Property Investment Guide Singapore:
Information for Property Investors on Apartment and House Sales
There are many superlatives attributed to Singapore and the city-state has been consistently ranked high for a number of reasons in reports from all over the world.
Situated at the crossroads of international trade routes, Singapore is a top location for foreign investors, be they multinationals, part of Europe’s dynamic middle-market or technology start-ups. The on-going liberalisation of markets and industries and the privatisation of government-linked companies (‘GLCs’) offer excellent opportunities to invest in Singapore and the neighbouring markets. Integration of the 10 ASEAN countries under a free trade area (AFTA) with a population of more than 500 million people is on track. Free Trade Agreements with the US, Australia, Japan and many other countries provide easier access to the global market.
From Singapore you can access a market size of 2.8 billion people within 7 hours flight time. It its located within the Association of Southeast Asian Nations (ASEAN) representing a combined market of more than 500 million people. Singapore’s seaport offers transport to more than 600 ports in 123 cities. Changi Airport won the Best Airport Award four times in a row and links to 140 cities in 50 countries.
Global Investors Programme (GIP)
Thousands of investors have been attracted by the Global Investors Programme (GIP)administered by the SEDB – the Singapore Economic Development Board – to ease the entry of investors.Many are attracted by the fact that they can apply for Permanent Residence when investing in the city state:
These are the circumstances for your application:
1. Invest at least SGD 1 million in a start-up or expansion of an existing business to seek permanent Residence status in Singapore
2. Invest at least S$1.5 million in an approved Singapore-incorporated venture capital fund or Singapore-incorporated foundation or trust that focuses on economic development
3. Invest at least S$2 million in a new business startup, expansion of an existing operation, approved Singapore-incorporated venture capital fund or Singapore-incorporated foundation or trust that focuses on economic development and purchase Residential property with not more than 50% of the investment amount.
4. Other investment vehicles such as venture capital funds, foundations or trusts, and/or private residential properties will be considered for application for Permanent Resident applications when you purchase residential property for not more than 50% with the investment. You should always ask for your particular situation to be assessed by the EDB.
The prices below are the maximum and minimum values of the median unit prices per square foot (psf) of the various districts in the different market segments
The values indicated are in Singapore Dollar.
Further info on what influences property prices in Singapore see the section Property News.
If you are buying the property for investment and intend to let out the property, calculate the yearly rental yield versus the purchase price. Properties in prime district i.e. District 09, 10, 11 and the Central Business District command a higher rental return however due to the premium purchase price, they most likely have a lower rental yields. Also, a freehold property compare to a leasehold property achieve a lower rental yield due to its premium in price.
Note: if you are a Permanent Resident planning to rent out your own apartment instead of living in it by yourself you may need permission from the government.
Laws for Landlords
A major indicator of a countries economic freedom is its score on the property right index, which shows the degree to which a country’s laws protect private property rights. The reports in general focus on Legal and Political Environment (LP), Physical Property Rights (PPR), and Intellectual Property Rights (IPR).
For an investors the following rankings taken from the International Property Rights Index 2007 may be of importance as they speak for themselves.
Is Singapore landlord friendly?
As there is no law governing the relations between landlords and tenants Singapore can be regarded as landlord friendly. All terms such as the deposit, the length of a lease and the right to termination can be freely negotiated in a contract. Disputes are mainly resolved through mediation under the Small Claims Tribunal.
However, you should note, that in Singapore the landlord is personally responsible for his tenant’s legal residential status and should ask the tenant prior to lease commencement to supply the following documents:
|Copy of Employment/Dependent/Student passes for all occupants.|
|Copy of Passport for all occupants|
|Confirmation of Employment Letter (in the case of a personal lease)|
|Registration of Company Certificate (in the case of a corporate lease)|
Tax on Rental Income
Tax is payable to the government on rental income of a property. The owner of the property receiving the income is responsible for declaring and paying this tax.
The total rent received from the tenant must be declared. However, expenses can be claimed against rental income of the property. Expenses incurred during vacancy period cannot usually be claimed unless the owner can show that they have exercise best effort in letting out the property, these expenses may be considered.
The total rent and deductible expenses claimed must be reported when filing income tax returns. Tax will be calculated on the net rent which is the total rent received less total deductible expenses.
The following are deductible for tax purposes:
|interest on a mortgage loan|
|fire insurance on the property|
|commission paid on getting a tenant|
|cost of renewing a lease or getting a new tenant (except for the first tenant)|
|tenancy works in getting the property ready for new tenant like painting, installing curtains etc|
|monthly maintenance charges to management corporations|
Note: There are situation where income derived through collection of rent may be taxed in Singapore and again in native homeland, please seek legal advise from an accountant.
Why should you engage the services of a professional property management company?
Most of us do lack the experience needed for the day-to-day management of a property, especially if it comes to property you own in a foreign country. Property managers know the rental market and can assist you to maximize your income. They will source and evaluate potential tenants and negotiate rental agreements according to local laws and regulations.
Property managers respond to the tenant’s requests and coordinate and handle emergency and routine repairs and – above all- help you to avoid unnecessary repairs which will cut your expenses.
Property managers even offer to handle your taxes, determine profitability and present monthly statements on your rental income and expenses.
In Singapore the fees for this service depend on the number of units, type of property, location and any specific requirements from owners. Typically, for a 1 or 2 bedrooms apartment in prime district, the fees are about S$250 per month.
|Info: property management costs for a 1-2 bedroom apartment|