EnterAsia Information Services

Investor’s Guide

Property Investment Guide Singapore:

Information for Property Investors on Apartment and House Sales

Why Singapore

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.

 
Rank Title Source/Year
9 Business Competitiveness Index 2007-2008 World Economic Forum 2007-08
1 World’s easiest place to do business World Bank report: “Doing Business 2007: How to Reform”
1 Best Business Environment” spot in Asia Pacific EIU Country Forecast, January 2007
2 World for Global Potential Competitiveness Japan Center of Economic Research, 2007
1 Best Labour Force BERI’s 2007 Labour Force Evaluation Measure report
4 Most attractive investment incentives in Asia IMD World Competitiveness Yearbook 2005
2 Best Investment Potential Worldwide BERI Report August 2006
1 Best Investment Potential in Asia BERI Report August 2006
1 Best in avoiding             Bureaucracy and Red Tape in Asia Political and Economic Risk Consultancy, June 2006
1 Of the World’s Top 20 Most Globalised Nations A.T. Kearney/FOREIGN POLICY Magazine Globalization                Index 2006
1 The best place to live for Asian expatriates ECA International 2006
 
Source: EDB Singapore

 

 

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.

 

 


Property Prices

 

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.

Info:
Property
High-End
Mid-tier
Mass    Market
 
Maximum
Minimum
Maximum
Minimum
Maximum
Minimum
Landed
$1,884 $878 $1,693 $563 $849 $411
Non-Landed
$2,100 $1,296 $1,513 $706 $799 $504

Further info on what influences property prices in Singapore see the section Property News.

 


Rental Yields

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.

Info:
Category Score World Rank Regional Rank
Physical Property Rights 8.0 6 of 70 1 of 14
  • Property Rights Protection
8.9 10 of 70 2 of 14
  • Registering Property
8.6 7 of 70 3 of 14
  • Ease of Loan Access
6.4 11 of 70 3 of 14
Source: International Property Rights Index Organisation

 

 

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
property tax
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.

 

 


Property Management

 

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
The fees for this service depends on number of units, type of property, location and any specific requirements from owners. Typically, a 1 or 2 bedrooms apartment in prime district, the fees is about S$250 per month.