New Reporter
03-04-23, 08:43
Explore new ways to widen ownership of Singapore homes and commercial property
Mar 27, 2023
IN 2007, Google opened its first office in South-east Asia, in Singapore’s Collyer Quay, with 24 employees. At an event marking its 15th year here in August 2022, the tech giant said its Asia-Pacific headquarters in Singapore housed 3,000 staff serving the region.
Google announced its first data centre in Singapore in 2011. By 2022, Google’s third data centre facility in Jurong was completed and in operation. Put together, Google’s data centres represent a long-term investment here of US$850 million.
Early this year, Google laid off about 190 employees here as part of a worldwide retrenchment exercise. The group will give up part of the space it leases at Alexandra Technopark from Feb 20, 2024.
Google started its journey in 1998. Today, its parent company Alphabet is among the world’s largest companies by market value.
Why the likes of Google choose to grow here and whether more such stories unfold have huge implications for Singapore’s property sector.
Google creates high-paying jobs, which supports demand for homes as well as spending on retail and lifestyle activities, thereby benefiting mall owners. Office landlords gain from Google leasing chunks of office space.
Other property asset classes such as warehouses, data centres and hotels also benefit from global giants such as Google basing their Asian or regional operations here.
Government’s role
Some Singapore property groups can build high-quality buildings with strong sustainability features, and they manage buildings well. But why the likes of Google use real estate here is largely due to the government’s efforts.
The government works to draw businesses and talent here. It also ensures that Singapore, despite being expensive, is competitive for businesses to house their talent.
The government gains from having a vibrant Singapore property market. For FY2021 to FY2022, the amount of property tax collected rose by 49 per cent year on year to S$4.7 billion, accounting for about 8 per cent of tax revenue.
Collection from stamp duty, much of which comes from property, amounted to S$6.8 billion or about 11 per cent of tax revenue. Property groups and their employees also pay corporate and individual income taxes.
With higher property values, stamp duty rates and property tax rates, the tax contribution from property transactions and ownership will likely rise.
The high home ownership rate among Singapore residents of nearly 90 per cent helps anchor locals here, and gives people a direct stake in the country’s prosperity.
Perhaps more can be done to share the gains accruing to real estate from Singapore being an attractive live, work and play destination, by widening the ownership of physical properties.
Non-residential properties
The democratisation of ownership of non-residential properties has been supported by the growth of real estate investment trusts (Reits).
Since the first Reit listed in 2002, the sector has grown. Retail investors today can own parts of properties such as office towers, malls, business parks, warehouses, data centres, factories, hotels and serviced residences.
Major assets owned by Reits include VivoCity, Paragon, Plaza Singapura, Raffles City Singapore and Mapletree Business City.
https://i.imgur.com/tg2MxlK.png
Reits have local and foreign institutional as well as retail unit holders. More individuals can be educated on the merits of Reits. Also, more properties here that are not held by Reits can hopefully find their way into them.
Other innovations to broaden the ownership of non-residential properties should be tried. For example, Temasek can lead a fund, with participation by retail investors, to undertake mega development projects in Singapore.
Strata-owned commercial-centric properties such as Golden Mile Complex and Tanglin Shopping Centre have been successfully sold en bloc, and will be redeveloped.
With successful en bloc sales of ageing strata-owned commercial assets, new products can be built to better meet the needs of today’s users. Ideally, such assets should be owned by many locals instead of a small group of tycoons.
Tokenisation
Leveraging regulated blockchain technology, investing in buildings or development projects – which typically entail high capital requirements and are relatively illiquid – can become more accessible to individuals.
With the tokenisation of real estate, individuals can deploy small sums in exchange for owning fractions of specific buildings or development projects. For example, investors can participate in an en bloc residential redevelopment project here for as little as S$20,000.
Home-grown Fraxtor’s digital platform bridges investors, including individuals, and real estate investment opportunities originated by private equity managers and small- to mid-sized property developers. Investors, who co-invest in property projects here, receive digital tokens for buying units in a scheme.
One may need to be an accredited investor to access tokenisation opportunities. Such investors include individuals with annual income of at least S$300,000 or net financial assets exceeding S$1 million.
Is there scope for more tokenisation opportunities and greater participation by individual investors?
Private homes
It may be timely to allow funds, which are widely owned by Singaporeans, to buy private homes without incurring Additional Buyer’s Stamp Duty.
There is rental demand for homes from foreigners, who are studying or working here, as well as locals. Some locals may rent a home because they want to live near a particular school, or are waiting for their new home to be ready, or prefer renting to owning.
Let us have large chunks of residential rental income flow into the hands of many locals, instead of only residents who have the means to buy multiple homes, or foreigners. Funds held by citizens that own rental homes here could limit the size of holdings per person to ensure such funds are widely held.
Many locals are familiar with residential property here, and investing in Singapore assets avoids foreign currency risk. Thus, Singapore-focused residential property funds could appeal to locals.
In coming up with its Long-Term Plan Review that looks at Singapore’s development over the next 50 years and beyond, the Urban Redevelopment Authority engaged with over 15,000 people.
While Singapore’s urban landscape gets upgraded to serve evolving needs, more can be done to ensure property ownership here is widespread and inclusive.
https://www.businesstimes.com.sg/opinion-features/explore-new-ways-widen-ownership-singapore-homes-and-commercial-property
Mar 27, 2023
IN 2007, Google opened its first office in South-east Asia, in Singapore’s Collyer Quay, with 24 employees. At an event marking its 15th year here in August 2022, the tech giant said its Asia-Pacific headquarters in Singapore housed 3,000 staff serving the region.
Google announced its first data centre in Singapore in 2011. By 2022, Google’s third data centre facility in Jurong was completed and in operation. Put together, Google’s data centres represent a long-term investment here of US$850 million.
Early this year, Google laid off about 190 employees here as part of a worldwide retrenchment exercise. The group will give up part of the space it leases at Alexandra Technopark from Feb 20, 2024.
Google started its journey in 1998. Today, its parent company Alphabet is among the world’s largest companies by market value.
Why the likes of Google choose to grow here and whether more such stories unfold have huge implications for Singapore’s property sector.
Google creates high-paying jobs, which supports demand for homes as well as spending on retail and lifestyle activities, thereby benefiting mall owners. Office landlords gain from Google leasing chunks of office space.
Other property asset classes such as warehouses, data centres and hotels also benefit from global giants such as Google basing their Asian or regional operations here.
Government’s role
Some Singapore property groups can build high-quality buildings with strong sustainability features, and they manage buildings well. But why the likes of Google use real estate here is largely due to the government’s efforts.
The government works to draw businesses and talent here. It also ensures that Singapore, despite being expensive, is competitive for businesses to house their talent.
The government gains from having a vibrant Singapore property market. For FY2021 to FY2022, the amount of property tax collected rose by 49 per cent year on year to S$4.7 billion, accounting for about 8 per cent of tax revenue.
Collection from stamp duty, much of which comes from property, amounted to S$6.8 billion or about 11 per cent of tax revenue. Property groups and their employees also pay corporate and individual income taxes.
With higher property values, stamp duty rates and property tax rates, the tax contribution from property transactions and ownership will likely rise.
The high home ownership rate among Singapore residents of nearly 90 per cent helps anchor locals here, and gives people a direct stake in the country’s prosperity.
Perhaps more can be done to share the gains accruing to real estate from Singapore being an attractive live, work and play destination, by widening the ownership of physical properties.
Non-residential properties
The democratisation of ownership of non-residential properties has been supported by the growth of real estate investment trusts (Reits).
Since the first Reit listed in 2002, the sector has grown. Retail investors today can own parts of properties such as office towers, malls, business parks, warehouses, data centres, factories, hotels and serviced residences.
Major assets owned by Reits include VivoCity, Paragon, Plaza Singapura, Raffles City Singapore and Mapletree Business City.
https://i.imgur.com/tg2MxlK.png
Reits have local and foreign institutional as well as retail unit holders. More individuals can be educated on the merits of Reits. Also, more properties here that are not held by Reits can hopefully find their way into them.
Other innovations to broaden the ownership of non-residential properties should be tried. For example, Temasek can lead a fund, with participation by retail investors, to undertake mega development projects in Singapore.
Strata-owned commercial-centric properties such as Golden Mile Complex and Tanglin Shopping Centre have been successfully sold en bloc, and will be redeveloped.
With successful en bloc sales of ageing strata-owned commercial assets, new products can be built to better meet the needs of today’s users. Ideally, such assets should be owned by many locals instead of a small group of tycoons.
Tokenisation
Leveraging regulated blockchain technology, investing in buildings or development projects – which typically entail high capital requirements and are relatively illiquid – can become more accessible to individuals.
With the tokenisation of real estate, individuals can deploy small sums in exchange for owning fractions of specific buildings or development projects. For example, investors can participate in an en bloc residential redevelopment project here for as little as S$20,000.
Home-grown Fraxtor’s digital platform bridges investors, including individuals, and real estate investment opportunities originated by private equity managers and small- to mid-sized property developers. Investors, who co-invest in property projects here, receive digital tokens for buying units in a scheme.
One may need to be an accredited investor to access tokenisation opportunities. Such investors include individuals with annual income of at least S$300,000 or net financial assets exceeding S$1 million.
Is there scope for more tokenisation opportunities and greater participation by individual investors?
Private homes
It may be timely to allow funds, which are widely owned by Singaporeans, to buy private homes without incurring Additional Buyer’s Stamp Duty.
There is rental demand for homes from foreigners, who are studying or working here, as well as locals. Some locals may rent a home because they want to live near a particular school, or are waiting for their new home to be ready, or prefer renting to owning.
Let us have large chunks of residential rental income flow into the hands of many locals, instead of only residents who have the means to buy multiple homes, or foreigners. Funds held by citizens that own rental homes here could limit the size of holdings per person to ensure such funds are widely held.
Many locals are familiar with residential property here, and investing in Singapore assets avoids foreign currency risk. Thus, Singapore-focused residential property funds could appeal to locals.
In coming up with its Long-Term Plan Review that looks at Singapore’s development over the next 50 years and beyond, the Urban Redevelopment Authority engaged with over 15,000 people.
While Singapore’s urban landscape gets upgraded to serve evolving needs, more can be done to ensure property ownership here is widespread and inclusive.
https://www.businesstimes.com.sg/opinion-features/explore-new-ways-widen-ownership-singapore-homes-and-commercial-property