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Singapore City Overview and Residential Buyer Guide 2018 Edition Market Overview Singapore Market Overview Singapore Market Overview

Despite its lack of natural for innovation to thrive. The urban Most condominiums in Singapore resources and limited land landscape is also diversifying, are well-equipped with facilities area, Singapore has not only with new shops, restaurants and such as gyms, swimming pools, survived the early years of entertainment to enjoy. barbecue pits, playgrounds postcolonial independence, and 24-hour security. Landed but has thrived, moving from Against this backdrop, Singapore residential properties are also being a low-income country ranks among the top destinations available for lease, but may not to a high-income one. It’s for investors in local residential have such facilities. accomplished this through property, as highlighted by Knight pragmatism and an unrelenting Frank’s City Wealth Index 2018. For foreign investors and focus on being both politically Singapore’s residential property expatriates relocating to neutral and economically relevant. sector has grown in size and Singapore, prime residential variety. There are approximately districts 9, 10 and 11 are among Singapore’s appeal comes from 1.1 million public housing (HDB) the top choices. These districts political stability, a well-defined units and 370,000 private dwelling are attractive because of their rule of law, world-class air and units, collectively housing a total close proximity to the Orchard sea infrastructure, sound labour population of 5.6 million residents. Road shopping belt, the famous relations and global connectivity. international and local schools, Its location enables access to the There are also hybrid units, known and Holland Village and vast 650-million population of as Executive Condominiums (ECs), Dempsey Hill – retail and South-East Asia, and you can fly to built by private developers who restaurant areas loved by many parts of Australasia in under bid for the sites by open tender. expatriates and locals alike. eight hours. The ECs are sold according to public housing eligibility criteria The Marina Bay, and The country’s diverse economy such as income ceiling, family unit Tanjong Pagar areas of the Central focuses on manufacturing and and minimum period of residence. Business District (CBD) have services, a strong currency also grown in popularity, as the and well-regarded political The private housing market in government has enhanced and leadership. In recent years, Singapore offers a variety of promoted the CBD as a place in there’s been a real emphasis lifestyle options, ranging from which to live, work and play. In on entrepreneurship to drive the city to suburban living, Sentosa, an island around 20 next phase of growth, with an high-rise housing to landed minutes’ drive from the CBD, a increasing number of tech homes, and it caters well for number of luxury condominiums start-ups and capital providers young working professionals and landed homes have been creating a growing ecosystem as well as families. completed over the past few years. 4

Key Facts Key Facts Below we highlight some of the key economic trends in Singapore over the past five years, including GDP growth and number of households.

GDP Growth Unemployment Rate Nominal GDP growth for Singapore and South-East Asian countries, annual percentage change The unemployment rate for Singapore, May 2018

8% Singapore’s economy Unemployment Singapore South East-Asian countries has seen steady growth. in Singapore 6% Its average annual 2.0% has been very growth of 4.3% over the steady – not 4% past five years is above going more the average of 2.6% than 0.3% 2% across all South-East either side of Asian economies over 2% since 2009. 0% the same period. The current unemployment -2% rate is 2%, the lowest level -4% in a year (it was 1.9% in

2017 March 2017). 2015 2013 2014 2016

Source: Singapore Source: Knight Frank Research, Macrobond, Singstat, IMF Ministry of Manpower

Demand Rising Inflation Rate Number of households in Singapore The inflation rate for Singapore, May 2018

The number of households in the Singapore area Inflation, which has grown by 12% over the past five years. stood at 0.4% 0.4% in May 2018, has 1,289,900 remained positive and largely below 1% since November 2016. While 0.4% represents an increase on the previous two months, it is below the 0.6% 2017 2015 2013 2014 2016 seen in 2017. Source: Knight Frank Research, Singstat Source: Singstat Singapore in Context Singapore in Context

This map of the country shows where the major airports and selected established universities are situated as well as a breakdown of the residential regions.

Malaysia

Seletar Expressway

Singapore Airport

Bukit Timah Expressway

Kranji Expressway Central Expressway Central

Singapore Changi Airport

Pan-Island Expressway

Kalang-Paya Lebar Expressway

Ayer Rajah Expressway

East Coast Parkway

Sentosa Singapore Straits

Top Singapore Universities Singapore University of Technology & Design Singapore Management University Singapore Institute of Management National University of Singapore Nanyang Technological University

Core Central Region Rest of Central Region Outside Central Region

The Core Central Region’s (CCR) most notable The Rest of Central Region (RCR) encompasses The Outside Central Region (OCR) comprises areas include districts 9, 10 and 11, the all the planning areas at the fringe of the CBD. the planning regions beyond the Central Downtown Core Planning Area, and Sentosa. This includes Marine Parade, Toa Payoh, Bukit Regions. Most of the non-landed private Merah, Kallang, Queenstown, Novena, Bishan housing is targeted at Singaporean buyers The most expensive homes in Singapore are and Geylang. Most of these estates are looking for larger properties. Having said that, located in the CCR due to its proximity to the established and have a unique cultural identity. some of the sea-facing landed homes at CBD and the main shopping belt at Orchard They are popular among Singaporeans and Pasir Ris and are popular among Road. The region also attracts the most foreign foreigners in the upper-middle income group. wealthier households. homebuyers. 6

Singapore Residential Districts Singapore Residential Districts An overview of the residential districts in Singapore.

District 1 Raffles Place, Cecil, Marina, District 10 Ardmore, Bukit Timah, District 20 Bishan, People’s Park Holland Road, Tanglin District 21 Upper Bukit Timah, Clementi Park, District 2 Anson, Tanjong Pagar District 11 Watten Estate, Novena Ulu Pandan

District 3 Queenstown, Tiong Bahru District 12 , Toa Payoh, Serangoon District 22

District 4 , Harbourfront, District 13 Macpherson, Braddell District 23 Hillview, Dairy Farm, Sentosa , District 14 Geylang, Eunos, Paya Lebar District 5 , Hong Leong District 24 , Tengah Garden, Clementi New Town District 15 Katong, Joo Chiat, Amber Road District 25 , Woodgrove District 6 High Street, Beach Road District 16 Bedok, Upper East Coast, Eastwood, Kew Drive District 26 Upper Thomson, Springleaf District 7 Middle Road, Golden Mile District 17 Loyang, Changi District 27 , Sembawang District 8 Little India District 18 Tampines, Pasir Ris District 28 Seletar District 9 Orchard, Cairnhill, River Valley District 19 Serangoon Garden, Hougang, Ponggol 7

How to Buy How to Buy*

An overview of the legal process involved when buying property in Singapore.

There are different restrictions Foreigners may only purchase However, a foreign person is Since August 2004, foreigners and processes involved for Executive Condominiums (ECs) on not restricted from acquiring have been allowed to purchase the different property types the open market from the 11th the following: landed properties on Sentosa available in Singapore. Below year after completion of the EC Cove. Such overseas purchases we outline the restrictions that project when it is privatised. l Apartments are further facilitated by the foreign buyers face, as well as absence of any minimum the process. Private Properties l Any unit in an approved occupation period imposed on the Under the Residential Property Act condominium development foreign buyer. Nevertheless, such Public Housing (HDB) Flats of 1973, a foreign person cannot under the Planning Act purchases would be subject to HDB flats are subsidised public acquire or purchase “restricted” restrictions – the property must be housing. Foreigners are generally residential property unless they l A leasehold estate in restricted owner-occupied and the overseas not eligible to purchase these, obtain prior approval of the residential property for a term homebuyer is only allowed to own although there are exceptions Minister of Law. “Restricted” not exceeding seven years, one restricted residential property under the following circumstances: property includes: including any further term that at any one time in Singapore. may be granted by way of an These foreign homebuyers also To purchase a new HDB flat: l Vacant residential land option for renewal have to seek approval from the Land Dealings (Approval) Unit of l At least one Singaporean citizen l Landed property i.e. detached Singapore Land Authority for their in the family nucleus land, semi-detached house, Sentosa Cove purchases, although terrace house (including linked the process is quicker compared To purchase a flat on the house or townhouse) with conventional approvals. resale market: l Landed property in strata l At least one Singaporean citizen developments that are not in the family nucleus approved condominium developments under the l At least two Singapore Planning Act permanent residents in the family nucleus, or engaged to be married

Payment Terms Payment terms vary depending on whether you are purchasing directly from a developer or from private individual owners; below we explain how.

Private individual sale

Event Payment to be made Time frame for payment Issue of Option to Purchase Booking fee, usually 1% of the purchase price Upon issuance of the Option Upon exercising Option to Purchase Deposit, usually 4% of the purchase price Within two weeks from issue of Option to Purchase Completion of purchase, seller hands keys over Remaining 95% of the purchase price Six to eight weeks from the time the Option is to purchaser exercised

Developer sale progressive payment

Event Payment to be made Time frame for payment Issue of Option to Purchase 5% of the purchase price Upon issuance of the Option Exercising the Option or signing of the Sales & 15% of the purchase price Signing of the Sales & Purchase agreement, or Purchase agreement within eight weeks from the date the Option to Purchase is granted, whichever is later Progressive payment upon completion of the Remaining 80% (split into several payments of Upon completion of the various stages of various stages of construction works 5% - 25% of the purchase price) construction works 8

Property Tax in Singapore Property Tax in Singapore*

Buyers’ Stamp Duty Property Tax From 6 July 2018 onwards, foreigners who want to acquire a residential property Properties are also taxed on an ownership basis. Property tax is calculated by in Singapore have to pay an Additional Buyer’s Stamp Duty (ABSD) of 20% on the applying the prevailing property tax rate on the Annual Value (AV) of the property. higher of the total purchase price or market valuation. This ABSD comes on top of The AV is estimated based on market rentals of similar or comparable properties. the standard Buyer’s Stamp Duty (BSD). The BSD is imposed on the higher of the With effect from 1 January 2015, the following rates of property tax are payable: total purchase price or market valuation. A quick summary of the ABSD and BSD is shown in the table below. Tax Rates for Property Ownership in Singapore

Profile of Buyer BSD Rates ABSD Rates Owner-Occupier Tax Rates (on or after 6 July 2018) Annual Value (S$) Effective 1 January 2015

Foreigner buying 20% First 8,000 0% residential property Next 47,000 4% Next 5,000 6% Next 10,000 6% Singapore PR buying first 5% 1% of the first S$180,000 Next 15,000 8% residential property Next 15,000 10%

Next 15,000 12% Singapore PR buying 15% Next 15,000 14% second and subsequent 2% of the next S$180,000 AV in excess of 130,000 16% residential property Source: Inland Revenue Authority of Singapore (IRAS) Singapore citizen buying Nil There is currently no capital gains tax in Singapore. first residential property 3% of the next S$640,000 Loans As at June 2013, Singapore’s Central Bank, the Monetary Authority of Singapore Singapore citizen 12% (MAS) introduced a Total Debt Servicing Ratio (TDSR) framework, with a refinement buying second 4% on the remaining of Loan-to-Value (LTV) rules on 11 March 2017. The debt servicing framework residential property amount applies to borrowers, both foreign and Singapore nationals, seeking to take property loans or credit facilities secured by property from any bank in Singapore. Singapore citizen buying 15% third+ residential property The details of the new framework are as follows:

Framework Requirements Details Source: Inland Revenue Authority of Singapore (IRAS) Total Debt Overview The TDSR, given by the formula below, cannot Servicing exceed 60% Nationals and permanent residents of Switzerland, Liechtenstein, Norway and Ratio (TDSR) Monthly total debt obligation x 100%

Iceland, as well as nationals of the United States of America fall within the Gross monthly income scopes of the respective Free Trade Agreements (FTAs), and will be accorded the same treatment as Singapore citizens. Applies to borrowers who are applying for credit or re-financing facilities for the purchase of property or where the facility is otherwise Sellers’ Stamp Duty secured by property In the government’s attempt to move towards a stable market, any residential Covers properties in and outside of Singapore properties purchased on or after 14 January 2011 are subject to a sellers’ stamp Does not apply to mortgage equity withdrawal duty. Residential properties that are sold within the first, second and third year from loans with Loan-to-Value (LTV) ratio equal to or the date of acquisition are subject to a 12%, 8% and 4% stamp duty tax respectively. below 50%

Monthly total Take into consideration borrowers’ outstanding Additional Conveyance Duty for Property Holding Entities debt obligations property and non-property debt obligations when As of 11 March 2017, there are Additional Conveyance Duty (ACD) applied if you computing monthly total debt obligations are buying or selling shares or units (“equity interests”) in property-holding entities (PHEs) that own significant interest in primarily residential properties in Singapore. Gross monthly Gross monthly income excluding Central Provident Fund income (CPF) employer contribution 30% ‘haircut’ for variable income, e.g. bonuses, commissions, allowances, rental Note: The views expressed in this article are based on regulatory requirements as at 25 July 2018. Application of Mortgagor of Borrowers named on a property loan are also to Loan-to-Value property loans be the mortgagors of the residential property for Limits which the loan is taken *This section provides general information issued from publicly available sources. It is not intended to provide any form of tax or legal advice. You should not rely on Income-weighted Borrowers are subject to TDSR assessment. this for such advice. Neither The Hongkong and Shanghai Banking Corporation average age In the case of joint borrowers, the income-weighted Limited (“HSBC”) nor Knight Frank LLP provides tax advice. You are advised to for loan tenure average age of borrowers will be used when applying the seek independent legal and tax advice. provision rules on loan tenure

Source: Monetary Authority of Singapore, Knight Frank Research 9

Next Steps

Please contact your HSBC Premier Relationship For property enquiries: Manager or call our HSBC Premier hotline: Tan Tee Khoon Executive Director & Head of Residential Hong Kong Project Marketing +852-2233-3322 [email protected] www.hsbc.com.hk Linda Chern Director & Head, Residential (Prime Sales & Corporate Leasing) [email protected]

Alice Tan Director of Residential Project Marketing [email protected]

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