Sunday, October 14, 2007

Small Fish, Big Catch

Source : The Sunday Times, Oct 14, 2007

Architect Andrew Tan, who submitted his concept drawing to a contest by the Ministry of National Development.

HOME-BUYERS like The Ambience. There's the resort-style atmosphere spread over about 20,000 sq ft of land, the 80m-long pool and a gym.

PERFECT AMBIENCE: Buyers were tempted by this image that was part of the ad for The Ambience in last week's The Sunday Times. -- PHOTO: D2B DEVELOPER

The fittingly-named The Ambience in Punggol Seventeenth Avenue is the latest cluster housing development to hit the market, and response has been good since its launch last Saturday.

Five of the 11 two-storey detached units, each between about 3,600 sq ft and 4,500 sq ft, were sold by last Thursday, says Mr Dennis Leong, CEO of the developer DB2.

Units are going for $630 psf, which means one of the smaller units would be priced at about $2.38 million.

Cluster housing units in more central areas have also been snapped up.

For example, MCL Land launched Hillcrest Villa in Dunearn Road last month. It consists of 163 units, each about 3,100 sq ft in size and priced between $2.5 million and $3 million. All, save for the showflat, were sold within two weeks.

Mr Leong is happy with his slice of the action in the suburbs, declaring: 'For the price and location, getting just a swimming pool is already considered very value-for-money. People are aware that land is getting increasingly scarce.'

It's the positive response towards these developments that keeps small-scale developers like two-year-old DB2 in the business, he says.

In fact, a considerable proportion of cluster housing projects are from smaller developers.

The 28-unit Gilstead Brooks in Gilstead Road was developed by niche property developer Sin Heng Chan, while the 25-unit Gardens At Gerald in Seletar Hills was developed by Oaktree Land.

Both made the news when they were launched in 2002 and 2005 respectively, for selling out quickly.

'Bigger developers usually go for bigger pieces of land on which they can build more houses and reap more profits,' Mr Leong says.

DB2's current portfolio consists entirely of cluster houses: Besides The Ambience, it is behind the eight-unit Centurion 12 in Brighthill Crescent and another in Bukit Teresa which is 'in the works'.

Expat kampung in Sixth Avenue

COME dusk, the Honore brothers - Matthias, three, and Lucas, two, - can often be seen dipping their toes into the pebble-strewn pond in the main foyer of The Teneriffe.

AT HOME: The Honores - Cindy and Oliver with their sons Matthias and Lucas - are happy in The Teneriffe. -- ST PHOTO: DESMOND FOO

This is the Sixth Avenue cluster housing estate where they live with their French father Olivier, 40, and Chinese Singaporean mother Cindy, 30.

Around them, other children of mixed or Caucasian heritage run around while adults standing close by chat away.

This congregation of multi-nationals in a 'resort like' environment is what Mr Honore, an engineer who is a permanent resident here, likes most about his estate.

'My Swiss neighbour and I've been talking a lot to the new French family that has just moved in,' he says. 'The spirit of community is really there.'

Mr Eddie Koh, a Knight Frank realty adviser who has sold or rented out over 10 units at The Teneriffe in the past six months, says over 80 per cent of the estate's residents are expatriate tenants.

Monthly rental rates at The Teneriffe are currently between $12,000 and $13,500.

The Honores moved from a four-bedroom Upper Bukit Timah condominium to join the Teneriffe community in May 2005.

Finding the ideal home was not an easy task.

'We had looked at condominiums but the price was too high then,' Mr Honore says.

His wife says that they looked at other cluster houses like Binjai Crest and another one in Upper Bukit Timah, but the rooms were too small or the place too noisy.

But the 'half-open, half-closed' design of The Teneriffe won them over.

The main entrance of each house is flanked by a private, open-air terrace, which means that even with the doors open, privacy is still respected, Mr Honore says.

Neighbourly socialising revolves mainly around the kids. 'We've made friends here because the children are always running around or having parties and that brings the parents together,' Mrs Honore says.

And when you're feeling anti-social, you can simply stay at home, he adds.

Asked if the family would consider moving, he says with a laugh that only if his 3,200 sq ft home, which is spread over four storeys, can fetch a price of $3.5 million.

The current price for a unit of that size at The Teneriffe is about $3 million, Mr Koh says.

Mr Honore adds: 'The lifestyle in a cluster housing estate is very interesting. Everything is self contained - from the carpark to where you throw your garbage. Even the gym. You never need to do any fitness because every day, you're already climbing a lot of steps in your own home.'

Cluster Lustre

Source : The Sunday Times, Oct 14, 2007

Who says Singaporeans are an introverted bunch? They are snapping up cluster properties which offer good ol' kampung-style living

INSTEAD of a phone call or a knock on the door, 11-year-old Cornelius Lee says hello to his neighbours with five loud claps. Within seconds, the pitter-patter of hands in a similar rhythm resounds through a Mediterranean-style courtyard that provides a centrepiece for a grouping of terrace houses.

Welcome to cluster housing living - the modern-day kampung, or village, where neighbours who live in individual landed dwellings share facilities and their lives.

Cornelius, his elder brother and his parents live in Kew Residencia in the East Coast. It is one of Singapore's early cluster housing developments, having been launched in 1996.

Cluster housing refers to uniformly designed, landed properties that are built in clusters within a gated estate.

Inhabitants get to enjoy the perks of condominium-style facilities like security, a swimming pool and gymnasium, as well as private basement parking.

According to real estate company Colliers International, 20 cluster housing projects have been launched so far this year, the latest being The Ambience at Punggol by developer DB2.

Inspired by old kampung communities where people 'enter a community before their own house', architect Andrew Tan of ATA Architects submitted the idea in 1991 to a contest by the Ministry of National Development seeking new housing designs.

His design of groups of houses surrounding a courtyard, which is in turn connected to a main courtyard, won top honours but was never built.

The public, too, initially took a while to latch on to the idea.

Ms Tay Huey Ying, director of research and consultancy at Colliers International, says early developments such as the 20-unit Northshore Bungalows in Punggol built in 1995 took over two years to sell. Prices were between $3.1 million and $3.7 million for a house of about 4,000 sq ft.

Meanwhile, Kew Residencia took 11/2 years to sell 25 of its 37 units at an average of $980,000 each, says Ms Tay.

She adds that it is difficult to compare prices of the cluster developments with that of existing landed or condominium projects then because they were an entirely new market.

But four years later, people were cosying up to clusters.

D'Manor in Tanah Merah and Horizon Garden in Ang Mo Kio - launched around 1999 at prices ranging from $880,000 to $1.5 million - hit headlines for being snapped up within two weeks.

Mr Tan says the initial apprehension in the early 1990s was probably due to worries about forking out large sums for a house for which you still had to share communal space.

'Then, terrace housing was still widely available and people probably thought if they had to pay over $1 million for a house, why should they share,' he says.

New generation

BUYERS of cluster homes - regulatory guidelines state they must be Singaporean or seek permission from the Government to buy if they aren't - have changed their tune amid soaring property prices and an increasingly scarce amount of available land.

Knight Frank realty adviser Eddie Koh says Singaporeans tend to buy cluster houses in prime areas, such as the 163-unit Hillcrest Villa in Dunearn Road, for investment.

A check with home owners show that those eyeing projects outside the central region tend to be looking for a roof over their heads.

At Horizon Garden in Ang Mo Kio, the mix between local and expat residents is currently about 50:50, says resident Eleanor Foong, who is in her 40s.

Under the Urban Redevelopment Authority's ruling, expats can only be tenants, not owners, of cluster houses.

Meanwhile, at Gardens At Gerald, a 25-unit cluster housing project in Seletar Hills completed in January, resident Roger Tan, 36, says all his neighbours are Singaporean.

And contrary to the notion that Singaporeans are a conservative, introverted lot, all seven families LifeStyle spoke to say they enjoy the community-centric living that cluster housing provides.

All are fairly young couples in their 30s and early 40s with young children, which Ms Tay says is the pattern among such home owners.

In May, for example, Mr Tan invited the five other families who had moved into his estate at that point to his house to celebrate his daughter's sixth birthday.

At Kew Residencia, it is common for residents to have dinners and wine-drinking sessions or go bowling together.

'It's really like a modern-day kampung,' says Kew Residencia resident Bernard Teo, who is in his 40s.

'You have to be open to the idea of mixing with your neighbours if you are moving into a cluster house. If not, you'll stick out like a sore thumb.'

Best of both worlds

UNDER URA guidelines, a strata title arrangement is used to mark public and private space within cluster housing. The strata title ensures that individual homeowners have rights not only to their own unit, but also communal facilities.

Simply put, it is a marriage of condo- style facilities with the luxury of staying in a landed house.

Gardens At Gerald resident Roger Tan points out that children can run about more freely because of the availability of security.

At the same time, unlike condominium living, where parking can be quite far from your apartment, cluster housing allows residents to 'park your car, walk and you're inside (your home)', says Mr Olivier Honore, 40.

He lives in the Sixth Avenue cluster housing project The Teneriffe. 'Cluster housing is really designed for the people,' he says.

Prices of cluster homes have shot up with the boom - Hillcrest Villa, for example, went for $870 psf at its launch last month in comparison to the nearby Teneriffe, which was launched at $410 psf in 2000. But industry experts and buyers say the cluster is still good bang for your buck.

Mr Malek Ali, who was a real estate consultant for two years until he switched careers recently, says cluster houses are usually between 10 and 15 per cent cheaper than condos.

'Developers tend to give a bit of a discount when they take into consideration that spaces in cluster houses such as the carpark are actually unusable space,' says Mr Ali, who lives in a cluster development in Gilstead Road.

Knight Frank realty adviser Eddie Koh agrees.

'A condominium in the vicinity of Hillcrest Villa would probably cost $1,000 psf,' he says. 'And, these days, you'll never find a condo as big or with five rooms as you would in a cluster house.'

Investors, too, are increasingly game to put their money into the once-alien market.

In fact both Mr Koh and Ms Audrey Wong, an agent with JC Properties (Singapore), say all the Singaporeans they have dealt with bought their cluster homes to reap rental yields.

Cluster housing is popular among the expatriate community because of the quality of life it provides and can fetch monthly rentals of between $10,000 and $13,000, Ms Wong says. 'Especially when it's in a location close to international schools and amenities.'

A retiree who wants to be known only as Mr Fong is one such investor.

'Many of these properties tend to be leasehold projects that would eventually be returned to the Government. It thus makes sense to invest instead of stay in them, especially when they give fairly good returns,' says Mr Fong, who rents out three cluster houses he owns in the expat-friendly Bukit Timah area.

Too close for comfort

BUT cluster housing is not all kampung glam. Mr Tan says some developments take integrated living too far by incorporating too many elements onto the land.

'I had seen so many before Gardens At Gerald that were very cramped and lacked exclusivity, which defeated the purpose of upgrading from a flat,' he says.

And not everyone fits in with the friendly vibe of the tribe.

'As much as we have good neighbours, we also have very strange ones,' says Ms Joyce Lim, who lives in Kew Residencia, but declines to divulge more.

However, if and when your neighbours get too in your face, you just have to go inside, says The Teneriffe's Mr Honore.

'Just like in a college dorm.'

No Plans To Change Banking Secrecy Laws: MAS

Source : The Sunday Times, Oct 14, 2007

SINGAPORE has refuted a foreign media report last week that it was changing its banking secrecy laws to address concerns that it was a money laundering haven.

The Monetary Authority of Singapore (MAS) was commenting on a Dow Jones Newswire report on Thursday that said Singapore was looking into changing its laws in a bid to seal a trade agreement with the European Union (EU).

The report quoted Mr Glyn Ford, a member of the European Parliament, as saying that Singapore's Members of Parliament had told their counterparts from the EU during talks last week that the Republic was planning 'legislative changes'.

Dow Jones said Singapore was considering the changes to 'remove the tag' of it being a 'potential haven of suspicious money from launderers and terrorists'.

In a statement yesterday, an MAS spokesman said the allegation that Singapore was such a haven for suspicious money was baseless.

The spokesman said Singapore's laws on banking confidentiality provide bank customers the right to confidentiality of information, but do not shield criminal activity.

'We operate a rigorous regime against money laundering and financing of terrorism which is benchmarked against international standards. We have no plans to change these laws, contrary to the report,' said the spokesman.

Mr Zainudin Nordin, an MP and chairman of the Singapore-Europe regional parliamentary group, who headed the Singapore delegation, also refuted the Dow Jones report. He told The Sunday Times yesterday: 'At no time did we talk about the banking secrecy laws.'

He said the two parties discussed developments in Singapore's financial sector and the EU team did raise concerns that Singapore's banking policy did not meet some of their criteria for the trade pact.

'We said that we would highlight their concerns to the relevant authorities in Singapore,' said Mr Zainudin.

In the Dow Jones report, Mr Ford said that 'the one stumbling block' in reaching an agreement is 'over banking secrecy'. The European Commission has been negotiating a trade agreement with Singapore since 2005.

But the MAS said the 'so-called 'stumbling block'... relates to the question of withholding tax on customer savings'.

The spokesman said 'the Singapore Constitution does not allow us to collect taxes on behalf of a foreign country'.

'This is an altogether different issue from the fight against money laundering and the financing of terrorism.'

MAS Refutes Dow Jones Report On Changing Banking Laws In S'pore

Source : Channel NewsAsia, 13 October 2007

The Monetary Authority of Singapore (MAS) has refuted claims made in a Dow Jones news report on 11 October, which said Singapore is "a potential haven of suspicious money from launderers and terrorists".

MAS said the allegation is baseless, and contrary to what the report said, MAS has no plans to change Singapore's banking laws.

The authority said Singapore's banking laws provide customers the right to confidentiality of information, but do not shield criminal activity.

And Singapore operates a rigorous regime against money laundering and financing of terrorism, which is benchmarked against international standards.

MAS said the laws allow transparency in combating criminal activity while safeguarding investors' interest for safety and security.

In the Dow Jones report, a member of the European Parliament was quoted as saying Singapore and the European Commission were discussing a trade agreement, but a stumbling block was over banking secrecy.

The MAS said this so-called stumbling block refers to the issue of withholding tax on customer savings.

It said Singapore does not allow the collection of taxes on behalf of a foreign country.

MAS said this is a different issue from tackling money laundering and financing terrorism. - CNA/so

Banks To Set Up $117b Fund To Limit Credit Crunch

Source : The Sunday Times, Oct 14, 2007

NEW YORK/WASHINGTON - MAJOR banks including Citigroup are looking at setting up a roughly US$80 billion (S$117 billion) fund to buy ailing mortgage securities and other assets, in a bid to prevent the credit crunch from further hurting the global economy, sources familiar with the matter said.

Representatives from the United States Treasury have organised conversations among top global banks, sources said, as financial institutions grow increasingly concerned that a certain type of investment fund linked to banks may have to dump billions of dollars of repackaged loans onto financial markets.

A fire-sale of assets could lift borrowing costs globally, trigger big losses from investors and force banks to further write down some holdings on their balance sheets.

Such sales could trigger huge losses for banks, and in the worst-case scenario tip the US or Europe into recession.

The fund is the latest response to a global credit hangover after at least three years of easy credit that fuelled massive mortgage lending in the United States and spurred record levels of leveraged buyouts.

'Banks made unwise business decisions, and now they're scrambling to save themselves,' said Mr Steve Persky, chief executive at Dalton Investments in Los Angeles, which has US$1.2 billion under management.

Citigroup, JPMorgan Chase and Bank of America are involved in the discussions, according to people familiar with the situation. The three banks declined to comment.

The US Treasury is involved in the discussions, but taxpayer money is not expected to be used.

The Financial Services Authority, the UK market regulator, has suggested UK banks consider participating in the fund, the Wall Street Journal reported on Saturday, citing a person familiar with the situation.

Details concerning the fund the banks are setting up, including its size, are still being hammered out and may change as other banks and investors become involved, sources said.

The fund that is being contemplated would bail out funds known as 'structured investment vehicles', or SIVs.

SIVs bought assets like mortgage securities from banks, and financed their purchases using short-term debt known as commercial paper. They make money by earning more from their investments than they have to pay to fund them.

But if SIVs cannot sell commercial paper, they must sell their assets, and many of the assets do not trade often and would be hard to sell. -- REUTERS

I've Come Into A Fortune But Am Clueless About Estate Duty

Source : The Sunday Times, Oct 14, 2007

Q. I HAVE inherited $15 million, and the money is currently deposited in a British bank.

I am the beneficiary of funds from a deceased friend, who was from Mexico. If I transfer the money from Britain to Singapore, am I subject to an estate duty or a tax that is payable?

A. AS A rule, an inheritance is in the nature of a capital, so transferring it to Singapore should not attract an income tax.

A Singapore citizen will generally be domiciled in Singapore, and even more likely so if he was born here.

If Singapore is your domicile, your assets here and abroad - apart from immovable properties overseas, which are not subject to Singapore law - are liable to an estate duty here when you pass on.

The first $600,000 worth of movable properties and the first $9 million worth of residential properties are exempt from an estate duty.

Beyond these thresholds, however, the duty is 5 per cent on anything up to $12 million and then 10 per cent in excess of that amount.

Allowing for an exemption on the first $600,000, the duty on $15 million in cash - assets in movable form - will be $840,000.

It may be that $15 million is more than you can use in your lifetime, in which case you may wish to consider planning your estate.

Since the law exempts from duty up to $9 million worth of Singapore residential property, there will be less duty on your estate if you invest some of the funds in a residential property in Singapore.

As well, funds that you 'settle' in a trust, so that you personally no longer benefit from them, are not dutiable after five years.

A Singapore permanent resident or, more generally, a person with a right and an evident intention to return to a home country, may not be domiciled in Singapore.

If you happen not to have Singapore as your domicile, then there will be no duty on your estate - at least in this country - save for any immovable property in Singapore, which is subject to Singapore law regardless of your domicile.

In that case, there is no limit to the cash or other movables your beneficiaries can inherit from you free of Singapore estate duty.

Finally, it is worth noting that an estate duty has become a very minor part of revenue for many economies.

There is also no longer any estate duty in Hong Kong and Malaysia. It is possible that Singapore will follow.

Advice provided By

Leon Kwong Wing Co-Head, Tax Department

Harleen Kaur Associate, Tax Department

Advice provided in this column is not meant as a substitute for comprehensive professional advice. E-mail questions to

Build Dream Homes On Small Govt Plots

Source : The Sunday Times, Oct 14, 2007

Infill sites to come back on market after over a decade - buyers likely to get cheap land in choice areas

THE idea of building a house on a former septic tank site might seem noxious to some.

10 Mt Sinai
This 4,855 sq ft parcel was a cul-de-sac on Mount Sinai Lane. The highest of 48 bids for the plots in 1993 came in at $880,000. It has since been developed into a two-storey bungalow. -- PHOTOS: SLA, JOYCE FANG


But it could mean the chance to build your dream home on that rarest of commodities in Singapore - cheap land.

The Government will release smallish plots - likely to be big enough for just one home each - over the next few months, to meet the sizzling demand for land.

The fine print: The sites might previously have been used for public purposes, so they could have housed parks, gardens, sub-stations, or possibly even septic tanks.

Individual investors and small developers can build homes on these plots, known in the industry as 'infill sites'. The sites usually have adjacent buildings on either side.

Such plots have not been put on the market in more than a decade, but the booming economy and high demand for land have convinced the Singapore Land Authority (SLA) to resume sales, said its deputy director for land sales, Mr Teo Jing Kok.

Infill sites were introduced in 1990 to ease housing demand. By the time sales stopped in 1993, 20 plots had been snapped up at public tenders amid growing interest.

The lowest price paid for an infill site was $402,000, in 1991. The parcel of open space, near Braddell Road, was more than 9,000 sq ft, so the price worked out to less than $45 per sq ft (psf) of land area - relatively cheap even for those times.

408 Dunearn Road

This 15,080 ft plot of open pace drew 28 offers in 1993 and was sold for 3.6 million. Dunearn Lodge, a 14-unit apartment block, now stands on it


Over the following two years, the popularity of these sites increased sharply. A 5,581 sq ft plot on Ceylon Road, off East Coast Road, drew a whopping 62 bids when it went on sale in 1993. The highest bid was $1.3 million, or just over $230 psf.

All the plots offered in the early 1990s were zoned for building homes, and most now host bungalows or other landed homes.

Several of the plots once housed septic tanks, some were empty spaces, while a site at Mount Sinai was a cul-de-sac.

Buyers in the past were mainly boutique property development firms or individuals who wanted to build their own homes, said the SLA.

The previous sales 'showed that owners are free to create their own types of houses and are generally more satisfied with the outcome', the agency told The Sunday Times.

'They are able to exercise control in the interior and exterior designs, as well as the colours, resulting in their 'dream home'.'

The first sites, sold in 1991, came with 999-year leases. The remaining sites in following years were 99-year leasehold. The upcoming plots are believed to be mainly leasehold as well.

The SLA said it has not finalised the sites to go on sale, but based on the plots offered in the past, they are likely to be in popular residential locations.

The parcels sold in 1991 were mostly in Upper Bukit Timah and Yio Chu Kang.

110-112 Tamarind Road

This former septic tank site with 11,236 sq ft. of land area sold for $1.45 million in 1993, after receiving 29 bids. Now, it houses twp-storey landed homes. -- PHOTOS: SLA, LAU FOOK KONG, DOMINIC WONG

The year after, the Government released sites in Sixth Avenue and Namly Drive in Bukit Timah. In 1993, plots along Dunearn Road, the East Coast and Mount Sinai went on the market.

Consultants expect a good response for the upcoming sales, as long as the locations are desirable.

'There is likely to be demand as many homebuyers are now seeking good landed homes and are willing to pay higher prices,' said Mr Nicholas Mak, the director of research and consultancy at Knight Frank.

Recent launches of 99-year leasehold cluster housing, such as MCL Land's Hillcrest Villas and the latest phase of Far East Organization's Greenwood project, have been well-received.

However, Mr Mak added that the Government might have to allay concerns from potential buyers about possible 'leaks from a previous septic tank or remaining electromagnetic waves from a former substation'.

In response, the SLA gave reassurances that the sites it puts up for sale will be safe to build homes on. It said it will obtain the necessary clearances and conduct certified tests of the soil conditions for each site before allowing the site to be offered.

It will also outline the locations of any waterpipes or sewers within a sale site for the benefit of all bidders, the agency said.

As for likely pricing, Mr Mak said landed homes have risen roughly 2.5 times in price since 1990. If the prices of infill sites match this pace, a 10,000 sq ft plot could go for less than $1.5 million - a fairly good deal.

By comparison, each unit at Hillcrest Villas sold for $2.5 million to $3 million. Nearby, the strata bungalows at 8 @ Kings Road are going for about $5.5 million each for 2,000 sq ft of land area.