Redas, industry studying cooling measures: sources

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http://www.businesstimes.com.sg/sub/...15940,00.html?

Published December 27, 2011

Redas, industry studying cooling measures: sources

Suggestions also being raised, some may be presented to the authorities

By UMA SHANKARI


(SINGAPORE) The Real Estate Developers' Association of Singapore (Redas) has been holding a series of meetings with industry players to look into the impact of the latest round of property curbs, sources told BT.

According to the sources, meetings were held recently with stakeholders such as developers, property consultants, brokerage analysts and lawyers.

They discussed the intended objectives of the cooling measures - which include an additional buyer's stamp duty (ABSD) of 10 per cent for foreigners - as well as the likely consequences.

BT understands that several suggestions for a more 'calibrated' approach were also raised at the meetings. Some of those proposals, which are still being explored and fine-tuned, could eventually be tabled and presented to the authorities, sources said.

One idea floated was to identify 'hot spots' for foreign investments according to postal district codes, and then apply tiered stamp duties.

According to a recent CBRE analysis of URA's caveat data lodged from January 2011 to November 2011, almost 29 per cent of private homes in the core central region - which includes the prime districts 9, 10 and 11, Marina Bay and Sentosa Cove - were purchased by foreigners.

By contrast, the foreigners' share was only just over 14 per cent in the outside central region, which is a proxy for suburban mass market locations.

Industry players also suggested that instead of singling out foreigners to bear heavier taxes, the authorities could give more incentives to support Singapore citizens and Permanent Residents (PRs). One proposal was to provide more generous subsidies for first-time homebuyers.

Under the latest round of measures announced on Dec 7, foreigners and corporations have to pay an ABSD of 10 per cent - on top of the existing buyer's stamp duty of up to 3 per cent.

The new duty will also apply to PRs buying their second or subsequent homes and Singaporeans buying their third residential property or more - though only to the tune of 3 per cent.

Those at the meetings noted that foreign buyers have not significantly contributed to the increase in mass market home prices.

Based on a list collated by Redas ahead of the meetings, foreigners had a strong presence in only three out of 33 selected projects launched recently.

At least 50 per cent of the units in the three projects, all of which are targeted at mid to high-end buyers, were sold to foreigners, PRs and corporations. And only one project had more than 50 per cent of units sold purely to foreigners.

Industry players also noted that the new measures do not address the rising prices of resale HDB flats - which are thought to underpin the demand for mass market private homes and the subsequent price surge in that segment.

Analysts are split over whether the ABSD is here to stay. CBRE's executive director for residential, Joseph Tan, thinks that the duty is not likely to be around forever.

'We are of the opinion that these measures are unlikely to be a permanent feature because of the nature of Singapore's highly open economy,' he said in a recent report.

But Chua Hak Bin, an economist with Bank of America Merrill Lynch, said the government is shifting to a 'Singaporeans first' policy, and that the differentiated buyer's stamp duty may therefore become a permanent fixture.

'The differentiated buyer's stamp duty may remain even after property markets cool, as the government moves towards differentiating the privileges and rights of Singaporeans, permanent residents and foreigners,' Dr Chua said in a Dec 15 note.

Any relaxation would likely occur by way of loan-to-value (LTV) ratios or the seller's stamp duty, he added.

When the measures were announced, the Ministry of Finance and the Ministry of National Development said that they were introduced to moderate investment demand for private homes and promote a more stable and sustainable market.

But industry players have speculated that in addition, the government could have unstated intentions such as lowering the cost of living, implementing a 'Singaporeans first' policy, and managing foreign investments into Singapore.

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http://www.businesstimes.com.sg/sub/...02340,00.html?

Published December 28, 2011

Developers, govt agree to disagree

Redas chief calls ABSD 'Another Bad Shock for Developers', minister says that it is necessary

By MINDY TAN AND FELDA CHAY


(SINGAPORE) That the government and developers disagree over the latest cooling measures was made plain at last night's Redas dinner, where deeply divergent views were publicly aired.

The Real Estate Developers Association of Singapore's 52nd anniversary dinner was the first public function for the industry since the government announced the cooling measures, including the Additional Buyers Stamp Duty (ABSD) on Dec 7.

In the presence of Tan Chuan-Jin, Minister of State for National Development and Manpower, who was the guest-of-honour at last night's event, Redas president Wong Heang Fine called the ABSD an 'Another Bad Shock for Developers'.

In his speech, Mr Tan acknowledged that he did not expect developers to welcome the measures, but reiterated that the measures were implemented in the common interest for a stable and sustainable property market.

'Our small property market is attractive to foreign funds . . . (So) the latest measure is a targeted and measured move to moderate such investment demand in order to avoid the need for a major correction down the road,' he said.

Mr Wong, however, had a different take. Beyond the short-term concerns of property sales volume and prices falling, there are other longer-term concerns, he pointed out. Mr Wong is also the chief executive of CapitaLand's Singapore residential arm.

Not only could the government measures lead to a higher cost structure for developers due to higher land acquisition cost, they could potentially have a knock-on effect on mortgages resulting in a possible decline in home equity values and consequently, shrinking wealth, he said.

The measures may also risk hurting the already frail economy and dampening foreign investments and business prospects in Singapore.

'One analyst is even of the view that these harsh measures could tip the economy - already on the edge - into recession,' said Mr Wong, in a publication issued by Redas to celebrate its 52nd anniversary, Building an Outstanding Global City.

'With real estate activities accounting for some 5.2 per cent of GDP, a 25 per cent fall in property transactions in 2012 could shave GDP growth by about 1.3 per cent,' he warned.

In December, the government rolled out the ABSD to moderate investment demand for private residential property. Foreigners and companies buying any private residential property now pay an ABSD of 10 per cent of the purchase price or market value, whichever is higher.

A 3 per cent ABSD applies to permanent residents buying their second and subsequent homes, and Singaporeans buying their third and subsequent residential property.

Another point of contention was the government's lack of consultation with Redas and other industry players, before implementing the cooling measures.

'It is Redas's wish to continue to engage the government in close dialogues even on sensitive matters such as cooling measures before they are implemented,' said Mr Wong.

However, Mr Tan countered that while there are many areas of mutual interest in which the government would be 'happy to engage in closer dialogue', the government 'may not be able to consult Redas on every issue, especially those that are market-sensitive'.

'Importantly, it is not about common consensus, but about doing the right thing and implementing the right policy,' he said.

Further, Mr Tan said that the Ministry of National Development was prepared to release more land for the development of 5,000 executive condominiums (ECs) next year to help more higher-income Singaporeans own private housing.

This follows the government's move, in August this year, to raise the monthly income ceiling for the purchase of new ECs from $10,000 to $12,000. According to Mr Tan, around 220 households have since benefited from the higher income ceiling.

He reiterated that the government remains committed to helping first-time owners and newlyweds address their housing needs, and will begin to pay more attention to helping HDB second-timers next year.

Noting that it is still too early to comment on the impact of the measures on property prices, Mr Wong said that Redas will continue to assess the impact of the latest measures in consultation with industry players, before providing appropriate feedback.

Noting that the policy is 'short term' in nature, to address the influx of funds from foreign investors into the property market, Mr Wong said: 'Let the measures take its natural course, and then we'll look at it.'

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Property curbs could hurt economy: Redas

Volumes, prices will be hit, but economists say dose of medicine needed

Published on Dec 28, 2011

By Esther Teo, PROPERTY REPORTER & Cheryl Lim


THE key organisation representing property developers warned last night that the new cooling measures that sharply raised stamp duties could hurt the real estate market and the wider economy.

The president of the Real Estate Developers' Association of Singapore (Redas) said developers may face increased land costs. The curbs could also lead to a fall in home values, while possibly damaging the already fragile economy and dampening foreign investment.

Mr Wong Heang Fine highlighted the concerns during his opening address at Redas' 52nd anniversary dinner at the Ritz-Carlton, Millenia Singapore.

The Dec 8 measures - dubbed by some experts as the harshest out of the five policy moves since September 2009 - include an additional buyer's stamp duty of 10 per cent on foreigner home purchases.

They also require developers to build and sell all units in their housing projects within five years or pay a stamp duty of 10 per cent.

Mr Wong acknowledged that the measures are likely to hurt both prices and volumes in the short term, with the prime segment the hardest hit given that there are many foreign buyers in that sector.

'One analyst is even of the view that these harsh measures could tip the economy, already on the edge, into recession,' Mr Wong said separately.

Real estate activity accounts for about 5.2 per cent of gross domestic product (GDP), so a 25 per cent fall in property transactions next year could shave economic growth by about 1.3 per cent, he noted.

Furthermore, the new measures might also hurt the mortgage market, adding to the sector's challenges given the significant housing supply in the pipeline from the government land sales programme.

'Nonetheless, Redas is confident that real estate will remain an attractive and important asset class for all long-term local and international investors. Today, our nation ranks among the best as a vibrant global city and attractive investment destination,' Mr Wong said.

He said Redas will continue to assess the impact of the new measures in consultation with industry players.

Mr Lim Ee Seng, chief executive of Frasers Centrepoint and Redas first vice-president, added: 'The measures have already been imposed, there is nothing we can do about it.'

'So the only thing to do is to monitor it closely and have very close dialogue and see how it works out. I am sure the Government will tweak it if it is not achieving the original objective of a stable, affordable property market.'

Mr Chia Ngiang Hong, Redas' second vice-president and City Developments (CDL) group general manager, said that while foreigners are expected to be affected the most in the short term and might be more cautious in their purchases, they may re-enter the market in future as Singapore is regarded as a safe haven by many.

In fact, he noted that foreigners had made purchases at one of CDL's projects at the recent weekend.

Some consultants agreed with Redas, saying the severity and the timing of the measures could hurt the property sector.

'Even if the developers had been consulted, the implications would still be as wide-ranging for sure. This is especially in a situation where segments like financial services and manufacturing are slowing down,' said Mr Alan Cheong, head of research at Savills Singapore.

But economists say the measures are timely. Mr Joseph Tan, chief economist of Asia at Credit Suisse, pointed out that low interest rates have led to an exuberant real estate market, resulting in property-related loans making up a significant portion of bank lending here.

'(That situation) is not healthy... The (developers) can't have it both ways, especially if they have been making good money within the past few years,' he said.

While the measures may be a bitter pill for the various property stakeholders to swallow, other economists say it is exactly the medicine the industry needs now.

Although price growth moderated in recent months, transaction volumes were still strong. CIMB economist Song Seng Wun said that if this was left unchecked, there would be a more severe impact on the economy in the long run.

'More liquidity will flow into Singapore, especially if investors continue to see gains in the market. Obviously, this would impact other property segments like rents, and might even eat into the overall cost of labour and affect Singapore's affordability ranking,' he said.

Other economists also said the Redas claim that a fall in property transactions could shave 1.3 per cent off GDP growth next year is probably an exaggeration.

They said the health of the economy is more dependent on whether there is strong consumer and business confidence, and job creation.

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