Singapore Property News Upfront 22

Two way investments
More super-wealthy South-east Asian individuals, including Singaporeans, are looking to invest in UK properties, especially in London. But the flows are not just going one way; more British investors too have become interested in Singapore real estate, say two senior private bankers with SG Private Banking, part of the Societe Generale Group.

‘Over the past one year we have seen - if you consider only the more serious expressions of interest from our clients in South-east Asia in this market (UK) - a jump of at least 20 per cent,’ said Don Percival, director of private banking with SG Hambros, which is SG Private Banking’s UK arm.

The property boom in this part of the world has heightened the interest that wealthy Asians have traditionally had in acquiring real estate as an asset class, and the UK is one of the most popular destinations for that purpose, Mr Percival told BT. The UK property market holds several attractions for foreign investors. Not only does it offer investors non-domicile tax status, it also offers a stable economic and political environment. Furthermore, the market has been booming as growing demand exceeds limited supply, with property values in central London growing some 33 per cent last year.

There’s also a historical connection for investors from South-east Asia, as a result of British colonialism. Said Nikita Rossinsky, managing director (Southeast Asia) of SG Private Banking: ‘There is an amazing amount of interest right now (in UK property). And part of it is historically motivated. There’s an affinity with the UK especially in this part of the world. Investors from Singapore, Malaysia, Brunei - when they look overseas, they look at the UK.’

Typically, these high-net-worth clients are looking to diversify their portfolio by investing in the UK. Many of them, in fact, may already have an exposure to the UK property market, but are looking to rebalance their portfolio. Said Mr Percival: ‘We’ve seen more Singapore clients who already have portfolios in London.’ Added Mr Rossinsky: ‘And it’s not just money going from Singapore to London. We have also seen clients who have multiple properties there, who then leverage these properties to help them invest in their business here. So the money goes out and then comes back here.’

The Singapore real estate market itself has also become a draw for foreign investors, such as those from the UK, who are drawn by recent developments here and the stable regulatory and social environment. ‘People feel comfortable investing here; it’s a centre of global excellence,’ said Mr Rossinsky. ‘And we have seen the interest in London as well…Singapore is marketing itself as ‘the Switzerland of Asia’ and I have made introductions to our teams here for accounts and trusts to be set up,’ said Mr Percival.

The two senior bankers were speaking to BT after a private seminar held by SG Private Banking for about 50 of its South-east Asian clients last week. The seminar was held in response to more queries from clients on investing in UK property. It drew double the number of participants it had planned for. About 60-70 per cent of the guests were flown in from Malaysia, Brunei, Indonesia and the Philippines.

A lot of times, a client’s property investment decisions are also influenced by lifestyle factors, as the investor may also be looking to stay in the property he buys, said Mr Percival. What his bank then does for these clients - upon introduction by their local SG Private Banking relationship managers in Asia - is to adopt a holistic approach in helping them make the best property investment decisions.

Other than offering lending services, the bank also provides advice in efficient tax planning, and estate and success planning. It also introduces them to independent specialists in property acquisition, education and immigration, said Mr Percival.

Source: The Business Times, 16 July 2007
Posted by Property Wizkid

Boom or Bust - that's the Question
Will the financial and property markets continue to boom, or do investors need to be more cautious? When, if at all, should the authorities step in? Sanjay Prabhakaran Director, South-east Asia Baxter Healthcare (Asia) Pte Ltd. I believe the current financial and property boom will be sustained for a few more years at least. However, the factors that will determine the growth potential of the financial and property sectors will differ.

Singapore has successfully expanded and diversified its financial markets over the past several years. Whether or not the ongoing bull run will continue depends partly on the government’s ability to adjust national policies in response to (or in anticipation of) developments elsewhere. Such tweaks could, for example, be designed to reduce the dependence on the US economy, or to increase our trade surpluses and foreign exchange reserves.

In addition, the current financial boom differs from earlier bull runs in that there is a greater spread of wealth within the investment community. In other words, there are more investors keen on gaining exposure in the markets of their choice. The financial services providers should continue to lower the barriers to investment and make new asset classes available to retail investors, to facilitate the goal of wealth creation.

On the property front, the government has been successful in attracting high-net-worth individuals to Singapore, as well as developing new growth engines - such as biotechnology and healthcare - for the local economy. These should ensure that the residential and rental markets for mid- to high-end properties stay robust. Then again, the government should never allow the market to overheat or the high-net-worth individuals could relocate elsewhere.

What’s fuelling the markets?
Charles Reed CEO interTouch
THE boom in the property market is about the same as it was just before the Asian financial crisis almost a decade ago. But the recent Reuters Real Estate Summit in Singapore highlighted that with rentals peaking, investors are not yet done with the lucrative property market, which still holds huge potential. Investors, and now more speculators, are certainly not yet done, but is there still huge potential?
With booming Asian economies, property investment in the region is escalating and with more developers trying to get a piece of the pie, funding in this sector shows no sign of slowing down.
There is demand among the growing middle classes in China, India and in other Asian cities, to invest in their own property markets, thus fuelling the industry further. I find it hard to believe that the growing middle classes in China or India can afford the current runaway prices! What is fuelling the Singapore property sector and the stock market at the moment is the excessive liquidity in the market from the newly-minted millionaires created by the collective sales fever. Overnight, thousands of people suddenly find themselves with millions of dollars of cash to play with.
Needless to say, the authorities need to observe developments quite closely as policy and regulations are invaluable. However, there is no need to step in as yet as competition is important for the industry to fully reach its potential. The way forward is greater liberalisation and openness from industry regulators to attract healthier competition.

Derek Goh Executive Chairman/Group CEO Serial System Ltd
Economic cycles are part and parcel of the system that the world economies operate in. These are economic forces (micro and macro) that influence the daily lives of every individual. The financial and property markets are booming because of the bigger appetite of fast growing economies like China, India and Japan. Though each economic cycle lasts an average of 10 to 12 years, the asset bubble is not going to burst just yet.
Government intervention in the markets is unnecessary as the Asian economies are now more resilient and able to withstand bigger swings. Businesses are not expecting any downturn in the next 12-18 months as major events on the horizon are stabilisers for the global economy, namely, the Beijing Olympics in August 2008 and the US presidential election in December 2008.
Beyond 2008, there is less certainty, as the US economy is losing momentum and China’s trade surplus would be too huge for the US balance of trade. Potential trade wars may be triggered by an aggressive new US president then.
For 2007 and 2008 overall, the Singapore economy will not be greatly shaken by any financial or property tsunami.

Tan Kok Leong Principal TKL Consulting
THE current property and financial market boom should probably be viewed as the upswing of a business cycle, in the wake of globalisation and technological changes. It is a feature of capitalism at work. The outlook for the introduction and spread of technologies remains favourable while relatively low interest rates favour investment, purchase of homes and consumer durables.
The financial crisis 10 years ago was probably caused by volatile short-term capital flows which attacked weaknesses in foreign reserves, the international exchange rate system and capital markets simultaneously. Future problems, perhaps, are likely to be caused more by disorderly unwinding of global imbalances.

A word of caution
Alfred Wong Managing Director/Architect WongPartnership
There is definitely a feeling of euphoria in Singapore. The rate at which residential property prices are rising does not reflect the increase in the earning power of Singaporeans. This is, of course, with the exception of those in the finance and real estate sectors. However, judging by car sales at the car show on July 8 when $31 million worth of cars were sold, it would appear that the average Singaporean is riding on a wave of positive expectations from the integrated resorts and the projected population growth.
I think that many investors do not remember the lessons of the last Asian crisis. I also expect the authorities to step in if the situation approaches a critical point.

Sam Yap S G Executive Chairman Cherie Hearts Group
The property market is currently overheating from speculative pressure, with prices soaring to levels not backed by economic fundamentals. This is sustained by easy credit from banks to speculators and property developers. Once the bubble bursts, a potentially destructive impact could be unleashed on our economy, with home buyers, property developers and banks being the likely victims.
The steps taken by the government to ease the pressure, while encouraging, are insufficient. More proactive measures, such as releasing more land for residential and commercial development and stricter guidelines on bank lending may be needed. Urgent action is required for a soft landing.

Annie Yap CEO The GMP Group
Compared with a decade ago, we can confidently say that in terms of business or leisure, Singapore can appeal to almost anyone today. Financially speaking, with greater collaboration with China, India and the Middle East, Singapore’s financial environment is more diversified than ever. Having our eggs in more baskets means we are more resilient and stable. With upcoming developments in the works, we will see Singapore attract interest from an increased breadth and depth of investors.
But we cannot let lofty enthusiasm become dangerous. Over-speculation can jeopardise Singapore’s plans for growth. Therefore, regulatory bodies should take up the role of observers, engaging in soft policing to calm over-excitement before sectors overheat. That way, markets operate smarter without compromising their autonomy. For example, the use of media in encouraging balanced discussions about the property market has helped in making the sector and the general public pause to take stock.

Lars Ronning President, North & South-east Asia, India, Australia & New Zealand Tandberg
As financial and property markets continue to boom, caution should be exercised to establish that the current situation is a true reflection of economic growth and not just a result of speculative buying by over-zealous investors.
Amid the air of optimism and euphoria, the authorities need to prevent such inflationary pressures from increasing the cost of doing business here and eroding Singapore’s attractiveness as a business hub to foreign and local investors.

Tan Ser Giam Chairman Eastern Navigation Pte Ltd
Singaore's financial market is flush with funds and this will continue to push the stock market higher, barring unforeseen events. The property market will likewise be strong, although the risk of the government stepping in to cool the market remains high. There are rumblings from businesses about rising rentals adding to the cost of doing business. One of the things to watch is the US economy. If it goes into recession, all bets on the stock and property markets are off.

Joel G. Momberger Managing Director Informatica SEA Pte Ltd
As a small open economy, Singapore is extremely vulnerable to external developments, especially in the surrounding region. While it has withstood the Asian financial crisis 10 years ago and even maintained a relatively favourable economic performance, its close links with the regional economies suggest it will not get away completely unscathed should anything untoward happen.
However, Singapore’s track record of prudent fiscal and monetary policies has been a great asset and this will help reassure investors of its commitment to consolidate its position as a financial centre for the region.

On government intervention
Lim Soon Hock Managing Director Plan-B ICAG Pte Ltd
WHAT goes up must come down, and this applies to both the financial and property markets, as has been proven in the past. Astute investors will watch the cycle very carefully to look for early signals of correction and downturn.
The wild card amid the optimism and euphoria is the US dollar. Should the US dollar depreciate sharply, there will be shock waves throughout the global economic system. While countries in Europe and Asia may benefit from the weakening of the US dollar, it will only be temporary; the US being the economic engine and technology innovator of the world will import less, because it will cost more. This will have adverse repercussions on the economies of these countries, and as a consequence, on the financial and property markets.
Our authorities should only step in where necessary to prevent a crisis. For example, to prevent an over-strengthening of the Singapore dollar, or property prices escalating beyond the means of the man in the street. I am confident the government will do everything possible to ensure that the gap between the rich and the poor will not be left to widen without timely intervention.

Wee Piew CEO HG Metal Manufacturing Ltd
There are a lot of positives going for the Singapore economy, which has been posting strong growth in the last couple of years. In the coming years, we are likely to see continued growth in the services sector - like financial services and tourism - with the opening of the integrated resorts.
Hence, the current boom in property and financial services is not without fundamentals. There is definitely more capital flowing into Singapore to take advantage of its growth in the coming years. As such, I do not see an asset bubble at this point in time. After all, the property market has only just been on an uptrend in the past year or so while a property boom typically lasts for a few years.
However, if the recent sharp rise continues next year - especially if it spreads to mass market residential property and the HDB market - then I think the authorities should consider taking some steps to ensure more supply of land for developers. On the other hand, I think stricter measures like those imposed in 1996 should be avoided as it is better left to the market to find a price equilibrium.

Eric Hoh Vice-President, Asia South Region Symantec
It is heartening to see how Singapore has accelerated in terms of economic growth which comes amid a thriving stock market, a strong economy and a property boom. Singapore is likely to continue on its economic upswing with the much anticipated launch of the integrated resorts and hosting of the Formula 1 Grand Prix race.
As many continue to leverage on the increasing attractiveness of Singapore as a global city, I feel that the property and financial boom will continue in the short to medium term. For now, I agree with Senior Minister Goh Chok Tong that we should not be overly concerned and let the market find its own level.

Ng Kong Yeam Group Executive Chairman Sino-America Tours Corporation Pte Ltd
Booms and busts will always occur, if one reads economic and financial history. In 1985, property prices in Singapore were very low, nothwithstanding efforts by developers to promote sales. Ten years later, in 1995, prices shot up. Then in 1997, the property and stock markets fell due to the Asian financial crisis.
Supply and demand dictate the rise and fall of prices of stocks and properties. Expensive goods are sold based on wants rather than needs. In my view, the boom in Singapore will last two more years, and then a bust will begin to take place. In the US, the housing bust has already started. Investors should figure out for themselves when they should be cautious. Authorities cannot possibly regulate the rise and fall of prices.

Wong Teek Son Executive Chairman and CEO Riverstone Holdings Ltd
There is a tripartite relationship between businesses, authorities and investors for the market to continue to boom.
Businesses need to build credible operating models to withstand the economic fluctuations. Riverstone, for example, builds its foundations on value propositions by customising products to fit every customer’s needs, leading to long-term relationships.
Investors need to examine their options carefully when making their investment decision. Singapore has a good corporate governance structure and investors have data available for them to make educated decisions. The authorities need to continuously work with the market to ensure that information is transparent, adequate and responsibly reported, and leave the decision making to the open market.

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Source: The Business Times, 16 July 2007
Posted by Property Wizkid

A $2b insight from the "Remisier King", Peter Lim
Peter Lim, the man formerly known as the ‘Remisier King’ and who is estimated to be worth more than $2 billion today, reckons the stock market still has two good years to go. But he is getting concerned about the property market. ‘The market won’t collapse for the next two, three years. It’s all sentiment-driven. People are making more money, and so long as people are spending, we are OK. But one has got to start to think how to exit at the end of 2-3 years - 2009, before the casino starts operating,’ he said.

Mr Lim is, of course, well known as an influential stockbroker and deal-maker in the Singapore and Malaysian markets in the early 1990s. That was also when he made his millions, but quit at his peak to take care of divorce proceedings. Despite being out of the industry, it was in the last few years that his fortunes took a leap forward, thanks to the booming stock market. He was recently in the news for agreeing to put $150 million into Rowsley for its reverse takeover of a China solar company.

In a near four-hour interview with BT to talk about his market views and investment philosophy, Mr Lim said a lot of the big companies listed on the Singapore Exchange (SGX) today have a global presence. Like Keppel Corp, for instance; it can’t fulfil all the orders for its oil rigs. So even if there is a shift in investor sentiment and the market corrects severely, investors can still ride out the whole cycle, said Mr Lim - barring a global recession, of course.

The danger, he said, is in the small-cap sector. ‘Some of these stocks have gone up a lot. Much of the potential has been priced in. If this potential is cut short by any unexpected unfortunate event, they will come down like a rock.’ Small-cap stocks run up fast because of their small float. But when the sentiment turns, everyone is a seller, he said.

As for the property market, Mr Lim thinks prices have gone up too fast. The sharp increase has taken everyone by surprise, even the government. ‘Actually, it’s quite simple. Singapore is small. You get a small bucket, and pour a lot of water, it’ll overflow. This is what’s happening. I think the demand just comes together at the same time. I don’t think it’s sustainable.’

Demand is so strong that people are knocking down buildings, and that’s curtailing supply even more. But the thing is, the buildings knocked down will have three times more apartments when they get rebuilt a few years down the road. ‘When the supply comes out, property prices will drop,’ he said. Comparisons have been drawn between Singapore and London. ‘But you tell me: how many en bloc (redevelopments) do they have in London? No en blocs means no additional supply.’ he said.

Mr Lim is worried about the impact of high rentals on businesses - office rentals have gone up by 200-300 per cent in the last few years. ‘Costs are going to bloat . . . most businesses’ margins are going to be eaten up by costs.’ At the moment, many individuals and companies are making money from asset inflation, he said. ‘You hope that this asset inflation becomes an income, becomes regular. But I don’t think so. These are all situational. But it will go one day.

‘I’m not a pessimist, but this is how I see it. That’s why at the end of a bull market, you see a new generation coming up. Because all the old ones die. Now and then, you see one of those who stays - then he becomes a legend. And if you observe those legends, most of the time, they spend their time scolding people: ‘don’t gear, don’t gamble’. And that exactly was the message that he kept harping on during the interview.

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‘A lot of people get it wrong. When the bull market is here, they build debts. Bull market is the time to build cash. Because today’s market turns very quickly. When the market turns, you cannot sell, especially for the property market. You can only sell when things are going up.
‘So I always tell my friends: ‘Make sure you stay alive. The market won’t die, so there’s always a next time.’

By BT’s estimates, Mr Lim is worth in excess of $2 billion. He has just under 5 per cent in Wilmar International. Based on the company’s current market capitalisation of $22 billion on SGX, that stake alone is worth $1.11 billion. He has about 11 per cent in FJ Benjamin, and that’s worth $52.6 million. Meanwhile, his 25 per cent stake in Rowsley has a market value of $37 million. So his Singapore equities alone are worth $1.2 billion. On top of that, he has some Australian mining stocks bought in the 1970s and ’80s.

Mr Lim says 50 per cent of his portfolio is now in equities, another 10 per cent in properties and the remaining 40 per cent in cash. The cash is from the dividends he received, which he has not reapplied to the market. So all in, he’s worth more than $2.4 billion. The 54-year-old believes that the fortune he has today is pre-destined. ‘This size - substantially, it’s your destiny. If today I have $10 million, I’d say over 90 per cent is due to my hard work. But getting it right is not $1 billion. Maybe it’s $100 million. How that $100 million becomes $1 billion, you know it’s because somebody likes you. You must believe it’s somehow a path that’s been drawn.’

The bulk of his net worth is in Wilmar, in which he was asked to pump in under $10 million in the early 1990s. By the second half of the decade, he had totally written off that investment. That was when the Indonesian currency fell from 2,500 rupiah against the US dollar (the exchange rate he invested in Wilmar), to 16,000 rupiah, and president Suharto was ousted. There were riots in Indonesia. There was no way of cashing out the assets. But in a few years, things stabilised in Indonesia and the pieces began to come together for Wilmar. Its China operations began to pick up, businessman Robert Kuok decided to inject his Malaysian palm oil operations into Wilmar and palm oil prices started to go through the roof because of the scramble to produce biofuels. ‘My Indonesian partner was asking me the other day: ‘How the hell did we make so much money?’

‘Up to a point after people tell you a story and a vision, don’t write it off. Sometimes it comes true. You just make sure that if it doesn’t come true, you don’t get hurt too much,’ he said.
The most important factor to consider when investing in a company is the person running it; you look at whether the person is honest, and whether he or she is master of their trade.
‘It works. It’s a tested method of assessing companies,’ Mr Lim said.

Wilmar is not his only lucky break. He escaped the Asian crisis as he had quit the broking profession in 1996 to prepare for his divorce proceedings. And he spent the next six months liquidating most of his stock positions. So when the crisis hit, he was mostly in cash. He was also not in the market during the dotcom bubble as the hearing on the division of matrimonial assets dragged on until 2001. He thanks his lucky stars for having avoided the Asian financial crisis, but thinks he would not have been caught in the insanity of the dotcom bubble.

Nowadays, Mr Lim spends his time dispensing advice to deal-makers in the industry - and sends them a bill of $300,000 or more for it. He still gets a thrill out of structuring deals, which he says is similar to a chess game. He described the recent Rowsley deal to acquire a solar energy company in China as ‘beautiful’, as one which allows existing shareholders to ‘lock in the upside, but hedge the downside’. He’s also having to cope with the problems of having too much money. He worries if his children, a 15-year-old girl and 13-year-old boy, will be spoilt by his wealth. He reckons he may give the bulk of his money to charity eventually.

But going by the four-hour lunches that he takes - with Imperial Treasure at Great World City being his Canteen No 1 and Kuriya his Canteen No 2 - and sometimes squeezing in a game of tennis or two before dinner, the money problem can’t be all that bad.

His views on . . .
Cutting deals
Maybe it’s in the blood. It’s quite exciting to pitch a deal, to make sure that you don’t catch me. It’s like a chess game: you make this move, the next one I make. I don’t want to get checkmate.
Wealth
Money is a funny thing. When you don’t have it, you want it. But when you have it, you have a lot of problems. I believe that if I’d had no money, I wouldn’t have had my divorce. Things wouldn’t be good, but it wouldn’t end up in a divorce.
Growing old
Once you are old, every year makes a lot of difference. Your lease gets shorter, there’s no extension. You go, you go.
Death
Some of my school mates have passed away. So once you start to see all these things, your perspective on life becomes more measured, more considered.
Making money
It’s very difficult to make money from trading. People who get rich are those who buy a company, build it, run it. Most of the traders, they come, they make money, because they have this gambling instinct. They take the money and spend it. The minute they lose money, they got no money to pay up.
The next downturn
Today’s bull run can get cut short by a number of things. Just like our recent experience with Sars, or a bomb drops on the wrong person’s head. Like anything else, the least expected thing can happen at the wrong time. I got a feeling the next downturn will be very severe.

Source: The Business Times, 16 July 2007
Posted by Property Wizkid

Home rental - downgrading for many
The boomtime in Singapore’s property market is hitting one group of house-hunters hard: singles. Across the private market, property agents said prices in the past three months have gone up by as much as 40 per cent, with rents at some locations even doubling. These singles, usually professionals in their 20s to 40s, now face the prospect of downgrading from their current rented homes, sharing with others, or moving back in with their parents in order to reduce living costs.

In the first quarter of this year, Urban Redevelopment Authority (URA) figures revealed that private residential property rents rose 7.6 per cent from the previous quarter, compared with a 5.3 per cent increase in the last quarter of last year. Second-quarter figures are expected at the end of this month.

Recent trends show that these private property tenants have downgraded to renting Housing Board (HDB) flats - or pooling together resources to purchase flats in either the private or HDB resale market, said Mr Eric Cheng, the senior division director of property agency PropNex. According to PropNex’s surveys, singles account for 16 to 17 per cent of total property transactions - but this has since risen by 2 to 3 percentage points in the last three months.

Mr Dennis Yong, the president of real estate company HSR Group, also noted that the rentals of private studio apartments, which used to be around $1,100 a month, are climbing upwards of $2,000. As a result, many tenants have downgraded and the take-up rate of HDB flats has been ‘crazy’, he said. ‘You advertise in the morning and it’s snapped up in the afternoon.’

Flight steward Joe Tan, for example, said he was forced to move out of his two-room, 960 sq ft apartment at Bayshore Park last month when his monthly rent was raised from $1,600 to $2,800 at the end of his lease. Unable to afford the new rent, the 36-year-old has opted to rent a smaller HDB flat in Tampines for $1,100 a month. He is thinking of buying a property.
Another local, Mr Kevin Lim, 35, a freelance media producer, said that he was now looking for an affordable flat after his landlord raised the rent for his private apartment in Novena from $1,800 to $3,500.

Mr Tan said the increase was unreasonable for the standard of his flat. ‘There are no affordable private flats for us any more, unless we move out to the sticks,’ he said. Knight Frank director of research and consultancy Nicholas Mak said the rental squeeze was due to demand surpassing supply, which has been aggravated by a massive reduction in flats as a result of the recent collective sales frenzy. With property values going up, landlords expect higher returns, he said.
The increasing number of expatriates working in Singapore, many of whom have a higher income because of relocation packages, also exerts pressure on the market.

While HSR’s Mr Yong said the rental hikes have also affected the outskirts, Mr Mak felt that affordable flats were still available further away from the city. He expects the demand to ease after 2009, when more residential projects will be completed. ‘Then, there will be a real test of the sustainability of current rental market prices,’ he said.

Source: The Straits Times, 16 July 2007
Posted by Property Wizkid

Government may get up to $4b in stamp duties for 2007
With the property market setting new records each month, government revenues from stamp duty look set to reach new highs this year. Property deals in the first five months of this year have yielded more than $1.7 billion in stamp duty. At this rate, the government coffers could get a $4 billion boost for the entire year.

The takings for the first five months of this year have already surpassed the $1.3 billion for all of last year, the latest official statistics showed. And this is just 7.7 per cent shy of the record $1.8 billion in 1996, the last property market peak. But with the pace of transactions hotting up over the past few months, some analysts are predicting that the stamp duty collected could rise even more.

‘If the property market continues as it is now - and we are only starting to see it pick up - we are looking at somewhere in the order of $4 billion to $5 billion in stamp duty,’ said Mr Song Seng Wun, economist and research head at stockbroking house CIMB-GK.

Stamp duty is a tax on commercial and legal documents used in certain transactions. The bulk of it comes from property purchases. Stamp duty ranges from 1 per cent to 3 per cent of the purchase price. The latest surge in stamp duty is largely due to the jump in property prices and transactions. ‘Stamp duty reflects increased economic activities everywhere, but the main contributor has certainly been the property market,’ said Mr Song.

Mr Nicholas Mak, director of research and consultancy at property firm Knight Frank, also sees a surge in stamp duty, though he is slightly less bullish than Mr Song. He expects a record 33,000 private homes to be sold this year. The average value of each home is also likely to be higher than in the past, he noted.

This would increase stamp duty, as it is calculated as a percentage of a property’s price. Based on this, he projects tax takings of about $3.2 billion. A recent tweak in stamp duty rules may also contribute to the boost. In December, the Government stopped deferring stamp duty payments on property sales - a practice started in 1998 that allowed buyers to put off paying it for up to a few years.

Now, property buyers have to cough up stamp duty within 14 days of agreeing to buy. But those who bought properties before December still enjoy deferments. This means that the stamp duty takings so far this year come not only from new property sales in the first five months, but also from deferred sales in past years, bumping up the figure.

Economists say stamp duty is set to become the third biggest contributor to government operating revenue this year, from being one of the smallest in the past. It is projected to surpass customs and excise duties, motor vehicle taxes, property taxes and betting taxes. Since 2000, it has consistently fallen behind all four categories.

Analysts also noted that with the bumper take from stamp duty, as well as projected higher takings from the goods and services tax and income tax, government revenues are likely to surpass the $32 billion collected last year.

Source: The Straits Times, 16 July 2007
Posted by Property Wizkid