This law is finally been enacted.

As mentioned in August 2009, the Government was considering making it compulsory for conveyancing lawyers to have their stakeholder’s funds held by conveyancing accounts in banks.

Under the new measures, lawyers will no longer be allowed to receive and hold conveyancing money in their clients’ accounts. Instead, the money must be held in a conveyancing account in banks appointed by the Ministry of Law. Withdrawal or pay-out of such money will require two-party authorisation.

Violation of the rule will result in a fine of up to S$50,000, imprisonment of up to three months, or both.

Singapore Land Authority (SLA) has also set up a new electronic Payment Instruction (ePI) service to provide a better and more secure environment for lawyers to initiate pay-out instructions and counter-sign digitally, as well as for the appointed banks and SLA to securely process and retrieve instructions.

Such will prevent cases like these from happening. This would boost confidence to our locals as well as our foreign investors of our conveyancing process of procuring a property in Singapore.

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Mickey Mouse Apartments? Think Again. Image Credit: Cake by Nesrin, Flickr

Definition of Mickey Mouse/ Shoebox Units

This term could be unique to Singapore for micro sized apartment that has really a small built-in area that could be just enough to function. You could have sizes like a studio unit with only 258 sqft (Suites at Guillemard) and have penthouses of up to 1,000sqft. At current, URA only approves units which are more than 300sqft according to a Business Times article cited in October 2009.

The trend could have started from February last year with the successful sale of Alexis at Alexandra.

Advantage

Affordable Overall Price

Developers are smart these days when it comes to planning for sizes and the affordability of the units. With more units that could be built in a single development because of the small sizes, developers (eg. projects such as Siglap V) will price them in accordance to the affordability level of most mass market income group, starting prices could be even slightly lower than $500,000.

With such type of affordability price, banks are more willing to lend to you as the risk of defaulting a mortgage is much lower as compared to apartment quantum that goes over the $1,000,000 mark.

Disadvantage

Size versus Capital Gain

Because of the size of the apartment, any increment in terms of per square foot (PSF) movement wouldn’t prove any much valuable unless it’s a big jump. It makes it less cost effective for an investment as with all the costs that is also factored in.

Assume that you would have bought an apartment of 300sqft at 1,300psf, any increment in 50psf would net you $15,000 and in which the high psf that you would have bought in from the developer would make it hard for it to even raise in price action. Factoring all costs involved including your conveyancing, stamp duty and bank loan penalty, it would be very tough to have even decent capital gain profit because of its size.

High per square foot (PSF)

The high psf cost that you have bought in as explained will also be a huge resistance for new buyers to buy from you via sub-sale or resale market for your capital gain. You will always have a very serious objection to buyers who are psf sensitive which most buyers are.

Unlikely Too Functional

It could be done with space saving modules for a 300sqft studio to function. But think of those projects which are approved prior before 2010 where URA has given free gross floor area (GFA) to developers to add planter boxes, bay windows. Minus those spaces off from the 300sqft, you REALLY will have very little space left for your living in. Extremely claustrophobic.

During hard times when the economy is facing bad times, your mickey mouse unit might have a better liquidity function. But having said that it’s a bad economy, you would have a hard time achieving a good target selling price. Vice versal, during good economy times, people would prefer space, your mickey mouse unit will drop in terms of preference because of the lack of functional space.

Rental Yield?

Let’s work backwards on how much a freehold $450,000 mickey mouse studio apartment (300sqft) you should be collecting based on average 4% gross yield rental.

Annual Value at 4%: $18,000
Rental Per Month: $1,500

To pay for $1,500 for a 300sqft apartment, working in terms of per square foot rental would be $5 psf. With such high psf, a question would be on whether people will be paying for the size of the apartment. Also for mickey mouse unit projects, facilities are definitely not the main focus, in which comfort and ergonomics are sacrificed for more apartment units, which could make it harder for you to rent the apartment out. (ps, this is gross. you need to factor in a few more things such as agent’s commission, and monthly maintenance for net)

Comparatively a $1,500 rental could get you a 3-rm HDB apartment (800sqft) in which the living functions are not sacrificed.

Speculative Element Killed Instantly With Seller’s Stamp Duty

An attraction to buying mickey mouse units would be the possible speculative element in which margin profit that could be made with very small investment quantum. With the introduction of Seller’s Stamp Duty (SSD) in February this year, this effectively kills speculative mood of property punters.

In terms of percentage, they would have to pay another extra 3% (averaging, with bank’s penalty and legal fees) and to the government should they be selling it within a year. Having said that, they would have already paid a buyer’s stamp duty prior purchase, which is another extra 3%.

So with at least -6% off your initial investment and a high psf bought-in price, it would be hard to achieve any gains within a year.

I would strong discourage people to start with investing in a too small unit which is heavily priced even when the total price (quantum) is affordable. No doubt there’s inflation protection in property investment, but with the price that you have paid for (citing future price has already been priced in by developers), it will take quite sometime before other bigger apartment catches up with your psf price that you have paid for.

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Fancy getting a good deal from Auction? Photo credit: The-Lane-Team, Flickr

A closer look at what happens in Singapore knock down sessions and what a buyer should look out for.

Okay so you looked at my site and there’s this magnet property that you’re keen in in one of the latest auction list.

Inspecting the property before auction day

There’s always details on the Auction List on the person-in-charge of the property. You could arrange with him/her to view the property prior the auction before deciding whether to bid for it. This is the best time to also do your full due diligence on the property such as the state, the size, the maintenance cost etc.

Remember, it’s always a caveat emptor in any real estate transactions.

Seek Legal Advice

Like arranging for inspection prior to auction day, you should also seek legal advice should you be really interested in one subject property. Relevant legal documents are always available before an auction for your solicitors to review. Also you could check with your lawyer on the legal aspects on the eligibility of your transaction (e.g. foreigners are not allowed to buy landed unless with LDAU clearance)

Always Get These Things Ready Before Auction

Once the property is being knocked down to you, you will have to prepare a deposit of 10% of the purchase price and sign the sales and purchase agreement, which is a legal binding document to complete the sale and pay up the balance of 90% upon the completion, which is usually 10 weeks later. So cheques (two in case of GST), your identification card and/or Power of Attorney (POA) if you’re representing someone.

Stay in Auction Room once bidding starts

Some properties sell quickly and you may find that while you have stepped out, the property that you are interested in was sold.

Methods of Bidding

You could raise your hand, you could show your hand, you could do anything as long as you get the auctioneer’s attention.

After the Property is Hammered Down..

As soon as the property has gone down the hammer, the contract will be drawn up. You only need to furnish the auction staff with your identification card, pay the 10% deposit and you will promptly receive a memorandum of sale the same day.

Now go Get Your Property!

Congratulations. Now you know what happens in Property Auctions. Now go on, experience your first hand auction experience by heading to the latest property auctions today (:

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Mention to friends about staying in Sentosa Cove and they will prick their ears and start asking what’s so exotic and why people are staying in an island away from the main buzzling city.

Unblock Seaview from one of the Coast Penthouse

“Why do you want to buy Sentosa’s The Coast? Pricing can get you a much bigger unit in River Valley. Freehold some more!”

It’s a choice.

Sentosa offers a lifestyle which no where in Singapore’s main island could be comparable to. As Resorts World is in full steam ahead to get ready this year and Sentosa Cove is still an architect’s playground, having an address which is already very coveted could only mean even more prestige as time goes by.

Here’re some of the questions which potential investors or Sentosa future dwellers will ponder. We’ll decipher it here one by one.

How many residential units are there in Sentosa Cove?

There should be 2,500 units in Sentosa Cove when everything is fully developed.

Where exactly are these residential units?

Sentosa Cove generally is located in the East side of Sentosa and is mainly divided into two main areas, namely the North Cove and the South Cove. Both North and South Cove has a general mix of condominiums and landed plots with most homes configured to face the sea or artificial sheltered waterways.

When is the Resorts World, Sentosa’s Integrated Resort officially opening?

There’s no official dates cited, but according to Channel News Asia, it is on track with their schedule and is set to open in early January 2010.

How much does a condominium apartment in Sentosa Cove cost on average now?

It really depends on the condominium on the age of the project, the finishings and the orientation. As of below, these are the average prices (on per square foot basis) that the projects are calling for the month of October 2009 to January 2010.

The Azure – Frasers Centrepoint Homes ($1,676psf)
The Berth by the Cove – Ho Bee Group ($1,441psf)
The Coast – Ho Bee Group ($2,100psf)
The Oceanfront @ Sentosa Cove – City Development Limited ($1,859psf)
Seven Palms – SCGlobal ($3,300psf)
Marina Collection – Lippo Group ($1,872psf)
Turquoise – Ho Bee Group ($2,658psf)

How much does a landed plot cost on average now?

As quoted by StreetSine on one the latest Ocean Drive house sold, Sentosa Cove landed homes are sold averagely at $1,605 per square foot (psf) for the month of November 2009.

Is that true that only a few architects can be used for construction and even additions & alteration (A&A) works for Sentosa’s landed housing?

No. But your choice of architect will have to follow the guidelines set by Sentosa Cove Pte Ltd. Your designs must first be approved by SCPL before it can be materialised. Guidelines can be downloaded here.

There’s also a list of recommended architects who are familiar with SCPL’s guidelines to facilitate your home design needs.

Can foreigners buy landed properties (restricted residential property) in Singapore? Does Sentosa Cove have some lifted restrictions in landed properties?

Foreigners who wishes to buy a restricted residential properties where a written approval from the Controller of Residential Property Land Dealings is required.

1) Any landed residential properties including detached houses, semi-detached houses and terrace house
2) Any vacant land zoned for residential use

Foreign buyer can apply for a written approval from the Controller of Residential Property Land Dealings. The duly filled applications are evaluated on a case-by-case basis, and the entire process should take about three months.

The Only Exception for Sentosa Cove Homes

Foreign individual who wish to buy/ acquire a Restricted residential property in Sentosa Cove can obtain fast track approval (within 48 hours) from Singapore Land Dealing Unit. You can download the form here.

Remember, you cannot rent out a restricted residential property and it is bought solely for your own occupancy.

I heard there is a long term visit pass for foreigners specially catered for Sentosa Cove buyers. Is that true?

Foreigners who have bought a restricted residential property (comprising of either land only or land with building) at Sentosa
Cove, Singapore for the purpose of owner-occupation will be allowed to apply for a long term social visit pass which could allow the owner (and his/her immediate family) to stay in Singapore for up to 3 years.

For more details, refer to this Q&A.

You have been talking about lifestyle. What kind of lifestyle does it offer?

This isn’t the best photo, but you can’t recognise any of such scenes on Singapore main land for sure.

Is it prudent to invest in Sentosa? Why?

Land is scarce in Singapore and there’re many restrictions that hinders foreigners to buy a piece of land in Singapore.

Sentosa Cove offers a very different lifestyle compared with the main island and which only rich individuals can only afford, and with the alternative that the Singapore Government is offering to wealthy individuals to buy a restricted residential property in Sentosa Cove, the prices in Sentosa could only head north in the long run.

Related posts:

1. Top 10 Most Luxurious Condominium in Singapore

Or the most well-sought after, crème de la crème condominium projects in Singapore as listed by experts from Property Report

Singapore Cityscape. Credits to Pennypoon1104, Flickr

1. St Regis Residences (District 10)
2. The Sail (District 1)
3. Orchard Residences (District 9)
4. Hamilton Scotts (District 9)
5. Nassim Park Residences (District 10)
6. Beaufort on Nassim (District 10)
7. The Ritz Carlton Residences (District 9)
8. The Edge on Cairnhill (District 9)
9. Grange Infinite (District 10)
10. Sentosa Cove’s villas (District 4)

The Demand Has Always Been There

It’s good to know the luxury market is moving, and with the two brand new Integrated Resorts, Resorts World at Sentosa (Genting) and The Marina Bay Sands (Las Vegas Sands), both getting ready, the growth of Singapore’s economy will be tremendous over the next short few years. Foreigners could recognize Singapore’s real estate as potential and safe as government credentials here are sound.

With luxury end condominium, foreigners would not also have to worry about the volatility as the location of these projects are always in good demand, no matter good or bad times. No doubt there’s always a difference in tide and times of real estate economy, these projects are considered limited with the land scarce Singapore.

Related posts:

1. Frequently Ask Questions about Sentosa Cove Homes

An email from a reader who asked when is it exactly do you have to pay stamp duty when buying a property in Singapore.

When do you pay stamp duty on real estate?  I have been thinking about this for a while and was hoping you might be able to shed some light on the subject.

A little advice would go a long way right now.  Thankyou.

This is the textbook answer from IRAS’s website,

A document can be presented for stamping at any time before executing (signing). However, once a document is executed (signed), stamp duty must be paid within:

• 14 days from the date of execution if the document is signed in Singapore;
• 30 days of its receipt in Singapore if the document is signed overseas.

Penalties will be imposed on documents that are stamped late or for which stamp duty is underpaid.

To Avoid Penalty

Usually, your conveyancing lawyer will advice you to draft two cheques, one for exercising the option of the property and the other cheque is to pay for your stamp duty to IRAS to avoid penalties.

The late penalty fee is as calculated as 5% per annum calculated on a daily basis on the stamp duty payable

Can I use my CPF Money For Stamp Duty?

Yes, you can! But you’ll have to come out with the amount in your own cash or cheque first before CPF reimburses it back to your bank account; So make sure you have the amount for stamp duty ready first.

How to Calculate Your Stamp Duty Fees

Read this entry which I’ve created for a very easy digest of calculating your stamp duty fees when you’re purchasing your property.

If you have questions with regards to buying or selling a home, feel free to contact me anytime. I won’t bite

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P1 Registration Exercise Starts - Image Credit: Ministry of Education

The registration exercise for admission to primary one in 2010 will open from Tuesday, 7 July 2009 to Friday, 28 August 2009.

What’s the distance guide for Primary school enrolment and the priorities? How do you gauge the official distance of your home, your new home to your choice of school?

Ministry of Education Guideline

Parents can read the proximity guide which can be found on MOE’s website. Some abstracts coming from the official source,

Yes, you can register your child at any school of your choice. However if there are more applications than vacancies, then balloting will be conducted. Balloting will be conducted according to the following order of priority:

1. Children living within 1 km of the school of choice;
2. Children living between 1 km and 2 km of the school of choice;
3. Children living outside 2 km of the school of choice.

You can find out more on how schools does their registration if they are undergoing PRIME (Programme for Rebuilding and IMproving Existing Schools) should they be relocated to another temporary site whilst the actual is undergoing renovation.

So what is the official source to determine a distance between my home and my choice school?

MOE provides schools with an updated list of Home-School distance categories each year, about 2 weeks before the start of the Primary 1 registration process. Parents are welcome to call up the schools to check their official distance from the school at no cost.

Singapore Land Authority’s (SLA) site INLIS will be the only official source that the school will use to determine whether you are in category Zone 1, Zone 2 or Zone 3. Unfortunately it isn’t a paid service, so you’ll have to fork out $2.10. The computation will be based by your postal code and your choice of school.

Example of how an official note from SLA will look like when you purchase one

ps. If you are serious about buying a house because of school registration, please make sure your apartment really falls under the Zone 1 category properly; Having a condominium apartment that is near your desired school doesn’t automatically means that it is within the 1km radius, different blocks of the project might give you a different reading between Zone 1, 2 or Zone 3 even.

I don’t feel like paying $2.10, what else can I use?

KiasuParents has an excellent guide on measuring home-school distance with other alternatives like using MyLifeStyleMap and StreetDB. There’s also alot of primary school resources for you to refer to in KiasuParents which are amazingly useful:-

• Singapore’s Top Primary Schools
• Choosing a Primary School in Singapore
• Enhancing Your Chances Of Getting Your Child In Your School Of Choice

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The Colonnade designed by Paul Rudolph on Grange Road. Photo Credit: Pricey (Flickr)

This has always been a very tricky decision when it comes to buying a dream home of your choice.

Property A

A 65 unit boutique condominium development that has a pool, bbq, children’s playground and underground carpark facilities. The location is quiet, and considered quite close to amenities around the vicinity. Price is $850 psf for a 3 bedroom.

Property B

A 4,35 unit condominium development has full condominium facilities, location is about the same as Property A. Price is 950psf for a 3 bedroom, an additional of 100psf as compared to Property A.

Which would you choose?

Verdict

My advice to home buyers has always been selecting a home which allows you to have good capital gains even though subjected property is for their own stay. This ensures a good chance of making a profit when the property cycle is trending upwards, you have an option to lock in or even upgrading to a bigger and newer development.

I’d pick B because of better capital gain potential and also a healthy resale transaction levels.

The Deciding Factors

The Location

Grayscale photo of The Sail @ Marina Bay, photo credit: dearchivism_yanson

Look out for locations where they’re usually in demand. We all know that the crème de la crème in Singapore has got to be the old district numbers 9, 10 and 11 areas. For some reasons, many new areas are springing up to be potentials as the Government is focusing on spreading the central CBD hubs into different parts of Singapore (example, Paya Lebar Business District, Jurong East Business District and Marina Bay Financial Centre)

Getting a project in these area ensures a long interest from buyers on your purchase. Do not also drop the intention of looking at 99 years leasehold properties as most are strategically located close to MRT stations or prime district distances to malls and offices.

The Sail is a good example of most people missing the boat. At launch, The Sail went for $600+psf during launch amidst many skeptics on its tenure. The first owners who might have even held till today has the last laugh with sub-sale before TOP and resale prices hitting $3,387psf in April 2008.

The Layout

Odd layouts are usually unpopular with families if they’re not squarish or rectangular in shape (tsk, its okay with the balcony though). Typical families in Singapore prefer more built in spaces than Private Enclosed Spaces (PES) such as terraces and balconies though they’re welcomed.

Having a good size apartment with a good layout will safe guard your potential in selling your place in the future. During bad times, developers shrink sizes of the apartments to reduce the quantum so its much easier to sell, but during better times, families would ultimately prefer a decent sized apartment (good living and dining area, enough kitchen space, good sized rooms).

The Facilities

Condominium projects with full status (with tennis court, swimming pool and more) tends to edge a little over projects which only has a pool or basic amenities. The most important is the mixture of facilities with your landscaping of the surroundings is right in the condominium. We understand that land is scarce in Singapore and developers tend to squeeze in as many units as they can when they’re designing the project, but if its overdone it will make the whole living environment very cluttered.

Some of the unique projects that stands out in facilities and has unique factors on its own are like the recent Double Bay Residences which features band rooms with musical instruments, piano room and even a library, or conservation club houses such as the ones that The Wharf, The Seaview and Grand Duchess at St Patrick’s feature.

The Amenities

This ties very strongly with the first criteria of choosing a great location as whichever amenities it provides. Should the location be great, amenities will be the next critical factor. Good schools around the project ensures a very healthy sale and resale value. Look out for easy access to train stations, buses and eateries around. These are all selling points.

The Developer

Surprise surprise! A good developer always ensure quality is of a decent level as reputation is at stake. Hearing big names like UOL, Wing Tai, Wheelock Properties, MCL Land, City Development always put you in a comfort zone whenever you’re buying an uncompleted project as finishings are not disappointing. It makes a difference.

The Difference Between Boutique Development and Full Fledged Condominium

It boils down to the lifestyle of your choice in living. A boutique development ensures more privacy and less hectic in terms of the number of residents staying. That would be the most major difference. According to my observation, depending on the projects you choose (as all projects varies in quality), numbers between 10 – 50 are usually very, very quiet.

And you should check the maintenance too as the lesser the units supporting the project in terms of sinking funds and maintenance cost, usually the monthly management fees is much higher.

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