Singapore:
The Commercial Property Market
With more than USD3bn of commercial property sales in
Q3 2010, Singapore ranked third in the Asia Pacific region
after Japan and Australia. Q1 had seen a comparable level
of activity, although Q2 was lower.
Altogether,
it's clear that the Singapore commercial property market
is back to full health after problems in 2008 and 2009.
A new business development, the Marina Bay Financial Centre,
has helped to boost Singapore's image as a regional business
centre.
A CN Richard Ellis report ranked Singapore as 15th in
the world for office rentals in 2009, down from 9th in
2008. This may be a major factor in drawing business away
from Hong Kong, which is most respects is Singapore's
main competitor for regional hub business. Banks and other
financial services providers chasing the booming wealth
management sector are a particularly thriving area. Hong
Kong ranks 4th in the same table. The decision of the
Urban Redevelopment Authority to permit mixed-use developments
in so-called White Zones is another positive factor for
the commercial property market.
There is considerable over-supply of commercial space
at present, after completions in 2008 and 2009 failed
to find immediate tenants, particularly in the retail
sector, where a number of new malls came on the market
in 2009.
A
study issued by consultancy DTZ in August, 2010, says
that Singapore's commercial properties offer highly attractive
returns, and the firm expects that rents will show strong
growth in the next five years.
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Singapore: Commercial Property Prices
Rents
and prices fell significantly in 2008 and 2009; by the
end of 2009 average office rents were a shade over six
Singapore dollars per square foot.
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Singapore:
Commercial Property Law
The
main laws affecting commercial property in Singapore are
the Housing Developers (Control and Licensing) Act and
the Sale of Commercial Properties Act. Commercial property
is defined as a building or part of one intended for use
as a complete or separate unit for any purpose other than
as a residence.
Many
aspects of the format and content of sale contracts are
prescribed by the law.
In
a property transaction, the appointed lawyer will conduct
a set of prescribed searches and supervizes the completion
process. Transactions have to be registered with the Singapore
Land Authority, and stamp duties are usually payable.
Commission
structures for agents are not prescribed by the law; one
to three percent is normal.
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Singapore:
Commercial Property Taxation
Stamp duty is
payable on certain executed documents relating to properties
and shares, or interest in properties and shares. Such
documents include a lease, sale, purchase, gift or mortgage
of property. Liability arises once the document is executed,
even if the transaction itself has been aborted.
The
amount of duty payable varies according to the transaction.
For example, in the case of a mortgage, the duty is SGD4
for every SGD1,000 or part thereof, subject to a maximum
duty payable of SGD500.
Property tax
is charged on immovable property, including a house, building
and land. The amount of tax due is calculated based on
a percentage (tax rate) of the annual value of a property.
The tax rate is 10%, or 4% where the property is granted
an owner-occupier concession.
From
January 1, 2011, the 4% tax rate will be replaced by a
three-tier tax rate based on the annual value, as follows:
Annual
value
|
Tax
rate |
First
SGD6,000 |
0% |
Next
SGD59,000 |
4% |
Above
SGD65,000 |
6% |
Goods
and services tax applies to most sales of commercial property;
the buyer has to withhold 15% of the purchase price if
the vendor is a registered GST trader.
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