Latest news with #AdditionalBuyersStampDuty
AsiaOne
2 days ago
- Business
- AsiaOne
The biggest misconceptions about buying property in Singapore's CCR in 2025, Money News
Singapore's Core Central Region (CCR) is as straightforward as HDB eligibility rules. Everyone thinks they have a good idea of how it works, until questions are asked and they look deeper. Then suddenly there are 50 exceptions to every rule, a dozen gaps in the online information, and a stunning realisation that you've been wrong all your life about something. This is pretty much how it works with CCR properties: on the surface, you think you know the region: it's that place with all the rich expats, tech moguls, and one old uncle who has holes in his singlet but owns a GCB in Tanglin. But with the Singapore property market pivoting more toward this mysterious region (and I assure you, the CCR is a mystery,) it's time to take a more nuanced look; and to realise that quite often, much of the "property knowledge" you've been told about the CCR is wrong, or grossly oversimplified: For those not in the know: What is the CCR? The CCR is the region that houses Singapore's most expensive real estate options, like The Sail, Marina One, Ardmore Park, and various other condos that are basically a property agent's retirement fund. Historically, this is an area favoured by high-net-worth individuals, foreign buyers, and investors, and it's not necessarily about money either. Investors may also buy "cultural capital" or clout, by owning prestige properties here. Projects here are usually freehold or 999-year leasehold. Districts include: District 1: Raffles Place, Marina Bay, Cecil District 2: Chinatown, Tanjong Pagar District 6: City Hall, Clarke Quay District 9: Orchard, Cairnhill, River Valley District 10: Tanglin, Holland, Bukit Timah District 11: Newton, Novena Sentosa: Not geographically central, but it's lumped into the CCR due to its high-end positioning. Why should we regular folks be paying attention to the CCR in 2025? I've linked the relevant article in the intro, but to quickly recap: around 22 launches remain for the year of 2025, and of these, around 14 will be in the CCR. If you missed out on the non-central launches like Parktown Residence, Emerald of Katong, ELTA, etc., then consider me the bearer of luxury news: your next new launch option is likely going to be in Singapore's high-end CCR. Even before this happened, back in 2023, I'd pointed out that Rest of Central Region (RCR) prices were narrowing with CCR prices. This was partly due to the 60 per cent Additional Buyers Stamp Duty (ABSD), which removed a good number of wealthy foreign buyers from the CCR market. Moving forward to today, the price gap between the CCR and RCR is at an all-time low of 4.5 per cent. Given that over half the upcoming new launches are going to be in the CCR, consider this early preparation of the sales pitch: we're going to hear, over and over again, that this is a "big opportunity" to own a CCR property; especially if you already have a Rest of Central Region (RCR) property to upgrade from. So here are the oversimplified beliefs to address about the CCR, before we're neck-deep in it this year: The CCR is the most prime region, you won't go wrong here CCR properties are all top luxury properties Freehold status makes CCR properties better The best amenities are in the CCR 1. The CCR is the most prime region, you won't go wrong here This has the same energy as "WeWork is so huge it can't fail at this point." The glamour and high quantum properties packed into the CCR do give the impression that everything there is infallible, but in reality, it's quite the opposite. I feel it's the cheaper Outside of Central Region (OCR) where it's often harder to make a mistake, as you're starting with lower initial costs. The CCR isn't just high quantum, it's possibly the most volatile of the three regions — and you need to be more careful when buying here, not less. The CCR isn't rock-solid and infallible: we saw this just last year. At year-end 2024, I pointed out that the CCR saw an 11.8 per cent price decline, as opposed to a 9.8 per cent increase in the OCR. And yes, this was due to the ABSD hike as mentioned above, but that demonstrates the point: Why didn't other regions see a big stumble from the ABSD hike? Because the OCR — and to a smaller extent the RCR — have their values tied to everyday Singaporean homeowners. The CCR is packed with investors, wealthy foreigners, and a more exotic demographic. Buyer and seller behaviours here are not as predictable as those of regular HDB upgraders. This also goes for rental: as of Q1 2025, the vacancy rate for completed private residential units in the CCR stood at 10.3 per cent, higher than the RCR's 6.6 per cent and the OCR's 4.7 per cent. For the first nine months of last year (2024), median rent for condos in the CCR declined by a chunky 3.5 per cent, unlike a small 1.4 per cent in the OCR, and a 0.4 per cent increase in the RCR. Why? Because when the wider economy is in turmoil, companies like to trim the number of pricey expats they hire, or shrink housing allowances. In the OCR, where expats or landlords are fewer in number, the effect is more muted. The RCR may even see a small boost, as expats move from the CCR into the city fringe as the next alternative. It's the CCR that's most subject to fluctuations in the wider economy. This doesn't mean the CCR isn't investment-worthy, but it does mean that you need to pick your properties with even greater care than elsewhere. So the opposite of the saying is true: a low-cost OCR property is usually where you can afford to make a mistake, but still recover. The CCR is much more punishing toward bad choices, and you absolutely can go wrong. 2. CCR properties are all top luxury properties For the newer properties in the CCR, sure. But for resale… Look, I say this with all respect, and I don't want to disparage any properties, but let's accept that age and time have somewhat changed the definition of "top luxury." How many of you have seen, say, The Claymore, Orchard Court, Lien Towers, or any one of the many older properties in the CCR? Even the ones near highly prestigious areas like Orchard Road? These projects can still be expensive because of their location, freehold status, and large floor plates. But if you were to compare facilities, there are 10-year-old condos in the OCR that make some of these "prime freehold" properties look like budget office buildings. This is a real problem that parts of the CCR — especially Districts 9 and 10 — will face over the coming years. At some point, buyers are going to look at the peeling walls of 1980s squash courts, then back at the price, and start wondering why Treasure at Tampines or some OCR mega-development won't be better. Simply put, "CCR = luxury" is a misconception. You might find mass-market, OCR projects today that are both cheaper and better for your lifestyle. 3. Freehold status makes CCR properties better Let's put it this way: no one on a pro-basketball team talks about their height much. Because when everyone else has that quality, it's far less special. In the same vein, freehold status can matter when it's rare in an area, such as one freehold condo amidst leasehold counterparts. But freehold is the norm in the CCR, and a freehold condo surrounded by others is little more than the baseline. So this shouldn't be a particularly big selling point, even on the brochures. 4. The best amenities are in the CCR A bit of personal opinion here: from the 1980s when I was growing up, through to around the mid-2000s, the CCR was truly the centre of Singapore. The malls here had brands you couldn't find in heartland malls, there were restaurants and eateries we'd travel all the way just to visit, and HMV was a big deal because we needed to fill half our room with physical CDs. This died around 2009, when Uniqlo opened its flagship store in Tampines instead of somewhere in Orchard. URA's aggressive decentralisation has created multiple hubs of amenities, and the CCR is no longer the centre of our universe. Ask around: most Singaporeans will tell you that whatever they can find in Orchard, they can find in their neighbourhood mall, be it NEX, Clementi Mall, JEM, etc. Now, there are parts of the CCR which are still arguably unique, like the Holland V identity node. But as Singapore decentralises further, we may one day reach a point where "superior amenities" are no longer a defining trait of many CCR neighbourhoods. It's worth thinking about, for long-term investors. So if you're looking at CCR properties in 2025, remember: prestige doesn't pay your mortgage, and clout doesn't cover vacancy. The only thing worse than overpaying for a "prime" unit is realising too late that you were buying into the idea more than an actual, viable asset. Again, this isn't to shut down the CCR as an investment prospect or a home; it's worked for many people. My intent is just to point out that, thanks to years of conditioning and sales pitches, we may have dangerously oversimplified a very complex region, going through some very big changes. [[nid:718515]] This article was first published in Stackedhomes .
AsiaOne
25-05-2025
- Business
- AsiaOne
Can you still own multiple properties in Singapore? Here's what you need to know in 2025, Money News
It's hard to argue that multiple property ownership is much tougher today, compared to the property heydays of the early '00s. For those who haven't been in the property market for some time, the regulatory environment in 2025 can come as a shock: cooling measures have made owning more than one property a lot tougher, and potentially less lucrative, for investors. Whether you're new or just returning to the Singapore property market, here are the key changes to consider today: 1. Impact of the ABSD on multi-home ownership As of 2025, the Additional Buyers Stamp Duty (ABSD) is 20 per cent of the price or valuation (whichever is higher) on the second property, and 30 per cent on the third property or subsequent. For Permanent Residents (PRs), it's 30 per cent on the second property and 35 per cent on the third or subsequent property. Note that this still has no bearing on a "sell one, buy two" strategy, though. This is because using such an approach, each buyer has a property count of only one (e.g., after a family sells the property, each spouse has one home under their own name, thus having separate mortgages but not incurring ABSD). But the extent of the ABSD is such that, if you cannot avoid it (such as decoupling a condo unit to buy two), it becomes much more discouraging. One example of this is choosing to retain your HDB flat, while buying a condo to rent out (or vice versa). The price of the typical resale condo (as of April 2025) averaged $1,734 psf. Assuming you purchase a 900 sq ft resale unit, this would be about $1.56 million. The 20 per cent ABSD would come to about $312,000. Assuming the 900 sq ft unit is rented out for around $4,000 to $4,500 per month (typical for most non-central condos in 2025), this could come to over five or six years of rental income just to cover the ABSD alone; a number that's clearly not viable or attractive to most investors. There are, to be blunt, few reasons to retain your flat while purchasing a condo in 2025 — even if you can rent one out. If there are reasons, it will likely be due to factors such as wanting to provide housing for children (e.g., a one-bedder near NUS if they're studying) or having to retain the flat because you may need to move back one day. One possible way to bypass ABSD is to purchase a dual-key unit, but this doesn't seem to be catching on. A dual-key unit is a single unit that is subdivided into two. This still counts as a single unit, so there's no ABSD involved. In theory, you could rent out one side, whilst living in the other, with no loss of privacy. However, this doesn't seem to be catching on, perhaps because dual-key units also tend to be larger. This raises their quantum which, coupled with having only one tenant, could be seen to balance out the advantages of avoiding ABSD. As an aside, the higher ABSD rates indirectly constrain resale supply as well If you purchased your second or subsequent home before the ABSD rates were raised, you can probably sense why fewer people in your position would want to sell. There's definitely an emotional barrier if you didn't incur ABSD (or much lower ABSD) when you bought in earlier times, but would incur a 20 per cent ABSD if you sold and bought another second property today. This can also impact en-bloc sales, as those who have rental units in the development may not feel the sale proceeds cover the ABSD, on a replacement investment property. 2. Impact of Loan-to-Value (LTV) ratio limits on multi-home ownership LTV limits have shrunk over the years, now capped at 75 per cent even for the first property. If you have an outstanding home loan, the second property has an LTV of just 45 per cent; and this falls further to 35 per cent on the third or subsequent outstanding loan. In addition, the minimum cash downpayment falls to 25 per cent, if you have one or more outstanding home loans. So if you haven't finished paying off your existing condo unit, the minimum down payment for your second property — assuming a price of around $1.8 million for a two-bedder — would be $990,000. Of this amount, $450,000 has to be in cash. This is another reason some families place the entire mortgage on one spouse, when they first purchase a home — it frees up a chance for the other spouse to take the full 75 per cent LTV on a second property. 3. Impact of the TDSR on multi-home ownership The Total Debt Servicing Ratio (TDSR) was introduced in 2013, and is one of the most significant changes from the prior decade. Under the TDSR, your monthly loan repayments — inclusive of other debts (personal loans, car loans, etc.) — cannot exceed 55 per cent of your monthly income. TDSR is calculated based on a floor rate of four per cent per annum (regardless of the actual interest rate, even though the actual rate tends to be lower), and sources of variable income count as being 30 per cent lower for TDSR calculations. The latter fact is important for those who are already landlords. If your current rental income is $4,000 per month, for instance, it only counts as $2,800 per month for the purposes of TDSR calculations. If you're purely a landlord and only have rental income, this does make it a lot tougher for you to secure financing on another property. Consider an existing landlord making $8,000 a month from rent (for simplicity's sake, let's say he has no other income, and no other sources of debt): Gross Monthly Rental Income: $8,000 Adjusted Income (after 30 per cent haircut): $8,000 × 70 per cent = $5,600 TDSR limit (55 per cent of adjusted income): $5,600 × 55 per cent = $3,080 Assuming he could still get a 25-year loan (this is dependent on his age), and a floor rate of four per cent, this would cap his maximum loan amount at roughly $583,500. Given that resale non-landed homes average $1,734 psf and new launches average $2,626 psf, the quantum of even a 700 sq ft two-bedder is about $1.21 million (resale) and $1.83 million (new launch). This makes expanding into a third property quite challenging, especially after you add in the 20 per cent ABSD. 4. Real cash-flow considerations in multi-home ownership Non-owner occupied properties (i.e., anything rented out) have higher property tax rates. This is on a tiered system based on your property's Annual Valuation (AV), which is determined by IRAS and the Chief Valuer: Annual Value Tax rate First $30,000 12per cent Next $15,000 20per cent Next $15,000 28per cent Any subsequent amount above $60,000 36per cent Assuming the government decides your property can make $4,500 a month* and it's rented out, you'd pay: $3,600 + $3,000 + $2,520 = $9,120 per year, or about $760 per month in property tax. This has to be coupled with condo maintenance fees (roughly $400 per month in most mass-market condos), as well as the costs of own-unit maintenance (fixing broken kitchen appliances, replacing sagging doors, etc) *Remember the AV is not the literal amount you rent out the property for — it's set by the government. Usually it's generous, and set lower than real rental income, though. Example of cash flow assuming $4,500 per month in rent: Gross Rental Income: $54,000 per year Less Property Tax: $9,120 (we'll assume the AV matches the real rental income, for simplicity's sake) Less Maintenance Fees: $4,800 This is a net cash flow of about $40,080 per year, or about $3,340 per month. This is if you don't also have any mortgage repayments. If you still have mortgage repayments, however, it's unlikely that you'll be cash flow positive. Multiple property ownership is definitely more challenging in Singapore in 2025 This doesn't make it impossible, but it does mean you need to start earlier if you can — once age begins to limit your maximum loan tenure, for example, the monthly loan repayments will rise, and make it harder to meet the TDSR. It also means you should work out with your spouse, earlier on, the manner of holding for each property. Remember that you cannot decouple for HDB flats (i.e., transfer ownership fully to just one spouse) just to buy a second property for the family, so it can sometimes make sense for the flat's mortgage to be under just one name. This may also necessitate starting with a smaller flat, such as a 3-room instead of a 4-room, so that it's viable on one person's income. Finally, a sense of realism is needed in the current market. Depending on your finances, it sometimes makes sense not to own multiple properties, and simply share the load of upgrading to a single larger home. [[nid:717813]] This article was first published in Stackedhomes.
AsiaOne
17-05-2025
- Business
- AsiaOne
6 prime HDB shophouses for sale at $73m in Singapore: A look inside the rare portfolio, Money News
$73 million could buy you: A luxury bungalow in Nassim Road A small office building in the CBD fringe Or six HDB shophouses with established tenants in Singapore's busiest heartland hubs Savills Singapore just dropped one of the more interesting commercial listings of 2025: a portfolio of six shophouses all in prime spots: directly connected to MRT stations, bus interchanges, and right beside footfall anchors like NTUC Fairprice. Shophouses have seen more interest in recent years, mainly due to the 60 per cent Additional Buyers Stamp Duty (ABSD) on residential properties. Commercial shophouses don't incur this added tax, which makes them increasingly attractive to some buyers. This could explain the confidence in such a high-quantum package, which is backed up by core locations such as Toa Payoh, Ang Mo Kio, and Tanjong Pagar. Prime spots in Singapore's most resilient heartlands The locations of the shophouses are developed, with long transaction and rental histories. In fact, some of these shophouses are already tenanted by businesses; this adds the kind of consistency and predictability that landlords prefer. Toa Payoh Lorong 6: A ground-floor unit spanning 1,033 sq ft, with sheltered access to Toa Payoh MRT Station and Bus Interchange. The property is already subdivided into three units and fully leased. Ang Mo Kio Avenue 8: Two units (4,037 sq ft and 1,647 sq ft) spanning two levels with residential quarters above*. These shophouses sit within AMK Town Centre, right next to the Bus Interchange and AMK Hub. *For shophouses with commercial and residential use, ABSD is typically charged only on the residential portion; but verify with the selling agent or URA for more specific details. Tanjong Pagar Plaza: Three ground-floor units ranging from 603-764 sq ft, positioned right at the entrance and pedestrian drop-off point. This unit is beside the NTUC Fairprice. This doesn't just make for a good anchor tenant, it's also attractive to future tenants. (A supermarket naturally draws more people to the area, and it's assumed NTUC wouldn't have opened if they didn't already research the area. Spotting a business like NTUC or McDonald's is a "cheat code" to identify high traffic areas.) The numbers behind the asking price Let's break it down by location: Property Size Guide Price 190 Toa Payoh Lorong 6 1,033 sq ft $12m 702 Ang Mo Kio Avenue 8 4,037 sq ft $36m 705 Ang Mo Kio Avenue 8 1,647 sq ft $10m Tanjong Pagar Plaza (3 units) 603-764 sq ft each $5m each What makes HDB shophouses different According to Nick Chan from Savills, there are only about 8,500 privately held HDB shophouses in Singapore, making them "among the most tightly held commercial assets" here. Besides scarcity, HDB shophouses typically benefit from the captive markets of HDB estates. Their locations near transit hubs and daily necessities providers like NTUC ensure consistent foot traffic, and this means very high rentability. The shophouses have been marketed with an impressive claim of a four per cent rental yield. By comparison, the yield on a typical private non-landed residential property is about two to three per cent as of 2025. The rental performance may be due to: Positive rental reversion as leases expire (i.e., new tenants might potentially pay more than the previous, as the earlier ones locked in lower rates) Further subdivision of space to drive higher rental income Potential future upside from ongoing rejuvenation plans The units can be acquired individually or as a complete portfolio, with the sale via private treaty. The Bigger Picture What's particularly interesting about this listing is its timing. As Singapore navigates economic headwinds, investors are increasingly prioritising defensive assets over speculative plays. It can feel safer, for instance, to buy an asset and collect a predictable amount of rent, rather than count on high resale gains from luxury-area condos. An added benefit is that commercial tenants tend to be more "sticky." Residential tenants may be more willing to pack up and leave when rates rise; but businesses such as restaurants or shops could lose a chunk of their customer base by doing so. The question for some potential investors though, isn't just about the current four per cent yield; they need to look ahead and consider if escalating trade wars and economic uncertainty will affect their business tenants. Even if those tenants are loathe to move, poor business can result in vacancies (e.g., the tenant closes the business), as well as static or declining rent. [[nid:717939]] This article was first published in Stackedhomes.
