Category Archives: Overseas Property

UOB suspends London property loans after Brexit

United Overseas Bank (UOB), Singapore’s third-largest lender, has suspended its loans programme for London properties in the wake of uncertainties caused by Britain’s vote to leave the European Union.

UOB would be among the first banks in Singapore to turn cautious on such lending, even though it is not a large amount, as Brexit spooked global markets and pushed the pound to multi-year lows.

“We will temporarily stop receiving foreign property loan applications for London properties,” a UOB spokeswoman said in an email.

“As the aftermath of the UK referendum is still unfolding and given the uncertainties, we need to ensure our customers are cautious with their London property investments.”

Singapore’s biggest lender, DBS Group Holdings, said it continued to provide financing for property purchases in London but was advising its customers to be cautious.

“For customers interested in buying properties in London, we would advise them to assess the situation carefully before committing to their purchases as there could be potential foreign exchange and sovereign risks,” Ms Tok Geok Peng, executive director of secured lending, consumer banking group (Singapore) at DBS Bank, said in an email.

The Singapore dollar has gained about 10 per cent against the British pound since the referendum.

“There have been London properties available for the last few months before the Brexit. The question is whether these properties can still continue to receive buyers in the short-term,” said Ms Alice Tan, head of consultancy and research at Knight Frank Singapore.

Property consultants say data on the number of properties purchased by Singaporeans in the United Kingdom is not tracked that closely. Banks do not disclose lending data for UK property purchases.

UOB said it was monitoring the market environment closely and would review it regularly to determine when it could resume its property loan offering.

Source : Channel NewsAsia – 30 Jun 2016

Frasers Centrepoint unit’s Park Gallery in Australia sold out

PARK Gallery, a townhouse development located at Cova on Australia’s Hope Island, is sold out, Frasers Property announced on Wednesday.

Since launching in November, Frasers Property Australia, the Australian division of Frasers Centrepoint Limited, has achieved more than A$28 million (S$28.9 million) from the sales of 60 townhouses at Park Gallery.

The 60 “architecturally designed” Park Gallery townhouses consist of three bedrooms, two bathrooms with a single or double garage space. The majority of the townhomes will have direct access to Cova’s largest park at 5,000 sq m.

Frasers Property has partnered with Hutchinson Builders to complete the release with settlements due in Q3 2016.

New guidelines for overseas property ads from mid-August

From mid-August, enhanced guidelines on advertisements for property investment advertisements will take effect.

The new guidelines for all media platforms aim to eliminate advertising claims that are speculative, misleading, or cannot be substantiated, said Advertising Standards Authority of Singapore.

Singaporeans are one of the top real estate buyers in Asia, according to the Consumers Association of Singapore (CASE). The association said overseas property purchases by Singaporeans have risen significantly in recent years, with more foreign properties being advertised in Singapore.

On the other hand, CASE said it has seen an increase in the number of complaints related to such transactions. Since 2013, it has received 23 complaints, mostly where consumers did not get promised returns on their foreign investments.

Meanwhile, Advertising Standards Authority of Singapore said it has received 41 complaints in the last two and a half years, relating to advertisements on financial products and services, including foreign property investments and investment training seminars. The consumer watchdog said advertisements promise high, guaranteed returns, but lack sufficient warnings against risks.

“We want to ensure that the consumers are not given false hope,” said Mr Seah Seng Choon, executive director at CASE. “For example, the higher returns investors put in their advertisement has to be substantiated. The main objective is really to ensure that advertisements are legal, accurate and ethical. In a nutshell, we want to see transparency in their disclosure and the advertisements should reflect the factual information that consumers should receive. ”

The enhanced guidelines are being recommended by the Advertising Standards Authority of Singapore, an advisory council under CASE. They are aimed at raising the standards of disclosures such as warnings, and qualifications, so that potential investment risks are sufficiently highlighted to investors.

With the changes, advertisements for overseas properties must clearly state information relating to the development and features of the property, as well as potential ownership restrictions and tax liabilities. While the enhanced guidelines may keep investors better-informed, observers said investors, too, need to be careful of where they plan to park their funds.

Said Mr Wong Sui Jau, retirement planning ambassador for iFast Financial: “If you have a situation where they’re making all kinds of promises and implied returns so you get the impression (that) this investment instrument can give you a huge return, there must be a certain amount of risk involved. Either the underlying market is risky, or there may be some of these issues like legal tax which you are probably not aware of.”

The enhanced guidelines will kick in on Aug 12. Advertisers and media owners with contracts signed prior to the effective date will be given a three-month grace period until Nov 11 to fulfil existing contractual requirements and adhere to the enhanced guidelines.

Advertisers who fail to comply will be asked to revise their advertisements or withdraw them altogether. They may also risk losing advertising space and even face negative publicity following investigation by authorities.

Source : Channel NewsAsia – 4 Aug 2015

Singapore developers on overseas buying spree

Singapore developers struggling to sell apartments in their home market are buying property overseas, turning the island-state into the largest foreign investor from the region this year.

Companies including City Developments and Keppel Land pumped US$2.32 billion into overseas markets in the nine months through September, a three-fold increase from the same period last year and the most in at least eight years, according to data from Real Capital Analytics, a research firm that specialises in investments in commercial property.

The Singapore developers are looking abroad as government measures to rein in property values have caused residential prices to fall for four straight quarters, the longest period of declines since 2009.

Many Asian countries such as Singapore are facing property cooling measures at home, so they are venturing to Western markets where they can find returns and are seeing a strong recovery.

City Developments, Singapore’s second-largest developer by market value, said in September that it invested in a plot of land in Tokyo valued at S$356 million. Keppel Land, Singapore’s third-biggest developer, in July said it made its maiden investment in the US with a prime residential development in New York City. The project, which it said at the time was valued at about $70 million, is on Manhattan’s Upper East Side and will be developed by Macklowe Properties.

At the same time, the developers have become increasingly vocal about the difficulties they face in Singapore, where their margins have been squeezed by falling property prices.

Government measures to stem growth in the market and prevent a speculative bubble have brought residential prices down about 4 per cent from the peak in September 2013.

“In Singapore, the residential market is virtually dead,” said Desmond Woon, executive director at luxury-home developer Ho Bee Land.

“With the government measures in place, it has become very hard to do development of residential properties.”

The government’s curbs have included a cap on debt at 60 per cent of a borrower’s income and higher stamp duties on home purchases.

Additional taxes for foreigners buying residential property were raised to 15 per cent in 2013 from 10 per cent, on top of the basic buyer’s stamp duty rate of about 3 per cent.

All home sellers need to pay 16 per cent in levies if they sell within the first year.

City Developments warned last month that Singapore’s housing market may face “fire sales” and mortgage defaults as sales and prices fall.

The overseas investments by developers have helped catapult Singapore into the top place among Asian countries investing in overseas real estate so far this year, according to figures from New York-based RCA.

The country’s sovereign wealth fund, GIC, has been a major buyer of overseas real estate, though its 20-year investment horizon gives it a different profile from the listed Singapore developers.

In total, Singapore entities invested US$9.8 billion in overseas commercial property in the nine months to September, overtaking China with US$8.4 billion of overseas investments and Hong Kong with US$7.3 billion, RCA said.

Ho Bee, which has invested in office towers in London and is developing homes in Melbourne and Gold Coast in Australia, is scouting for more buying opportunities in Sydney and London, Mr Woon said.

The flipside of the developers’ growing interest in overseas real estate has been a drop in bidding at Singapore land auctions as the market cooled.

Results of a land auction announced in August showed only three bids were submitted, the fewest in 18 months, and well below 2009 when there were about 16 bids at the auctions.

Developers are willing to take on the additional risks associated with overseas investments.

Mainland Chinese and Singapore developers are going to New York, Australia and the UK.

They are ready to take a development risk, which is the highest point of the risk curve, as they need higher returns and because they are seeing these markets showing signs of a recovery.

They are also finding higher yields.

Profit margins for developing homes in Singapore are between 5 per cent and 10 per cent while margins in Australia are between 10 per cent and 20 per cent, Ho Bee’s Woon said.

Office properties in London can yield between 4 per cent and 6 per cent while Singapore office yields are about 4 per cent, he said.

“The Singapore residential real estate market will need to battle headwinds as sentiments remain subdued with little signs of property curbs being tweaked or removed in the near-term,” City Developments said in an e-mailed response, citing their earnings statement. The company is “actively pursuing opportunities in the US, UK, Australia, China and Japan,” it said.

The government said in October that home prices need to fall further.

Other developers going overseas include Pontiac Land Group, owner of the Singapore Ritz-Carlton, which invested US$200 million in reviving a 72-story residential tower project adjacent to the Museum of Modern Art in midtown Manhattan last year.

OUE, owner of Singapore’s Mandarin Gallery shopping mall, agreed to buy US Bank Tower in Los Angeles, California’s tallest building, for US$367.5 million in March 2013.

Singapore developers are acquiring mostly offices in London and hotels and commercial properties in Sydney.

Developers are searching for higher yields and returns. Singapore with its cooling measures is quite restrictive in terms of investments.

Some analysts do not see a dramatic reversal of policies over the next year so the trend of developers going overseas will continue.

Adapted from: Bloomberg, 2 Dec 2014

Singapore buyers close 16 Malaysia property deals at the STProperty Seminar & Expo over the Weekend

Singapore investors closed 16 Malaysian property transactions worth more than RM8.6 million (S$3.31 million) at the STProperty Seminar and Expo 2014 over the weekend at Suntec City, event organisers said.

That was the highest number of deals out of the four events that STProperty, Singapore Press Holdings’ (SPH) online property portal, has run in 2014.

The event targeted buyers who wanted to get in before a 6 per cent goods and services tax in April 2015 is expected to raise costs in Malaysia. STProperty also offered an RM8,888 rebate for the first five purchases.

“Singaporeans’ interest in Malaysian properties is not something new, especially with the continued strong showing of the Singaporean dollar against the Malaysian ringgit . . . Despite the current market slowdown, the property market is expected to rise in 2016-2017 so this promises a good amount of returns even for short-term investors,” Siva Shanker, president of the Malaysian Institute of Estate Agents (MIEA), said in a statement.

Malaysia’s property market is currently experiencing some softness, although Nixon Paul, the immediate past president of MIEA, said in November that prices in certain hot spots such as the upmarket Bangsar suburb in Kuala Lumpur have managed to hold up.

In its latest Financial Stability Review, the Monetary Authority of Singapore noted that real estate agencies in Singapore have seen increased interest in overseas property purchases, although the overall growth of property loans, including domestic mortgages, has tempered.

Adapted from: The Business Times, 1 Dec 2014

Overseas developers making stronger pitch

More overseas developers are opening property galleries or sales offices in Singapore to step up their marketing here, prompted by a continued interest in overseas projects.

While most have traditionally relied on their marketing agents to hold property exhibitions here on weekends, there is a growing trend of foreign players wanting to have a permanent presence here.

In the course of a week, two overseas developers have joined the fray. Australia’s Crown Group opened its sales office at Suntec Tower Two, while Malaysia’s UMLand opened its property gallery in Anson House at Tanjong Pagar.

BT understands that London developer Galliard Homes is about to open a sales office in Singapore soon.

Together, they join several other industry peers from the United Kingdom, the Philippines, Malaysia and China who have opened shop in Singapore, including notable names such as UK’s Berkeley Homes and China’s Country Garden. The latter opened a sales gallery here to showcase its Danga Bay project in Malaysia.

“Booming Asia is an important platform for us and we want to be ahead of that trend,” said Crown Group’s Indonesian-born CEO Iwan Sunito. Overseas buyers make up 30 per cent of Crown Group’s clientele, with Chinese and Indonesians forming the majority of this pool.

Sydney-based Crown Group, which achieved some A$20 million (S$23.3 million) of sales from buyers in Singapore last year out of A$300 million of group sales, hopes to reduce its reliance on agents here and derive more sales from direct marketing.

Its director of sales and marketing Adam Sparkes said that the Singapore office marks the start of a longer term plan of developing residential projects globally. Its first overseas office in Jakarta was opened last year.

The fast-growing Crown Group is also looking to set up an office in either Shanghai or Hong Kong within a year and to list the company within five years – possibly in Hong Kong.

UMLand’s opening of its sales gallery is timed with the launch of its premium mixed-development Star Residences in Kuala Lumpur. “The presence of the property gallery will further enhance purchasers’ confidence of UMLand,” said group CEO Charlie Chia. “If the opportunity arises, UMLand will certainly be interested to venture into property development in Singapore.”

UMLand has been marketing projects in Singapore since 2003 when its tie-up with Singapore’s The Ascott Limited in Somerset Seri Bukit Ceylon in Kuala Lumpur, a strata-titled serviced residence project, drew significant interest from Singapore-based buyers.

Its sales gallery will now serve as a one-stop shop for potential investors and buyers to explore other projects in Iskandar Malaysia and Klang Valley.

Mr Chia pointed out that new growth areas such as Iskandar Malaysia are only 30 per cent of Singapore’s property prices. “With this push factor of TDSR, Singaporeans ultimately throng to Malaysia to enjoy better terms and ease of end-financing with Malaysian banks for their investments,” he said.

However, there are still advantages of having sales representatives closer to potential buyers.

Malaysia’s SP Setia Berhad has seen double-digit growth in annual sales to Singapore-based buyers since it opened a sales office here in 2009. Having a presence here allows the developer to provide better after-sales follow-up, said Neo Keng Hoe, SP Setia general manager for Singapore.

This move was also part of the group’s international expansion into Vietnam, Australia, China, the UK and Singapore. SP Setia is behind the Singapore condos – 18 Woodsville and Eco Sanctuary – launched in 2012.

“We also market our investment grade developments in Kuala Lumpur, Penang, Iskandar, Melbourne and London and we do see growing interest for the Iskandar region,” Mr Neo said.

“The TDSR encourages overseas property purchasers to secure offshore financing and developers with good proven records will continue to do well here,” he added.

Source: Business Times – 2 June 2014

Malaysia most popular place for property buys

The hottest overseas real estate market for Singapore investors during last year’s splurge on foreign property was Malaysia, going by central bank estimates.

The country accounted for slightly more than half of real estate investments abroad last year, followed by Britain and Australia. These three countries made up the lion’s share of purchases.

The Monetary Authority of Singapore (MAS) estimates released yesterday were based on purchases made through local real estate agencies last year, and included Singaporeans, permanent residents and foreigners. No absolute figures were available.

On Tuesday, the MAS said Singapore investors poured $2 billion into foreign properties last year – a 43 per cent jump on 2012.

The latest MAS estimates show that the share of purchases, in terms of property value, in Malaysia jumped last year from 2012. Consultants said this may be due to a spike in interest in the Iskandar region early last year.

Singaporeans have warmed to investing in real estate abroad in recent months, as domestic property market curbs imposed last year made it tougher for them to pick up multiple homes here.

The overseas markets that were popular last year were favoured for their accessibility or their potential for higher returns.

Malaysia has long been one of the favourites due to its proximity to Singapore and the relative affordability of homes there, consultants said. In Iskandar, for instance, prices last year ranged from RM500,000 (S$195,000) for a terraced house to RM3 million for a bungalow. Condos cost about RM200,000 to RM300,000 in popular areas such as Medini, said Ascendant Assets director Getty Goh.

Australia also drew buyers looking for second homes, consultants said, though they added that some Singaporeans could also have invested there because of rental returns.

ERA key executive officer Eugene Lim said that the interest in Australia last year was concentrated mainly in Melbourne, where Singaporeans may have bought houses for their children studying there or to rent out to university students.

In Melbourne, Singaporeans typically go for small high-rise apartments in the city that cost less than $1 million, he noted.

Singaporeans tend to spend up to $2 million on homes in London’s Zone 1, which is in central London and includes areas such as King’s Cross and the posh Westminster area, he said. In Zone 2, which is right outside Zone 1 and includes districts such as Shoreditch, the price goes up to about $1 million.

Zone 3 student accommodation units can cost £400,000 (S$846,300) to £500,000 while those farther out can go for £290,000 to £300,000, he said.

However, consultants said that investing abroad has its risks. Investors may find it harder to resell their units in markets with ample supply, such as Iskandar.

They added that investors may sometimes have to hire a local managing agent to keep an eye on their property.

Source: The Straits Times – 23 May 2014

MAS sounds warning on foreign property risks

The increasing number of Singaporeans buying property overseas has prompted a warning from the central bank about the risks.

The Monetary Authority of Singapore (MAS) said yesterday that its reminder is aimed at ensuring financial stability and prudence among Singaporeans.

It noted that Singaporeans poured $2 billion into foreign property last year based on deals done by real estate agencies here – 43 per cent up on the $1.4 billion invested in 2012.

MAS warned investors to take note of the risks before taking the plunge, including the challenges of dealing with an unfamiliar foreign market, particularly market conditions that can affect supply and demand. “Those who over-extend themselves will face increased vulnerability should prices decline sharply,” it said.

It also cautioned that laws and regulations governing property purchases and loans in other countries can differ significantly from Singapore. While property developers here must maintain project accounts and adhere to strict progress payment rules, “there may not be similar safeguards in other countries”, MAS noted, in response to media queries.

It also pointed to foreign exchange and interest rate risks.

Local banks said yesterday that they take steps to ensure borrowers remain financially prudent, while realtors said they make sure buyers are aware of the risks.

“In assessing customers’ applications for overseas property loans, we take into consideration both the onshore and offshore loans that customers have in accordance to the TDSR framework,” said Mr Joseph Wong, head of consumer credit risk management at OCBC Bank.

TDSR, or total debt servicing ratio, was imposed in June last year and caps the amount of debt a borrower can take on.

However, MAS acknowledged that the TDSR rules “cannot prevent those who take loans from lenders outside Singapore or use their own savings to finance overseas property purchases from over-extending themselves”.

Malaysia and Australia are the most popular markets for local buyers, said consultants yesterday, although others such as London and Japan are gaining ground.

Source: The Straits Times – 21 May 2014