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Accelerating success.

Singapore Real Estate Investment & Leasing Guide


Contents 2013 Edition

General Overview of Singapore Singapore Market Overview

3

Socio-Economic Information

4

Financial System - Role of MAS

4

Foreign Exchange Control

7

Land System – Ownership and Tenure

8

Restrictions on Foreign Ownership

10

Sales and Purchase of Real Estate Leasing Practices

Acquisition and Development of Residential Land

13

Regulatory Framework

15

Taxation

29

Units of Measurement

30

Property Yields

33

Option to Purchase

34

Stamp Duty

40

Financing

45


General Overview of Singapore

1

General Overview of Singapore

a

Socio-economic Information

b

Financial system – Role of MAS

c

Foreign Exchange Control


a

b

Socio-economic Information

715.8 345,560.50 (as of 2012)

Land area (sq km)

(for year 2012)

GDP at current market prices (S$ million)

S$

Singapore Dollars Currency

7,422 5,312.4 65,047.91 Population density (per sq km)

3

General Overview of Singapore

(as of 2012)

total population (‘000)

Financial system – Role of MAS

c

The Monetary Authority of Singapore (MAS) is Singapore’s Central Bank, which promotes sustained non-inflationary economic growth through appropriate monetary policy formulation and close macroeconomic surveillance of emerging trends and potential vulnerabilities.

Per Capita GDP (S$ ‘000)

mas central bank of singapore

appropriate monetary policy formulation close macroeconomic surveillance

Foreign Exchange Control There is no foreign exchange control on the movement of capital and direct investment in and out of Singapore.

promotes sustained non-inflationary economic growth

General Overview of Singapore

4


Singapore Market Overview

5

General Overview of Singapore

a

Land System – Ownership and Tenure

b

Restrictions on Foreign Ownership

c

Acquisition and Development of Residential Land

d

Regulatory Framework

e

Taxation

f

Units of Measurement

g

PROPERTY YIELDS


a

Land System – Ownership and Tenure Two main types of land tenure granted are:

• Freehold title including Grant in Fee Simple and Statutory Land Grant. • Leasehold title including 999 years and 99 years, which are the most common term.

• 60, 30, 22 and 15-year leasehold titles are also issued for various industrial, commercial and recreational uses.

Generally, the ownership of land and buildings are not separate.

7

Singapore Market Overview

b

Restrictions on Foreign Ownership Restrictions on foreign ownership of private residential property in Singapore are governed by the Residential Property Act, under which restricted residential property includes: •

Vacant residential land.

Landed property [i.e. detached house, semidetached house, terrace house (including linked house or townhouse)].

Landed property in stratatitled developments which are not approved condominium developments under the Planning Act.

A foreign person is defined as someone who is not any of the following: •

Singapore citizen

Singapore company

Singapore limited liability partnership

Singapore society

Any foreign person including Singapore Permanent Resident (SPR) must obtain approval from the Minister of Law through the Land Dealings (Approval) Unit (LDU) to buy restricted properties.

Singapore Market Overview

8


The application will be evaluated on a case-bycase basis. If the approval for purchase is to be granted by the LDU, the said property has to be owner-occupied.

Sentosa Cove

A 117-hectare unique waterfront residential enclave located on an offshore island integrated with yachting and berthing facility. It is the only part of Singapore that does not restrict foreign ownership on landed residential properties. Nonetheless, prospective buyers will still need to seek approval from the LDU.

9

Singapore Market Overview

More information on foreign ownership of restricted properties can be found at

c

Acquisition and Development of Residential Land

more than four units of housing

Licensed housing developers are also subject to the rules made under the Act, namely the Housing Developers Rules and the Housing Developers (Project Account) Rules. These rules provide a framework for fair market practices in the sale of uncompleted private residential properties by licensed housing developers.

This is a requirement under the Housing Developer’s (Control and Licensing) Act.

Foreign individuals or companies, as stipulated under the Residential Property Act, must obtain in-principle approval from the LDU prior to land tendering and submission, and upon success of their tender bids, must seek formal approval from the LDU.

http://www.sla.gov.sg/ htm/ser/ser0306.htm Any developer who intends to carry out a project of

Notwithstanding the above, foreign persons or entities may purchase flats or units in a condominium building although purchase of all units in a development is not permitted.

accommodation is required to obtain a housing developer’s licence from the Controller of Housing before the commencement of construction works.

Singapore Market Overview

10


Under the Residential Property Act, housing developers whose shareholders and directors are not all Singaporean are required to obtain a qualifying certificate (QC) from the Controller of Residential Property (CRP) before they are permitted to purchase residential land for development. This is imposed to control foreign ownership of land in the State. A banker’s guarantee of an amount equivalent to 10% of

the land price is needed to obtain the QC and this may be forfeited if the developer fails to fulfil the QC’s conditions. Under the Act, foreign developers are required to complete building on the land acquired within the prescribed period and sell all project units within two years of obtaining the temporary occupation permit. They are not allowed to rent out unsold units.

Developers whose shareholders and directors are not all Singaporeans need a qualifying certificate (QC) to purchase residential land for development

Foreign developers are also banned from reselling land. Effective from 12 January 2013, for residential sites released under the Government Land Sales Programme, the foreign developer will need to pay an Additional Buyer’s Stamp Duty (with interest) if the following conditions are not met: •

Complete development and sale of all residential units in the development within five years* of the date of Contract or Agreement to purchase the site. Produce the Qualifying Certificate where relevant, and housing developer licence within two years^ of the date of Contract or Agreement.

Produce proof of piling and foundation works and any demolition work within two years^ of the date of Contract or Agreement. Produce proof of disposal of all residential units in the development within five years* of the date of Contract or Agreement.

* In cases where a developer has purchased residential land through a collective sale under the Land Titles (Strata) Act on or after 1 July 2012, five years will commence on the date of the collective sale order granted under the Act. ^ In cases where a developer has purchased residential land through a collective sale under the Land Titles (Strata) Act on or after 1 July 2012, two years will commence on the date of the collective sale order granted under the Act.

11

Singapore Market Overview

Singapore Market Overview

12


d

Regulatory Framework The Urban Redevelopment Authority (URA) is Singapore’s land-use planning and conservation authority. Written permission is required when any material change in building or land is to be made, such as change of use, building erection, etc. with the exception of minor works. The Building and Construction Authority (BCA) is a government agency that is responsible for the built environment in Singapore, including buildings, structures and infrastructure. The BCA also issues approval of structural plans, Temporary Occupation Permits (TOP) and Certificates of Statutory Completion (CSC).

13

Land Use Planning

Regulatory Authorities

Singapore Market Overview

regulatory authorities ura

Land-use planning and conservation authority

+

bca

Responsible for the built environment in Singapore

The permissible land use and density for developments in Singapore can be found in the Master Plan which is a statutory land use plan, guiding Singapore’s development over the next 10 to 15 years. The Master Plan 2008 is the current Master Plan.

Development Charge (DC) A DC is levied on the enhancement in land value resulting from the State approving a higher value development proposal, if the development ceiling exceeds the development baseline.

The development ceiling is the value of the development proposed for a site and allowed by URA. With effect from 1 January 2008, development baseline is defined as the value derived from the use and intensity of the approved development on the land or use and intensity allowed in Master Plan 2003.

Revision of DC rates is carried out bi-annually in March and September.

Singapore Market Overview

14


e

Taxation Types

Differential Premium (DP) The Differential Premium DP is a payment charged for lifting the title restriction when there is a change of use and/or intensity.

The determination of DP is based on the published table of DC rates. In addition, where tenure of land is leasehold, the DC rates will be adjusted to reflect the residual tenure of the land. A leasehold table, which expresses the value of the residual tenure as a percentage of freehold value, will be applied to the DC rates to determine the DP payable. 15

Singapore Market Overview

Individual Income Tax

Withholding Tax

Goods and Services Tax

Individual Income Tax

One will be regarded as a tax resident for a particular Year of Assessment (YA) if he/she fulfils one of the following: • Singaporean • Singapore Permanent Resident who has established a permanent home in Singapore. • Foreigner who stayed or worked for 183 days in Singapore or more in the previous year (excludes director of a company).

Capital Gains Tax

Corporate Tax

Double Taxation

Property Tax

b

Tax rates for resident individuals for YA 2012 onwards:

Chargeable Income

Rate (%)

Gross Tax Payable (S$)

First S$20,000

0.0

0

Next S$10,000

2.0

200

First S$30,000

-

200

Next S$10,000

3.5

350

First S$40,000

-

550

Next S$40,000

7.0

2,800

First S$80,000

-

3,350

Next S$40,000

11.5

4,600

First S$120,000

-

7,950

Next S$40,000

15.0

6,000

First S$160,000

-

13,950

Next S$40,000

17.0

6,800

First S$200,000

-

20,750

Next S$120,000

18.0

21,600

First S$320,000

-

42,350

Above S$320,000

20.0

Source: Inland Revenue Authority of Singapore (IRAS)

Singapore Market Overview

16


Employment income for non-resident individuals who are foreigners and have stayed or worked for 183 days or less in Singapore in the previous year are taxed at 15% or the resident rate, whichever is the higher tax. For YA 2013, all tax residents will receive an income tax rebate of up to S$1,500, depending on the age of the resident individual. Details as follows:

below 60

60 and above

Tax rebate Capped at

Tax rebate Capped at

30.0%

S$1,500

50.0%

Capital Gains Tax

Capital Gains Tax is not applicable in Singapore. However, if an individual is deemed to be trading in properties, the gains

derived from the sale of property in Singapore are considerable as taxable income.

Withholding Tax

Withholding Tax is applicable when a person is not a tax resident of Singapore and is deemed to be involved in property trading in Singapore. The buyer or the

buyer’s lawyer is required to withhold 15% of the sale price to account for the withholding tax and the amount

withheld has to be paid to the Inland Revenue Authority of Singapore (IRAS).

Corporate Tax

Generally, Corporate Tax is imposed on income of any company accrued in or derived from Singapore and income received in Singapore from outside sources.

The current corporate income tax rate is 17% since YA 2010.

S$1,500

Age as of 31 December 2012 Source: IRAS

17

Singapore Market Overview

Singapore Market Overview

18


Additionally, some companies are entitled to the following tax rebates, exemptions or incentives for YA 2013: i

Corporate Income Tax (CIT) Rebate for YA 2013 to 2015

As announced in Budget 2013, all companies including Registered Business Trusts, that are not tax residents in Singapore and companies that receive income taxed at a concessionary tax rate are eligible for a 30% Corporate Income Tax (CIT) Rebate of up to S$30,000 per YA for YA 2013, 2014 and 2015.

19

Singapore Market Overview

ii

Tax Exemption Scheme for New Start-up Companies

The tax exemption scheme for new start-up companies was introduced in YA 2005 to support entrepreneurship and help local enterprises grow. Under this scheme, a newly incorporated company that meets the qualifying conditions can claim a full tax exemption on the first S$100,000 of normal chargeable income,

which is income to be taxed at the prevailing corporate tax rate (excluding Singapore franked dividends) for each of its first three consecutive YAs. From YA 2008, a further 50% exemption is given on the next S$200,000 of the normal chargeable income for each of the first three consecutive YAs. As announced in Budget 2013, the tax exemption scheme does not apply to the following companies incorporated after 25 February 2013:

•

•

A company whose principal activity is that of investment holding and derives only passive incomes such as dividend and interest income. A company whose principal activity is that of developing properties for sale, for investment, or for both investment and sale.

Singapore Market Overview

20


These companies will be given partial tax exemption. Moreover, in order for new startup companies to qualify for the tax exemption, a company that is not excluded from the Tax Exemption scheme must:

be incorporated in Singapore (including a company limited

by a guarantee).

• be a tax resident in Singapore for that YA.

have no more than 20 shareholders

throughout the basis period for that YA when: - all of the shareholders are individuals beneficially and directly holding the shares in their own names; or - at least one shareholder is an individual beneficially and directly holding at least 10% of the issued ordinary shares of the company.

The tax exemption for new start-up companies on chargeable income of up to S$300,000 is as follows: Exempt Amount First @100% S$100,000 S$100,000

Singapore Market Overview

Partial Tax Exemption for Companies

Since YA 2008, companies are given a partial tax exemption on normal chargeable income (excluding Singapore franked dividends) of up to S$300,000 as follows: Exempt Amount

Next S$200,000

Total S$300,000

@50%

S$100,000

S$200,000 Source: IRAS

21

iii

First S$10,000

@75%

S$7,500

Next S$290,000

@50%

S$145,000

Total S$300,000

S$152,500 Source: IRAS

Singapore Market Overview

22


Goods and Service Tax (GST) GST is levied on domestic consumption of goods and services which are produced by GST registered businesses or imported into Singapore. The current GST is at the standard rate of 7%, unless the supplies of goods and services are zero-rated.

The sale and lease of residential properties in Singapore as well as financial services are taxexempt items.

23

Singapore Market Overview

Residential properties that do not attract GST include:

GST

• Vacant land that is zoned “Residential” or “Rural Centre and Settlement” in the Master Plan which will be used for residential development; or • Residential dwellings and properties, such as serviced apartments, which provide medium- to longterm accommodation as alternatives to residential dwellings.

Properties that do not fall within the definition of residential properties are considered non-residential properties, sale and lease of which are subject to GST. In addition, a GST concession is available for Singapore Real Estate Investment Trusts (S-REITs) and qualifying Singapore Registered Business Trusts (S-RBTs) listed on the Singapore Exchange to claim GST on expenses incurred for their business and their Special Purpose Vehicles. The GST concession applies regardless of whether they are GST registered S-REIT or S-RBT.

Double Taxation

Singapore has Avoidance of Double Taxation Agreements with several countries, which serves to prevent double taxation of income earned in one country by a resident of the other country. A complete listing of

Avoidance of Double Taxation Agreements concluded

by Singapore since 1965 can be found at

www.iras.gov.sg

Singapore Market Overview

24


Property Tax

Property tax is levied on the owners of all immovable properties in Singapore in accordance with a percentage of the Annual Value (AV) of the property. The immovable properties include Housing & Development Board (HDB) flats, houses, offices, factories, shops & land. AV, which is determined by the Chief Assessor, is defined as the estimated annual market rent for which a property may be let, excluding other expenses payable by the landlord such as maintenance costs, insurance and other taxes. Nonetheless, AV is assessed differently for the following types of properties:

For vacant land and development sites: AV is assessed at 5% of the estimated freehold market value of the land.

For gazetted hotels: with effect

from January 2011, AV of hotel rooms is assessed at 25% of gross room receipts in the preceding year while other lettable areas such as retail shops, food & beverage outlets and function rooms are assessed based on current market rents.

Section 6(6) of the Property Tax Act provides

exemption from payment of Property Tax when the Comptroller is satisfied that a building or any part thereof is used exclusively: • as a place for public religious worship. • as a public school which is in receipt of grant-in-aid from the government. • for charitable purposes. • for purposes conducive to social development in Singapore.

Owner-occupied Residential Properties

Prior to 1 January 2011, owner-occupiers of residential properties are eligible for a concessionary owner-occupier’s tax rate of 4% per year. However, with effect

from 1 January 2011, a new progressive three-tier owneroccupier’s tax schedule has superseded the flat 4% tax rate as follows: Annual Value (S$)

Progressive Tax Rates from 1 January 2011 (%)

First 6,000

0.0

Next 59,000

4.0

Amount exceeding 65,000

6.0 Source: IRAS

25

Singapore Market Overview

Singapore Market Overview

26


In Budget 2013, it was announced that a more progressive tax structure for all owneroccupied residential properties will be in place from 1 January 2014 and 1 January 2015:

Non Owner-occupied/ Investment Residential Properties

Currently, the tax rate for let-out residential properties is at a flat 10%. As announced in Budget 2013, non-owneroccupied residential properties with AV above S$30,000 will be taxed at the following new progressive tax rates:

Annual Value (S$)

Progressive Progressive Tax Rates from Tax Rates from 1 January 2014 1 January 2015 (%) (%)

Land and Non-Residential Properties

The property tax rate for land and non-residential properties remains unchanged at 10%.

First 8,000

0.0

0.0

Next 47,000

4.0

4.0

Next 5,000

5.0

6.0

Vacant Properties

Next 10,000

6.0

6.0

Next 15,000

7.0

8.0

Next 15,000

9.0

10.0

Next 15,000

11.0

12.0

Next 15,000

13.0

14.0

AV in excess of 130,000

15.0

16.0

Property tax is payable regardless of whether the property is vacant or occupied. However, property owners are eligible to claim a vacancy refund if the

Source: IRAS

Annual Value (S$)

Tax Rates from Tax Rates from 1 January 2014 1 January 2015 (%) (%)

First 30,000

10.0

10.0

Next 15,000

11.0

12.0

Next 15,000

13.0

14.0

Next 15,000

15.0

16.0

Next 15,000

17.0

18.0

AV in excess of 90,000

19.0

20.0

property has been vacant for at least 30 days continuously or in a calendar month, subject to the following criteria:

•

If the property is intended for letting but failed despite reasonable efforts having been made to secure a tenant in a fair market; or • If the property is undergoing repairs so as to make it fit for occupation (repairs do not include renovations, fitting out, alterations, improvements and additions).

With effect from 1 January 2014, the property

tax refund concession on unoccupied buildings will be removed and all vacant buildings will be taxed at prevailing rates.

Source: IRAS

27

Singapore Market Overview

Singapore Market Overview

28


f

Units of Measurement Price and rent are typically quoted on a per square foot (per sq ft) basis. Areas are typically quoted in square feet (sq ft) or square metres (sq m).

g

Property Yields Property Yields by Sector (2003 - 2012) 10% 9% 8%

Prime 60-year Leasehold Factory (Ground Floor)

7%

$

Price

+

rent

Areas

6%

Prime CBD (Orchard Road) Strata-Titled Shops

5%

Office (Raffles Place Grade A)

4%

Quoted in per sq ft

Quoted in sq ft or sq m

3% 2%

Residential (Prime District Luxury)

1% 0%

Q1

Q2

Q3

2003

Q4

Q1

Q2

Q3

2004

Q4

Q1

Q2

Q3

2005

Q4

Q1

Q2

Q3

2006

Q4

Q1

Q2

Q3

2007

Q4

Q1

Q2

Q3

2008

Q4

Q1

Q2

Q3

2009

Q4

Q1

Q2

Q3

2010

Q4

Q1

Q2

Q3

2011

Q4

Q1

Q2

Q3

2012

Q4

Source: Colliers International Singapore Research

29

Singapore Market Overview

Singapore Market Overview

30


Sales and Purchase of Real Estate

31

General Overview of Singapore

a

Option to Purchase

b

Stamp Duty

c

Financing


a

Option to Purchase The option to purchase is generally valid for three weeks. In order to gain this right or option, a booking fee of between 5% and 10% of the purchase price is payable by the intending purchaser. To exercise the Option to Purchase, a Sales and Purchase Agreement has to be signed and a down payment has to be paid. The intending purchaser has to exercise the Option within its validity period if he decides to buy the property or the booking fee will be forfeited if he fails to do so.

b Option to Purchase valid for

3 weeks

booking fee: 5% - 10% of the purchase price

How to exercise the Option Obtain a signed Sales and Purchase Agreement Pay downpayment exercise the Option within validity period. Otherwise, booking fee will be forfeited

Stamp Duty Buyer’s Stamp Duty Stamp Duty is a tax payable on documents pertaining to transactions or transfer of interest of immovable properties, stocks or shares. Generally, the buyer is responsible for paying the Buyer’s Stamp Duty (BSD). Buyer’s Stamp Duty Rates Based on the purchase price or market value, whichever is higher: • 1% on first S$180,000 • 2% on next S$180,000

Additional Buyer’s Stamp Duty An Additional Buyer’s Stamp Duty (ABSD) is to be paid by certain groups of people who acquire residential properties (including residential land) on or after 8 December 2011. On 11 January 2013, the government announced the revised ABSD rates applicable to acquisitions of residential properties on or after 12 January 2013. Affected buyers are required to pay ABSD on top of the existing BSD.

• 3% on the remainder Source: IRAS

33

Sales and Purchase of Real Estate

Sales and Purchase of Real Estate

34


Buyer’s Stamp Duty and Additional Buyer’s Stamp Duty for Residential Properties Based on Purchase Price or Market Value, whichever is Higher Profile of Buyer

BSD Rates

Foreigner and entity buying any residential property Singapore Permanent Resident buying first residential property Singapore Permanent Resident buying second and subsequent residential property

10.0%

Singapore Citizen buying third and subsequent residential property

15.0% Residential Properties

1% on first S$180,000

Nil

3.0%

5.0%

10.0%

2% on next S$180,000

Singapore Citizen buying first residential property Singapore Citizen buying second residential property

ABSD Rates between ABSD from 8 December 2011 and 12 January 2013 11 January 2013

Seller’s Stamp Duty (SSD) SSD is payable if the properties are disposed of within a specified holding period from the date of purchase.

3% on the remainder

Nil

Nil

Nil

7.0%

3.0%

10.0%

The rates of SSD payable on residential property purchased on or after 20 February 2010 and sold within a certain time, are summarised in the table. (Please see Page 37)

Where the sale comprises only a partial interest in the residential property, the SSD payable will be based on the consideration or market value of the partial interest.

Industrial Properties

The SSD rates payable on industrial properties and land bought on or after 12 January 2013 and sold within three years of the date of purchase, are summarised in the table. (Please see Page 39)

Where the sale comprises only a partial interest in the industrial property, the SSD payable will be based on the consideration or market value of the partial interest. For the purpose of determining SSD, joint tenants are assumed to equally own divided shares in the property.

Source: IRAS

35

Sales and Purchase of Real Estate

Sales and Purchase of Real Estate

36


Seller’s Stamp Duty for Residential Properties Date of Purchase / Acquisition or Date of Change of Zoning / Use Between 20 February 2010 and 29 August 2010 (all inclusive)

Between 30 August 2010 and 13 January 2011 (all inclusive)

On or after 14 January 2011

Holding Period

Rates

Up to 1 year

1% on first S$180,000 2% on next S$180,000 3% on remainder of the consideration or value, whichever is higher

More than 1 year

No SSD payable

Up to 1 year

1% on first S$180,000 2% on next S$180,000 3% on remainder of the consideration or value, whichever is higher

More than 1 year and up to 2 years

0.67% on first S$180,000 1.33% on next S$180,000 2% on remainder of the consideration or value, whichever is higher

More than 2 years and up to 3 years

0.33% on first S$180,000 0.67% on next S$180,000 1% on remainder of the consideration or value, whichever is higher

More than 3 years

No SSD payable

Up to 1 year

16% of consideration or value, whichever is higher

More than 1 year and up to 2 years

12% of consideration or value, whichever is higher

More than 2 years and up to 3 years

8% of consideration or value, whichever is higher

More than 3 years and up to 4 years

4% of consideration or value, whichever is higher

More than 4 years

No SSD payable Source: IRAS

37

Sales and Purchase of Real Estate

Sales and Purchase of Real Estate

38


c Seller’s Stamp Duty for Industrial Properties Date of Purchase / Acquisition or Date of Change of Zoning / Use

On or after 12 January 2013

Holding Period

Rates

Up to 1 year

15% of consideration or market value, whichever is higher

More than 1 year and up to 2 years

10% of consideration or market value, whichever is higher

More than 2 years and up to 3 years

5% of consideration or market value, whichever is higher

More than 3 years

No SSD payable Source: IRAS

39

Sales and Purchase of Real Estate

Financing Cost of Credit The lending rate in Singapore is usually pegged to SIBOR plus a premium, which is dependent on the credit standing of the borrower.

Loan Tenure

Effective from 12 October 2012, the

maximum tenure for all new residential property loans will be capped at 35 years.

Borrower’s Profile

Lending Rates

AAA-rating

SIBOR + minimum 120 bps

Institutional investors / Funds

SIBOR + 200 to 250 bps

NEW residential property loans

Average individual

SIBOR + 250 to 300 bps

Maximum loan tenure = 35 years

Sales and Purchase of Real Estate

40


Borrower Who is an Individual

Loan-to-Value (LTV) Ratio Residential Properties

Effective from 12 January 2013, the LTV limit for the non-individual borrower is lowered from 40% to 20%. The LTV limit for an individual borrower is as summarised:

Non-Residential Properties

For non-residential properties, an LTV cap of 80% is typically applied, subject to the credit standing of the borrower.

Legal Fees Conveyance fees are generally negotiable.

Date of Purchase The tenure of loan is less than or equal to 30 years

Number of Outstanding Loan(s)

LTV Ratio Applicable

Minimum Cash Down Payment

None

80%

5%

1

50%

25%

2 or more

40%

25%

None

60%

10%

1

30%

25%

2 or more

20%

25%

and The sum of the loan tenure and the age of the borrower, at the time of loan application, is less than or equal to 65 years

On or after 12 January 2013

The tenure of loan is more than 30 years or The sum of the loan tenure and the age of the borrower, at the time of loan application, is more than 65 years

On or after 12 January 2013

Source: Monetary Authority of Singapore (MAS)

41

Sales and Purchase of Real Estate

Sales and Purchase of Real Estate

42


Leasing Practices


Retail

Residential Lease Term

Rental Costs

Rental Renewal Rates

Fit-out / Rent Free Period

Additional rent free period / incentives

Security Deposit

Industrial

Office

Typically three years with an option to renew for a further term of three years

Typically three to five years with an option to renew for a further term of three years or more

Typically two to three years with an option to renew for a further term of similar duration

• If furniture is included, there will typically be a furniture rent component

Rents are quoted based on either of the following: • Gross monthly base rent + service charge + a percentage of gross sales turnover (typically 1.0% to 2.0%); or • Gross monthly rent or a percentage of gross sales turnover (typically 15.0% to 18.0%), whichever is higher.

The base rent is quoted on a monthly gross basis on the floor area of the premises. A service charge is included in the monthly gross rent.

The base rent is quoted on a monthly gross basis on the floor area of the premises. A service charge is included in the monthly gross rent.

Mutually agreed rate using the benchmark from current market rental level

Based on prevailing market rate. Some tenants may be able to negotiate for a cap to the rental increase, typically up to 30.0%.

Generally based on prevailing market rate. The rental rates may also mutually agreed at the onset if the tenant expresses commitment to expansion within the building.

Based on prevailing market rate or prior mutually-agreed rent

N.A.

Generally, landlord will provide a one month rent-free fit-out period. Depending on the market conditions, rent-free fit-out period of up to three months could be provided for restaurants or larger premises, on a case-by-case basis.

Generally, landlords will offer a one month rent-free fit-out period to up to three months or more for larger premises. This is usually negotiated on a case-by-case basis, depending on the state of the market.

Depending on lease term and size of the premises, landlords typically will offer a one to two-month rent-free fit-out period.

N.A.

Additional rent-free periods or other incentives may be extended by landlords, on a case-by-case basis, depending on the state of the market. However, this is not commonly practised.

Landlords may provide rent holidays, depending on market conditions. Generally, for buildings owned by funds, the landlords are more willing to grant rent holidays so as to maintain the quoted rent rate.

May offer rent holidays or cash incentives to attract and retain tenants, depending on market conditions. For mid-sized companies, landlords may give cash incentives of one-month's rent to offset the tenants' fit-out costs.

Typically two months’ rent for a two year contract

Typically three months’ rent. If the paid-up capital of the business is less than S$100,000, the security deposit can be increased to six months, depending on the landlord's requirements.

Typically three to six months’ rent. If the paid-up capital of the business is more than six months gross rent, landlords generally accept three months’ rents as a deposit.

Minimally three months’ rent. This may be increased depending on the lease term. Generally, for leases over three years, an additional one month’s gross rent for every year exceeding the three-year term is payable.

Usually two years with an option to renew for another one year • The base rent is quoted on a monthly gross basis on the floor area of the premises, inclusive of monthly maintenance charge

Stamp duty is also levied on lease/tenancy agreements that are prepared and signed when a property is let. It is calculated on actual rent or market rent, whichever is higher. Stamp duty is payable by tenant or lessee. Lease/Tenancy

Stamp Duty

(a)

Where annual rent does not exceed S$1,000

(b)

Where annual rent exceeds S$1,000, stamp duty is based on the contractual rent or market rent, whichever is higher

Rates Exempted

- For every S$250 or part thereof of the average annual rent for lease term:

45

Leasing Practices

Up to 1 year

S$1.00

More than 1 year and up to 3 years

S$2.00

More than 3 years or for an indefinite term

S$4.00

Leasing Practices

46


About Colliers International Colliers International is the leader in global real estate services, defined by our spirit of enterprise. Through a culture of service excellence and a shared sense of initiative, we integrate the resources of our real estate specialists worldwide to accelerate the success of our clients – making us the trusted partner when it comes to providing the right expertise in real estate. A subsidiary of FirstService Corporation, Colliers delivers to real estate occupiers, owners and investors on a local, regional and international basis, a comprehensive portfolio of customised services – including corporate solutions, brokerage, asset and facilities management, valuation and appraisal as well as research and consultancy.

Colliers at a Glance

Our presence:

62 countries

Our offices:

$

> 480

Our Professionals:

> 13,500

rent

Our Revenue in 2012:

Our Transaction Value in 2012:

US$2 billion in revenue

US$71 billion

Our Managed Property in 2012:

1.12 billion sq ft

Colliers International (Singapore) Pte Ltd 1 Raffles Place #45-00 One Raffles Place Singapore 048616 Tel +65 6223 2323 | Fax +65 6222 4901 CEA Licence No. L3004691J

www.colliers.com

Contact our Colliers professionals for your sales and leasing requirements. Dennis Yeo Managing Director Email dennis.yeo@colliers.com Tel +65 6531 8688

Brenda Ong Executive Director, Project & Leasing | Industrial Services Email brenda.ong@colliers.com Tel +65 6531 8685

Tang Wei Leng Executive Director | Investment Services Email wei-leng.tang@colliers.com Tel +65 6531 8586

Ho Eng Joo Managing Director | Residential Services Email eng-joo.ho@colliers.com Tel +65 6531 8618

Grace Ng Deputy Managing Director | Auction & Sales Email grace.ng@colliers.com Tel +65 6531 8500

Tan Boon Leong Executive Director, Project & Sales | Industrial Services Email boon-leong.tan@colliers.com Tel +65 6531 8682

Marcus Loo Executive Director | Offices Services Email marcus.loo@colliers.com Tel +65 6531 8670

Calvin Yeo Deputy Managing Director | Retail and Client Services Email calvin.yeo@colliers.com Tel +65 6531 8671

This publication has been prepared by Colliers International for general information only. Colliers International makes no guarantees, representations or warranties of any kind, express or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this publication and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s). © 2013. All rights reserved.


Singapore Real Estate Investment & Leasing Guide  

by Colliers International

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