What properties can PRs buy?

The Government has no restrictions on permanent residents when it comes to buying, selling and sub-letting condominium units. But there are rules for landed property and HDB flats.

To buy landed property – bungalow, semi-detached house, terrace house and town house, whether freehold or leasehold – PRs need to apply for a permit from the Singapore Land Authority (SLA). They will be assessed on their economic contributions – qualifications, expertise and investments here.

PRs cannot sell their landed property within three years of buying it. After three years, they may sell it to a Singaporean or another PR, who has to seek SLA’s permission for the purchase. PR owners of landed properties are also not allowed to rent them out under the Residential Property Act. Offenders are liable to a maximum fine of $5,000 or a jail term capped at three years, or both.

PRs are allowed to buy resale HDB flats – but not new flats – without housing and mortgage subsidies.

Resale HDB flats bought without a CPF housing grant and with a bank loan can be sold one year from the date of purchase. To sub-let the whole flat, the PR must have lived in it for three years.

Owners of HDB flats are allowed to sub-let rooms if they own a three-room or bigger flat. There is no minimum occupation period for renting out rooms. Owners have to adhere to the number of tenants allowed by the HDB.

No prior approval from HDB is required for the sub-letting of rooms. But with effect from tomorrow, flat owners who sub-let rooms have to register with the HDB within seven days of doing so.

This applies to all, not just PRs. Those who illegally sub-let entire flats may have their units taken back by the HDB or may have to pay a fine of $1,000 to $21,000.

Source : Sunday Times – 31 Jan 2010

Private home owners eye HDB flats

The businesswoman already owned a semi-detached house. Two years ago, she spent $400,000 to buy another property.

Her choice? A four-room HDB resale flat in Sunset Way, for which she paid about $80,000 above valuation.

The 50-year-old, who declined to be named, said it was for her two grown-up children to live in, for them to ‘gain some independence’.

But then, last November, she sold it at a $100,000 profit, which she used to fund another purchase – an executive maisonette.

She claimed she is not speculating in HDB properties.

But there is growing concern that private home owners like her are snapping up such homes – either to flip them for gains or for rental income – driving up prices in the process.

Resale flat prices rose 3.9 per cent in the final three months of last year to hit a new record, taking the full-year jump to 8.2 per cent.

An HDB spokesman said it is unlikely that rising resale prices can be caused by any single factor, such as purchases by private home owners or permanent residents.

Prices are ‘influenced by a myriad of factors such as pace of economic growth and market sentiments’, the spokesman said.

Real estate agents said there is growing interest among private home owners in acquiring an HDB flat.

However, they note that the size of this group may be too small to influence prices greatly.

Private home owners, who can buy only resale flats and without subsidies, can sell the flat if they have lived in it for at least one year.

Those who buy three-room or bigger flats can rent out rooms. But they must live in the flat during the period of the sub-letting, and comply with other rules.

If they have lived in the flat for at least three years, they can rent out the entire unit.

Latest figures show that the median rental for a three-room flat in Ang Mo Kio is $1,450. Units in good locations can fetch yields of up to 8 per cent, said housing agents.

Last Wednesday, National Development Minister Mah Bow Tan said the HDB would conduct a review to check if any rules are ‘encouraging or allowing’ people to speculate in HDB flats.

It would also step up efforts to ensure people do not get away with abusing the system.

Mr Andrew Tan, a senior division director from Dennis Wee Group, said private home owners eyeing HDB flats include those in their 40s and 50s, and with savings of up to $200,000.

Since other types of private homes are beyond their reach, they look to three-room flats – which may be easier to rent out .

‘As an investment, a flat will not give super-high returns, but it’s a safe bet,’ he said, noting the volatile stock market and low returns from fixed deposits.

ERA agent Richard Sim received more than 10 queries from private home owners in the past year.

‘Most want to buy the flats for investment as they can make money in terms of rental or profit if they sell them. Some do buy them to retire in as well.’

The HDB has warned that those who rent out entire flats without approval and before fulfilling the minimum occupancy period can be punished.

From January 2008 to December last year, 56 owners were fined $1,000 to $21,000. Some even lost their flats.

Whatever their buying motives, Mr Syed Abdullah Alhamid, a senior division director with ERA, said private home owners can push up prices as they are cash-rich.

He said: ‘Some have two private homes and let go of one. With the money, they can pay a high price for the location of the flat they want. They will take you on.’

Source : Sunday Times – 31 Jan 2010

Number of homeless people doubles

The number of homeless folk picked up by welfare officers driving around Singapore’s housing estates, beaches and streets has doubled in the past two years.

A total of 253 people were picked up by officers from the Ministry of Community Development, Youth and Sports (MCYS) last year, up from 123 in 2007. More than half were found sleeping in void decks of Housing Board blocks.

More than six in 10 were men aged below 60 and ‘capable of working’, said MCYS. The rest were divided equally between women and older men. Around 85 per cent were Singaporeans.

Most of the vagrants were admitted to government-run homes for destitutes where they get free food, clothes and shelter, but face curbs on their freedom.

Those picked up from void decks and beaches last year included 17 families, up from just four in 2007.

But these numbers do not paint the full picture as about 260 other people, including 43 families, are staying at two temporary shelters for the homeless, run by New Hope Community Services, a voluntary welfare organisation (VWO).

One of the shelters is for families, the other for single men, many of whom are homeless ex-offenders. Five additional flats were released to the VWO last week and it expects to take in another 40 people by the end of next month.

A third shelter, operated by Lakeside Family Service Centre, was set up just a month ago and is currently housing 12 families.

The family shelters are located in a series of three-room HDB flats. Many of the families staying at these places were referred there by welfare agencies such as community development councils (CDCs) and family service centres (FSCs).

Unlike welfare homes, the family shelters allow residents to come and go as they please and charge between $50 and $150 a month, depending on the size of the families and their ability to pay. Families must also cook their own meals, though food rations are provided.

While the rise in numbers coincided with Singapore’s deepest recession in years, MCYS said there is no direct evidence to link this with the financial crisis.

Ms Ngo Lee Yian, the ministry’s deputy director for residential and after-care services, said the biggest cause for the spike was ‘greater awareness’ on the part of Singaporeans who called the ComCare Call hotline (1800-222-0000) to tip off the ministry on homeless people in their neighbourhoods.

The spike in hotline calls led to increased patrols by officers from MCYS’ Destitute Persons Service, which, in turn, saw more people being picked up, said Ms Ngo. There were around 280 patrols last year, up from 160 in 2007.

Members of Parliament such as Charles Chong and Seah Kian Peng have seen a rise in cases of constituents seeking help over housing problems.

‘The number of HDB-related cases I see rose significantly after flat prices started to rise,’ said Mr Chong, who gets about 15 such appeals every week. ‘Most are requests for rental units, though cases involving evictions or homelessness remain few.’

Pastor Andrew Khoo, executive director of New Hope Community Services which runs the eponymous shelter, said there are three main factors causing the down-and-out to land up on his doorstep.

Some shelter residents were forced to sell their homes because they lost their jobs and could not keep up with mortgage payments. About 60 flats are voluntarily surrendered to the HDB every month, The Sunday Times understands.

Others, said Pastor Khoo, had taken loans from banks and could not service them after interest rates were raised.

Such people also typically have strained relationships with family members and are often ineligible to rent or buy HDB flats.

‘So they have no one to turn to for help,’ said Pastor Khoo.

He added that about 60 per cent of the families staying at his shelter are Malay, and 20 per cent are Indian.

The shelters can house the homeless for only three months. During that period, families work with social workers to find alternative accommodation. On release, about 40 per cent go to live with friends or relatives and about 30 per cent rent a flat from the HDB.

New Hope has a waiting list of about 30 families, most of them fear losing their homes. Currently, two to three families are packed in each three-room flat.

‘Some may have to sleep in the hall,’ said Pastor Khoo. ‘But that’s better than living out in the open.’

Source : Sunday Times – 31 Jan 2010

Strict housing policies, illness and divorce leave some stuck

For 14 weeks between February and June last year, divorcee Zailan Abu Satamin, 40, and his third wife Faridah Atan, 26, drifted from beach to beach with an infant and two toddlers in tow. They say they were too poor to afford even a tent.

Instead, they lived in the rain shelters that dot Singapore’s parks.

After his last divorce, Mr Zailan sold the three-room Boon Lay flat he owned with his second wife in January 2007. He had remarried by then. Early last year, he lost the room he rented from a friend when he could not pay the rent.

He turned to the South West Community Development Council for help and it referred him to the New Hope Shelter where he now stays with his family.

Interviews with homeless folk, social workers and government officials indicate that divorce, dysfunction and disease, coupled with public housing policies that strictly regulate the amount of government help a family can get, may be making some people here homeless.

The number of homeless picked up by government welfare officers has doubled over the past two years – from 123 in 2007 to 253 last year, said the Ministry of Community Development, Youth and Sports (MCYS). About 60 families also give up their flats every month, unable to service the loans, though most end up staying with friends or relatives.

So who are these people and what makes them homeless in a nation that prides itself on having one of the highest home-ownership rates in the world?

Problems often start with divorce, and former spouses selling jointly-owned flats. HDB rules state a person cannot rent a flat within 30 months of selling one.

Mr Zailan sold off flats twice after his two divorces. After the second sale, he and Madam Faridah rented rooms from friends. The children came soon afterwards, straining his $950 monthly income.

‘There were times when we were unable to pay and landed up on the streets,’ he said. On such occasions, his family was of no use, he claimed. His parents are dead and his stepmother already has 17 relatives living in her three-room flat. Madam Faridah’s mother is dead and her father lives in Batam. She said she is not in touch with most of her 10 siblings.

Not planning for crises like job loss or illness also make some homeless.

Take, for instance, an unemployed 53-year-old who was wandering around one of Singapore’s beaches last weekend.

The former aerospace technician, who wanted to be known only as Mr Seah, said he has been homeless for a year since he was evicted from his rental room. Estranged from his former wife and three grown up sons, he showed The Sunday Times a doctor’s note stating that he suffered from depression and anxiety attacks.

His illness, he said, cost him two jobs. But because he has bought and sold HDB flats three times, he is not eligible to apply for a rental flat. He claimed the last sale in 2008 – after his divorce – netted $100,000 into his Central Provident Fund account. But as he had no cash, he could not rent from the open market. So a blue tent on a beach is his home for now.

Many of the homeless take refuge in tents at parks and beaches as they deem void decks too visible and unsafe. In April last year, the National Parks Board (NParks) introduced permits allowing applicants to camp on the beach for up to eight days every month. It issued 21,000 such permits last year.

NParks estimates 10,000 people camped in parks in 2005-2006. Indeed, some homeless folk are using the permits to take shelter at the beach. When The Sunday Times ran into Ms Alvar Magdelene, 38, and her husband, Mr Velayutham Agamuthu, 44, the couple were camping at a beach with a valid permit – and their dog, Angel.

Ms Alvar, a bankrupt divorcee who remarried three months ago, had to give up the one-room rental flat she shared with an acquaintance earlier this month.

Mr Velayutham also has no place to stay and no job. When their permit expired last week, they applied again under Ms Alvar’s name, only to find out they had been ‘blacklisted’ for six months.

That is because permits are meant for those who camp for ‘recreational purposes’, said NParks director for parks Kong Yit San. Homeless people, he said, are referred to MCYS officers.

Deputy director of MCYS’ residential and after-care services branch Ngo Lee Yian said the ministry has in place a mechanism to help such people.

First, officers work to establish the identities of the homeless and the reasons for their plight, she said. A stay in a welfare home or transitional shelter may be necessary for those with no ‘immediate accommodation options’. Families and individuals are also referred to community agencies for help with jobs, financial aid or counselling.

Ms Ngo said MCYS will set up more shelters for families in crisis over the next few months. ‘The important thing is for people to seek help early – and not wait till you are homeless.’

But this takes time. Mr Zailan, who now has a steady job, has applied for a rental flat – the debarment period is finally over. But it could be at least another six months before he gets one.

His tenure at the shelter, however, expires next month. ‘I can only pray that we don’t have to go back to the beach again.’

But Pastor Andrew Khoo, who runs the shelter Mr Zailan is in, is sanguine this will not happen. ‘Homelessness is never permanent in Singapore, given that there is so much help in the community.’

Source : Sunday Times – 31 Jan 2010

Shorter wait for rental flats

The average waiting time for an HDB rental flat has fallen from 21 months early last year to 13 months today. The number of applicants in the queue for a rental flat, meanwhile, has fallen from 4,550 in February last year to 3,465.

This is largely a result of the stricter eligibility criteria for rental flats which came into force last February, HDB’s deputy director for rental housing Mike Chan told The Sunday Times.

Under the tightened rules, those who previously owned private property, or whose children own private property, are not allowed to apply for a rental flat.

An applicant is also rejected if he has a child who owns an HDB flat with a spare room.

HDB has 42,000 flats under the public rental scheme. Another 7,500 flats will be added over the next three years.

The stricter criteria have helped ’sieve out those who have alternative housing options’ and ensure that these flats go to those who need them most, said Mr Chan.

Other safeguards to prevent abuse of rental flats include a rule that bars those who have sold their HDB flats in the open market from applying for a rental flat from HDB for 30 months after the date of sale. Some sellers, said Mr Chan, make profits from the sale of the flats.

But those facing ‘genuine financial hardship’ and with nowhere to live after selling their flats are given the flexibility they deserve, he said. On average, HDB waives the 30-month debarment requirement ‘for a few cases every month’.

But those in the rental queue who do not have the option of staying temporarily with their relatives or friends may be given ‘interim rental housing’ on a case-by-case basis. Under the scheme, they can rent a room at below market rates.

Various help schemes are also available for HDB lessees who run into financial difficulties. Short-term measures such as a reduced repayment scheme are in place.

If these are not enough, lessees are advised to seek longer-term and more sustainable solutions.

Source : Sunday Times – 31 Jan 2010

Cost and Location

When Mr Peter Breitkreutz decided to buy a Housing Board resale flat in July last year, living close to other Australians was hardly uppermost in his mind.

A permanent resident since 2008, all the Brisbane native wanted was a five-room unit on a mid to high floor, lift access on each floor and a flat that was not too old.

‘We were very open to many areas, except the west because we weren’t too familiar with places like Jurong,’ said the 43-year-old who works in the financial industry.

He and his wife, who is from China, viewed properties in Woodlands, Ang Mo Kio and Pasir Ris before settling for one in Sengkang.

The flat was close to a pre-school in Yio Chu Kang that they could enrol their two-year-old son in.

It was also a five-minute drive to his office in Ang Mo Kio, until he took up a new job in the city recently.

The flat’s valuation was $400,000 but, after negotiations with the seller, the couple knocked back the price to $375,000.

The factors influencing their purchasing decision are not unique, said property agents.

They, as well as other PRs from countries like India, China and Indonesia, confirm that similar considerations are at play behind their resale-flat transactions.

The issue of PRs and resale flats was in the spotlight last week. Minister Mentor Lee Kuan Yew said at a dialogue that the Government did not want to see new citizens congregate and would disperse them across HDB estates.

The HDB also disclosed that it was considering introducing a separate ethnic quota for PRs to prevent enclaves from forming in housing estates.

The latest statistics show there are 533,200 PRs. They own around 5 per cent of the nearly 900,000 HDB flats islandwide.

According to property agents, PRs pick a resale flat primarily based on what they can afford.

They also hope for the flat to be close to their workplace, transport options like an MRT station or bus interchange, and facilities such as schools and supermarkets.

Being near others of the same nationality is not a major pull factor, said agents, though certain locations may see a higher concentration of PRs from a specific country, compared with other districts.

PRs from Myanmar, for example, like Jurong West because they work in shipyards, offices and factories in the area.

PropNex agent Abdul Hamid has seen many Indian PRs going for flats near Lorong Ah Soo ‘as there’s an international school for Indians there’.

Proximity to places of worship sometimes matters, with some Indian PRs plumping for units in Race Course Road or Farrer Park, to access temples in Little India.

Filipinos choose areas such as Jurong West, Simei and Bukit Panjang for the relatively cheaper prices.

But PRs from Malaysia and China are scattered islandwide.

ERA agent Joyce Lim said her PR clients ‘don’t really say they want to stay near friends’. It is mainly pricing that influences where they buy, she added.

Deals involving PRs – usually young couples or those with kids – make up 20 to 30 per cent of property agents’ monthly transactions.

They note that PRs with higher incomes pick newer estates like Punggol or Sengkang and those closer to town like Queenstown.

In such areas, they may pay up to $350,000 for a three-room flat and $500,000 for a four-room one.

The less well-off opt for more mature neighbourhoods such as Bukit Batok where a three-room flat may cost $300,000, and a four-room type up to $430,000.

But while certain areas may be preferred, agents said they do not know any specific block that has a high concentration of PRs in general, or those from a specific country.

The fact is that PRs and Singaporeans are subject to the same quotas under the Ethnic Integration Policy, introduced in 1989.

Proportions for the main ethnic groups – Chinese, Malays, and Indians/Others – in each block, and each precinct of around 10 to 12 blocks, are subject to quotas.

Sale of a flat to a buyer from an ethnic group that has reached the block or precinct limit is not allowed.

The aim is to maintain a healthy racial mix in estates.

Dennis Wee Group agent Ivy Eyu said a Chinese customer of hers was unable to buy a five-room flat in Queenstown because the quota had been reached.

PRs from Japan, Myanmar, Europe and Africa fall under the Indians/Others category.

And given the influx of immigrants in recent years, agents like ERA’s Ms Angeline Lim said they have run into a roadblock when representing Indians.

They have been unable to close deals if the quota for a block or precinct has been reached.

Which is why ERA’s senior division director Syed Abdullah Alhamid said: ‘Looking into the policy now is a plus point, but I think it’s also time to up the quota for the Indians/Others group.’

His firm’s marketing director Tan Yam Seng agreed, saying: ‘If the Government wants to do anything about it, they should adjust it to reflect the current ratio of the market population.’

Source : Sunday Times – 31 Jan 2010

Building in security at property design stage

In this era of homeland security, a building should not be a house built on sand.

When a truck bomb went off outside a building in Oklahoma in the United States in 1995, most of the 168 victims died – not from the direct blast effects, but from the partial collapse of the building.

There would have been more survivors if it had been designed against progressive collapse, that is, the failure of one part leading to the crumbling of a much larger part, or even the entire building.

In hindsight, too, the 18-year-old building could have been retrofitted with added structures to strengthen it.

Meanwhile, one outcome of the Sept 11, 2001 terrorist attacks in the US is a worldwide drive to strengthen the security design of buildings.

In Singapore, the Ministry of Home Affairs (MHA) on Jan 20 produced a 138-page document to help those who design, construct and manage buildings to protect their properties against terrorist strikes.

The draft version of the Guidelines for Enhancing Building Security was first released in November 2007.

Home Affairs Minister Wong Kan Seng, in his foreword, called on the building and construction community to use the document to improve building security.

He described it as a ‘comprehensive compilation of international best practices in building security that can be applied to Singapore’.

The document cited several cases to bring home the reality of the regional threat.

Last July, seven people were killed and scores injured when suicide bombers breached the JW Marriott and Ritz-Carlton hotels in Jakarta and set off explosives.

The document noted that the terrorists’ targets ‘are now commonly hotels or resorts’.

It recommended different tiers of protection, based on factors like the number of people who use the building, its purpose, nature of activity and if it is symbolic or iconic.

The proposed modes of protection include access control and alarm systems, vehicle anti-ramming barriers and even how vegetation can help or hinder security.

‘Trees with a trunk diameter of larger than 50cm can be used to stop a vehicle, depending on the protection level required,’ said the document.

But thick vegetation can also be exploited to hide bombs and weapons, it said.

Building owners may claim that such measures are costly, but the ministry said costs will not increase much if security concerns are addressed from the beginning – during the design stage.

This is the practice of City Developments, which said security issues are addressed from the design phase of each new development, encompassing architectural design, building security infrastructure and the needs of the various stakeholders.

Its spokesman added that building security was of the utmost importance.

‘In our existing commercial buildings, we continually review security technology and innovation with the aim of enhancing security within our buildings,’ she said.

For example, independent assessors conduct regular security reviews at Republic Plaza. The company is studying the MHA’s guidelines ‘with the view of further enhancing security within our premises’.

At Marina Properties, which manages Millenia Tower and Centennial Tower, an annual budget is dedicated to upgrading security equipment and staff training.

Its measures include secure card access, regulated driveways to prevent unauthorised parking and the recording of vehicles moving in and out of the compound.

There are cameras at strategic locations, including the lifts, while security officers conduct regular patrols, sometimes in plainclothes.

‘Flowerbed bollards’ function as anti-crash barriers, proving that strong buildings need not look like fortresses.

A spokesman for United Engineers said: ‘The beauty of a good design lies in functionality and aesthetics co-existing. With advanced design technology and good creativity, this is increasingly possible.’

Source : Sunday Times – 31 Jan 2010

Affordable flats still available

Ever since the release of the latest housing statistics last week, public housing prices have become the talk of town.

And no wonder: Figures by the Housing and Development Board (HDB) showed resale flat prices rising 3.9 per cent in the final quarter of last year, hitting yet another fresh record.

They have risen about 40 per cent from 2007 to last year, and are now some 10 per cent higher than the previous peak achieved in the fourth quarter of 1996.

For the whole of last year, resale flat prices rose 8.2 per cent.

But while disgruntled home hunters lament that resale flats are now priced out of their reach, property analysts say there are still gems to be discovered in some housing estates.

An analysis of the latest statistics by The Sunday Times shows some estates still offer flats for less than $400,000.

Four-roomers in Yishun – an established estate – turned out to be the cheapest, going by the statistics. The median resale price for the fourth quarter was $292,000 – the lowest among all estates (see table). In comparison, four-room flats in the most expensive estate, Queenstown, had a median resale price of $523,000.

Bukit Panjang, Woodlands, Jurong West and Choa Chu Kang were some other estates that offered affordable four-roomers in the low $300,000 level.

For buyers looking for five-room units, the median resale price for such homes in Woodlands at $365,000 was the most affordable, followed by flats in towns such as Bukit Panjang and Sembawang.

Executive flats in Sembawang, Yishun and Woodlands were sold at the lower range of the $400,000 level.

Chesterton Suntec International research and consultancy director Colin Tan said that ‘from time to time, you see good value in some locations’.

For example, some estates have been slated for rejuvenation and upgrading such as Tampines, Yishun and Jurong. But because the plans are long term and have not materialised yet, flats in such estates remain affordable.

Buyers who are patient and buy units in such estates could see capital appreciation of their property when the rejuvenation is completed, say analysts.

But to some extent, the current prices of the more affordable flats already reflect the value that the market attaches to them, added Chesterton’s Mr Tan.

The fact that these estates are not in prime locations is reflected in the prices. Those who cannot afford flats in central locations can find good alternatives in the suburban towns, he said.

One upside about living in suburban areas is that you can typically get more space for your money, he added.

PropNex chief executive Mohamed Ismail noted that other estates which remained relatively affordable included Bedok, Hougang and Jurong East.

Suburban towns may also see an appreciation in flat prices if HDB does implement a quota on the number of flats permanent residents (PRs) can buy, he said.

The HDB said recently it is considering introducing a separate ethnic quota for PRs to prevent them from forming enclaves in public housing estates – but details are not available yet.

‘If there is indeed such a quota imposed and PRs are restricted from buying too many flats in a specific area, for example, central locations near an MRT station which they tend to favour, then demand for resale flats will spread more evenly throughout the island,’ said Mr Ismail.

Chesterton’s Mr Tan pointed out, however, that housing statistics serve only as guidelines. ‘In truth, market information is imperfect and bargains can be found just about anywhere – central as well as suburban. You have to be patient to look for it,’ he said.

ERA Asia-Pacific associate director Eugene Lim said: ‘My advice to home buyers is, buy what you can afford. Prices are at an all-time high now, home buyers will do well to be very prudent with what they spend on.’

Source : Sunday Times – 31 Jan 2010

Freehold vs leasehold

I surprised myself because I have traditionally been on the side of freehold property in the freehold versus leasehold debate.

Chasing away leasehold worries

The wait lasted nearly half a year.

Since I exercised the option to buy my first new home some time last August, I had eagerly awaited the day I could move in, pop open a bottle of champagne and bask in the smell of my freshly painted walls.

That day finally arrived just in time for New Year’s Day – the beginning of a whole new decade – and I was understandably excited.

But just before and after The Big Move, I was besieged by a phenomenon I had never thought about: post-purchase cognitive dissonance (PPCD).

I’m not making it up, really. Cognitive dissonance is defined as a condition of conflict or anxiety resulting from one’s actions. And PPCD is when, after buying something, you feel that an alternative would have been preferable.

In fact, you go through a rationalisation process in your head, questioning all the factors that made you decide to buy the said thing, and wonder if it was all one big mistake.

You see, in my quest for a spacious, affordable home somewhere in the suburbs, I had bought a 99-year leasehold apartment.

I surprised myself because I have traditionally been on the side of freehold property in the freehold versus leasehold debate.

I know the typical arguments for both sides of the case but I never gave it much thought till I became a home buyer and the cold, hard, facts were staring me in the face.

I had started off looking at freehold properties but, when it came down to dollars and cents, I realised that the difference between a freehold and leasehold apartment of the size I wanted was more than $150,000 and it made a big difference.

I took the plunge.

Today, my 1,650 sq ft property has 85 years left on its lease. After spending every penny my other half and I had on renovations and furnishings, we were thrilled the day we moved in.

Everything was gleaming and it felt good that we owned everything we saw.

But this lasted only a few days.

Acutely aware of the new depths my bank accounts had plunged to, I was overcome by an attack of PPCD during lunch with my mother one day while shopping for cutlery.

Mum, I asked, did I make a bad move sinking all my money into a property that will take me 30 years to pay off? And at the end of 99 years, would be worth absolutely nothing?

Also, given the price I’d paid for the property, is it likely that I could even break even on costs if I wanted to sell my apartment a few years later?

I was panicking, and convinced that nobody would buy my apartment when I want to sell it. I would incur a huge loss on it – something I wouldn’t be able to live down as a property reporter.

In an attempt to alleviate the symptoms of my PPCD, I spoke to some property analysts for an objective assessment of my choice to invest in a leasehold home.

This is the list of factors to consider that I eventually came up with:

1. Affordability

The major advantage of a leasehold property is that it is cheaper and offers a first-time home buyer a good opportunity to get on the property ladder without financial stress.

2. Yield

Leasehold homes also typically give you a higher yield compared to a similar freehold property as you can command the same rent but your capital outlay is lower.

3. Depreciation, and factors that will compensate for this

The main drawback is that the value of your property depreciates with age. I have now come to accept this fact, but there are some factors that can influence the rate of depreciation, such as location, quality of amenities and transport network.

For those contemplating a leasehold home, is it near an MRT station? Is your estate slated for major upgrading?

Thankfully, I thought, my new home will benefit from the upcoming Bukit Timah MRT line.

4. Collective sales

Leasehold properties typically receive less proceeds as developers have to pay the Government a fee to top up the lease, unlike for freehold properties.

I’m personally not one for collective sales. But it is comforting to know that even an old leasehold estate such as Farrer Court could command a premium of $2.15 million per home when it went en bloc.

5. Historic figures

Looking at property cycles in the last decade, analysts say the rate of appreciation of freehold homes does not always outperform that of leasehold homes.

In general, the numbers show that in an upswing, leasehold properties tend to gain more, although in a downturn, they also fall more rapidly – meaning prices are more volatile.

So if you buy a leasehold property and intend to hold on to your home for some time, you could easily choose to sell in an upswing instead of a downturn.

All in all, I felt my anxieties dissolve when I realised that my leasehold home was affordable, will give me a reasonable yield if I choose to rent it out, and would likely appreciate – or hold – in value when transport networks are improved.

Analysts say there is no conclusive evidence to show one is definitely better than the other, and that the decision you make depends mainly on budget and preference.

I now realise that my home, which I love because it has four bedrooms and is surrounded by four different nature parks, was really the best choice for me, given what I could afford.

My mum, in her infinite wisdom, said: ‘If history is anything to go by, you’ll be fine.’

My parents recently sold an HDB flat in Jurong after my grandmother who lived there passed away. It had aged 20 years since they bought it, yet they sold it at a price far higher than what they paid for it.

See? Why worry so much, my mum chided, HDB flats are also leasehold and their values go up every year.

It was a good point. I decided then I would just enjoy my first home, day by day.

Source : Sunday Times – 31 Jan 2010

Singapore regains top spot of most globalised economy in 2009

Singapore has regained its ranking as the most globalised economy in 2009, beating economic giants such as the United States, China and Japan.

This is based on the latest Globalisation Index, compiled by Ernst & Young and the Economist Intelligence Unit.

The study covered 60 of the world’s largest countries and had polled 520 senior business executives, with in-depth interviews conducted with 30 senior executives and high-level experts.

The index measures a country’s degree of globalisation relative to their gross domestic product. It is based on five criteria – trade openness, capital movements, exchanges of technology and ideas, labour movements and cultural integration.

Singapore has been ranked number one since 2003, but it lost out to Hong Kong in 2008 and came in second.

In regaining its top spot, Singapore has high scores for its trade openness and labour movement, but lost out to Hong Kong on capital movements and cultural integration.

This time, Hong Kong was edged into second spot, with Switzerland in seventh place, while the United States came in at 24th in the index ranking.

Ernst & Young Country Managing Partner Steven Phan said: “There was greater movement of capital and finance in Hong Kong in terms of foreign direct investments (FDI), where as Singapore has done relatively well in the areas of investment protection schemes and creating a level playing field for all enterprises.

“Singapore is number one in terms of the movement of goods and services relative to all the other 60 countries we surveyed, so this is really the imports and the exports relative to the size of our small domestic market. So that was a strong indicator, but among the other four criteria as well, we are consistently among the top.”

Source : Channel NewsAsia – 29 Jan 2010