), and a long, hard wait where one might potentially lose a lot of capital in the process.

Real estate market sentiment at the all time high in Singapore

Understanding the property cycle and current market conditions would help those interested in real estate investment to determine if it is a good time to invest. In order to correctly understand the market, buyers of real estate investment properties need to properly model the market to capture all the inputs and outputs.

Those interested in real estate investment should only go for high quality properties in good location with historical strong rental demand. One important thing such prospective buyers should ask is, “if money is not an issue, where would you rent?”

The prospective buyer would only know where the rental demand is after speaking to 30 – 50 people. So, always buy in those areas where people want to rent (because when times are good, one can get good rentals and when bad, it is still rent-able at a lower rent), you will still be able to find tenants because of the desirable locations.

Look for units that have some price distortion or buy good facing units that are going for less premium during high market. (Note: Some more speculative projects have a price difference of 20 -30 per cent between good facing and average facing units. For example, between 2800 psf versus 2200 psf, during a low cycle, the difference could narrow to 5 to 10 per cent.)

Where possible, those interested in real estate investment should always go for landed residential housing for store of value (though yields for such investments are very low). Investors should, however, be mindful of your monthly installment load. Go also for condominiums in prime districts well known for rental demand if you are investing, and understand your tenant market so that you can target them well.

Always make sure you have the necessary skills to negotiate well to buy a property. Those interested in real estate investment, but do not have the time to do do proper homework before investing, may obtain a full detailed Property Research Report by writing to us at  www.iCompareLoan.com/contact.

CSC Land Group’s maiden residential development in Singapore, Twin VEW near Jurong Lake District, saw 85 per cent of its units being sold in the opening weekend. With 442 units out of a total of 520 units sold (including four penthouses), the average price of units sold was $1,399 per square feet (psf).

CSC Land Group said that the buyers were a mix of group of singles, young couples, families and multi-generational families. Of the 442 units sold, 83% were Singaporeans, 15% were permanent residents, and the rest were foreign purchasers.

Investors and homebuyers were buoyed by the potential of the Jurong Lake District. “We are very encouraged by the strong response this weekend,” says Li Xiao Qian, chairman of CSC Land Group. “All unit-types have been very well-received, demonstrating the diversity offered by Twin VEW. WE are confident that this momentum will continue.” The project located at West Coast Vale is expected to be completed by 2021.

The developers say that the construction of Twin VEW near Jurong Lake District was inspired by by rice terraces, cascading waters and river valleys and is an architectural scenograph, reflecting the lifestyle of riverside living.

Twin VEW’s high-rise towers are north-south orientated, which would maximise residents’ views towards Pandan Reservoir and reduces the western sun exposure. The two towers boast spacious, 7-metre-high lobbies to offer optimum spaces for landscaping and recreational facilities, elevating even the first levels of residential units for enhanced views.

The development’s swimming pool, gymnasium, dining pavilions and the dining villas are all positioned towards the Pandan River.  Lifting above 36 storeys, the sky terraces in the 2 towers are designed to offer Pandan Reservoir as the backdrop for parties or daily fitness. Residents can also enjoy over 100% landscaping with 63 facilities on the e-deck and sky terraces. Encased within the development are also 2 shop spaces and a childcare centre to cater to the needs of the residents.

The developers explain that the name project, Twin VEW, represents the two spectacular towers that offer residents stunning views in all directions, and that the “deliberate spelling of ‘VEW’ is derived from the three main elements of nature: Variety, Earth, and Water.”

“Inspired by Mother Nature, each living space is tailored for every stage of the residents’ life, thoughtfully crafted to enable them to live their life stories to the fullest,” it added.

Twin VEW is situated with Pandan Reservoir on one side and the West Coast sea on the other. Units which are located from the 6th floor onwards should get an unblocked view of the waterfront. Sited next to Sungei Pandan and Pandan Gardens Park Connector, it is a stone-throw away from the Jurong Lake District, which has been earmarked by the Government to be developed into the largest regional centre outside the Central Business District.

Jurong Lake District looks bright with HSR construction slated to begin 2019

Several reputable educational institutions, like the National University of Singapore and Nan Hua Primary School, are in close proximity to Twin VEW. When it comes to dining and shopping near home, residents will be spoilt for choice with a myriad of options from nearby shopping malls that include JEM, West Gate, JCube and BigBox. Accessibility-wise, Twin VEW near Jurong Lake District provides residents with effortless reach to many parts of Singapore, including Orchard Road and Harbourfront, through short commutes via the Ayer Rajah Expressway.

CSC Land is the property development arm of China Construction (South Pacific) Development, which purchased the riverfronting site along Pandan Reservoir in February last year for $291.99 million ($591 psf per plot ratio). The development, which is a pair of elegant glass towers perched atop an elevated terrain, is designed to be a tranquil sanctuary for quiet indulgences, where residents will be treated to a multi-sensorial rejuvenation from the various amenities including spa pools and luxurious pavilions.

1, 2, 3 and 4 bedrooms are available in this 99-year leasehold project, which is expected to be completed by Quarter 4 of 2021. Units are priced at between $1,200 – $1,300 psf. The price of one-bedroom units start from $650,000, two-bedroom units from $898,000, three-bedroom units from $1.18 million, and four-bedroom units from S$1.55 million. There are also six breathtaking penthouses in the mix.

Soaring above the tranquil residential enclave at the Twin VEW near Jurong Lake District, are two modern 36-storey towers accommodating 520 units. The development’s residential unit mix comprises one to four-bedders, ranging from 484 sq ft to 1518 sq ft.

On 27 April, the Urban Redevelopment Authority today announced that the prices of private residential units increased by 3.9 per cent in the 1st Quarter of 2018, compared with the 0.8 per cent increase in the previous quarter. It is the biggest increase in 8 years and private property prices are expected to increase further this year. This indicates a steady upward momentum in prices as caveats in the remainder of the quarter were captured, boosting the index.

The increase in the overall private residential price index was mainly due to a huge jump in the Outside Central Region (OCR) index for non-landed homes to 5.6 per cent in the final data. Strong pricing in new projects with high transaction volumes contributed to the sharper increase in the index. The index for non-landed homes in Core Central Region (CCR) rose 5.5 per cent.

Private residential property sees highest quarterly increase in 8 years

If you are buying a unit at Twin VEW near Jurong Lake District, the mortgage consultants at icompareloan.com can help you with affordability assessment and a promotional home loan.

Just email our chief mortgage consultant, Paul Ho, with your name, email and phone number at [email protected].

Find out the Promo Home Loan Rates, or work with our Panel of Property agents.