New Reporter
27-10-23, 18:50
Money-laundering bust sends chill through Singapore’s luxury home space
Oct 25, 2023
A CHILL wind is blowing over the luxury residential market as foreign buyers face a triple whammy of higher interest rates, a recent hike in the Additional Buyer’s Stamp Duty (ABSD) and increased scrutiny following Singapore’s largest money-laundering crackdown.
Transaction volumes are slowing across prime condominiums, conservation shophouses and even landed homes, as indicated by lawyers, property agents and consultants interviewed by The Business Times.
Over July and August, Mabel Tan, a senior partner at law firm Joseph Tan Jude Benny, encountered two buyers of mainland Chinese origin who engaged her firm for conveyancing services, but were unable to exercise their option to purchase after failing to obtain a housing loan from banks.
The clients, both permanent residents (PRs), wanted to purchase landed homes subject to approval from the land dealings approval unit of the Singapore Land Authority.
Tan said: “One of them was very interested in a Bukit Timah Good Class Bungalow. He was able to provide all the documents to the bank, and we had done the anti-money laundering checks, but the bank took a while to check and did not come back in time for the client to exercise the option.”
Tan shares that the other client, who was keen to buy a landed home in Pasir Panjang, was asked by a bank to provide documents showing that a substantial sum he wanted to use for the purchase was from legitimate sources. The client had to contact his lawyer in China to produce documents proving his source of funds. While waiting for these documents, the option to purchase lapsed.
Tan noted: “Completion of sale usually takes about 10 to 12 weeks. Previously, clients would be able to finalise the loan arrangement at the halfway mark. Now, foreign clients hear that they may not be able to transfer funds in time for completion, and they are a bit more apprehensive and are not going into purchases.”
Property agent Lukas Teo, a member of PropNex Shophouse Elites, has also observed jitters among some investors following the S$2.8 billion money-laundering case.
So far, 10 foreigners have been arrested and prohibition of disposal orders have been issued against 152 properties. Ninety-four of these properties were residential, 53 were commercial and five were industrial.
Teo said: “For now, everyone is on high alert. Singapore is still a safe haven in terms of property investments; (but) investors want to see how the market goes in terms of prices, and are waiting to see the full extent of the investigations.
“The small-time investors and large developers and institutional-grade investors are still buying, but enquiries have dropped a bit from family offices and foreign investors.”
Conveyancing lawyer Mona Oei, managing director of Golden Law, said: “We have noticed that the months of April to August have been on the quiet side.
“Based on my knowledge, other firms which offer conveyancing services have also experienced considerable slowness in recent months.”
The slowdown can be observed in the super luxury segment of the private residential market, as well as in the shophouse and strata office markets, said Alan Cheong, Savills Singapore’s executive director of research and consultancy.
Savills tracks transactions in these categories that are S$10 million and above.
For the third quarter, it recorded 11 shophouse transactions worth a total of S$228.8 million. For the second quarter, there were 16 transactions worth S$390.9 million.
In the strata office space, there were six transactions in Q3 with a combined value of S$166.9 million. For Q2, there were 11 transactions with a total value of S$371.9 million.
List Sotheby’s International Realty research director Han Huan Mei noted only seven Sentosa Cove bungalow transactions this year, based on data from the Urban Redevelopment Authority’s Realis platform as at Oct 19.
This is down from 14 in the same period the year before.
On top of the well-established deterrents of macroeconomic headwinds and the government’s macroprudential measures, Han, too, noted “negative vibes” from the money-laundering scandal.
There are, of course, other reasons for slowing transaction volumes.
For instance, luxury condominium sales may have been hit by the limited supply of new condominiums in the Core Central Region (CCR).
Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said that the number of uncompleted units launched in the CCR dipped from 1,713 units in the first half of 2021 to 295 units in the first half of 2023.
Nicholas Keong, head of residential and private office at Knight Frank Singapore, noted that the fall in sales momentum for prime non-landed homes could also be due to a lack of availability of family-sized units in the prime districts.
Data compiled by Knight Frank showed that the number of caveats lodged for non-landed private residential homes at 2,500 square feet in size or above, located in areas such as Orchard, the Central Business District, Sentosa, Bukit Timah and Thomson, has fallen.
In July, there were 17 transactions recorded with a combined value of S$121 million.
By August, this had fallen to nine transactions totalling S$59.7 million. In September, there were seven transactions in this category worth S$72.5 million captured on Realis.
Edwin Yip, associate director at Tristar Properties, said: “Like other countries, we are not impervious to high interest rates, market uncertainty and global economic headwinds.
“The ABSD of 60 per cent on foreigners earlier this year has dampened demand for anyone who is just in transit. The priority is clearly to attract those foreigners with long-term plans to contribute to business and investments here.”
https://www.businesstimes.com.sg/property/money-laundering-bust-sends-chill-through-singapores-luxury-home-space
Oct 25, 2023
A CHILL wind is blowing over the luxury residential market as foreign buyers face a triple whammy of higher interest rates, a recent hike in the Additional Buyer’s Stamp Duty (ABSD) and increased scrutiny following Singapore’s largest money-laundering crackdown.
Transaction volumes are slowing across prime condominiums, conservation shophouses and even landed homes, as indicated by lawyers, property agents and consultants interviewed by The Business Times.
Over July and August, Mabel Tan, a senior partner at law firm Joseph Tan Jude Benny, encountered two buyers of mainland Chinese origin who engaged her firm for conveyancing services, but were unable to exercise their option to purchase after failing to obtain a housing loan from banks.
The clients, both permanent residents (PRs), wanted to purchase landed homes subject to approval from the land dealings approval unit of the Singapore Land Authority.
Tan said: “One of them was very interested in a Bukit Timah Good Class Bungalow. He was able to provide all the documents to the bank, and we had done the anti-money laundering checks, but the bank took a while to check and did not come back in time for the client to exercise the option.”
Tan shares that the other client, who was keen to buy a landed home in Pasir Panjang, was asked by a bank to provide documents showing that a substantial sum he wanted to use for the purchase was from legitimate sources. The client had to contact his lawyer in China to produce documents proving his source of funds. While waiting for these documents, the option to purchase lapsed.
Tan noted: “Completion of sale usually takes about 10 to 12 weeks. Previously, clients would be able to finalise the loan arrangement at the halfway mark. Now, foreign clients hear that they may not be able to transfer funds in time for completion, and they are a bit more apprehensive and are not going into purchases.”
Property agent Lukas Teo, a member of PropNex Shophouse Elites, has also observed jitters among some investors following the S$2.8 billion money-laundering case.
So far, 10 foreigners have been arrested and prohibition of disposal orders have been issued against 152 properties. Ninety-four of these properties were residential, 53 were commercial and five were industrial.
Teo said: “For now, everyone is on high alert. Singapore is still a safe haven in terms of property investments; (but) investors want to see how the market goes in terms of prices, and are waiting to see the full extent of the investigations.
“The small-time investors and large developers and institutional-grade investors are still buying, but enquiries have dropped a bit from family offices and foreign investors.”
Conveyancing lawyer Mona Oei, managing director of Golden Law, said: “We have noticed that the months of April to August have been on the quiet side.
“Based on my knowledge, other firms which offer conveyancing services have also experienced considerable slowness in recent months.”
The slowdown can be observed in the super luxury segment of the private residential market, as well as in the shophouse and strata office markets, said Alan Cheong, Savills Singapore’s executive director of research and consultancy.
Savills tracks transactions in these categories that are S$10 million and above.
For the third quarter, it recorded 11 shophouse transactions worth a total of S$228.8 million. For the second quarter, there were 16 transactions worth S$390.9 million.
In the strata office space, there were six transactions in Q3 with a combined value of S$166.9 million. For Q2, there were 11 transactions with a total value of S$371.9 million.
List Sotheby’s International Realty research director Han Huan Mei noted only seven Sentosa Cove bungalow transactions this year, based on data from the Urban Redevelopment Authority’s Realis platform as at Oct 19.
This is down from 14 in the same period the year before.
On top of the well-established deterrents of macroeconomic headwinds and the government’s macroprudential measures, Han, too, noted “negative vibes” from the money-laundering scandal.
There are, of course, other reasons for slowing transaction volumes.
For instance, luxury condominium sales may have been hit by the limited supply of new condominiums in the Core Central Region (CCR).
Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said that the number of uncompleted units launched in the CCR dipped from 1,713 units in the first half of 2021 to 295 units in the first half of 2023.
Nicholas Keong, head of residential and private office at Knight Frank Singapore, noted that the fall in sales momentum for prime non-landed homes could also be due to a lack of availability of family-sized units in the prime districts.
Data compiled by Knight Frank showed that the number of caveats lodged for non-landed private residential homes at 2,500 square feet in size or above, located in areas such as Orchard, the Central Business District, Sentosa, Bukit Timah and Thomson, has fallen.
In July, there were 17 transactions recorded with a combined value of S$121 million.
By August, this had fallen to nine transactions totalling S$59.7 million. In September, there were seven transactions in this category worth S$72.5 million captured on Realis.
Edwin Yip, associate director at Tristar Properties, said: “Like other countries, we are not impervious to high interest rates, market uncertainty and global economic headwinds.
“The ABSD of 60 per cent on foreigners earlier this year has dampened demand for anyone who is just in transit. The priority is clearly to attract those foreigners with long-term plans to contribute to business and investments here.”
https://www.businesstimes.com.sg/property/money-laundering-bust-sends-chill-through-singapores-luxury-home-space