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Thread: Landed property: Ministry says no plans to lift curbs on foreigners

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    Default Landed property: Ministry says no plans to lift curbs on foreigners

    No plans to relax rules on foreign purchase of landed property: MinLaw

    By Daryl Loo, Channel NewsAsia | Posted: 27 June 2007 2201 hrs


    SINGAPORE: The government has no plans to relax the restrictions on foreigners buying landed properties here.

    In reply to queries from Channel NewsAsia, the Ministry of Law says such properties have to be treated as a special category in land-scarce Singapore.

    Earlier this week, US investment bank Goldman Sachs had called for the restrictions to be lifted, arguing that the move will help boost the property market.

    There are strict rules on the sale of landed homes here, which include bungalows and terraced houses.

    Foreigners, including permanent residents, are prohibited from buying such property without prior approval from the government.

    Golden Sachs is arguing that relaxing the rules can help Singapore's efforts to attract foreign talent, and spur greater foreign interest in the residential property market.

    Says Leslie Yee, Executive Director, Asia-Pac Investment Research, Goldman Sachs, "Landed residential property offers significant upside potential. We actually highlighted that in terms of…the luxury end of the market, a bungalow on the ground can cost you some 35 per cent less than a bungalow in the sky, which are these apartments.

    "And so whether or not the government does relax anything on foreigners, buying landed property in Singapore - it's obviously a matter of speculation and of debate. But [where] value play is concerned, this is certainly one sector that we think is interesting to look at."

    In response, the Ministry of Law says there are no plans to liberalise the system, and that landed properties are seen as a special category.

    Some observers say it is not just a matter of dollar and cents, but that there is some national pride involved as well.

    Says Colin Tan, Head of Research, Chesterton International, "For a high-rise apartment, you are basically buying the right to the air space. For landed property, you're actually buying both the land as well as the building. For most countries, land is sacred, so it's not just in Singapore. You don't want to get up one morning, and then find that the whole country is in foreign hands."

    Under the rules, foreigners have to become PRs to get permission to buy landed homes in Singapore, with the sole exception of Sentosa Cove.

    Also, they can only own one landed home here, and must occupy it rather than rent it out.

    "If you say that the foreigners prefer to stay in landed properties, well they can always opt to rent them. They don't have to buy them. But if they really like Singapore so much, they can always become citizens and so be eligible to buy these properties as well," says Tan.

    Foreigners accounted for a quarter of all private home purchases in the first three months of this year. - CNA/yy

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    Default Landed property: Ministry says no plans to lift curbs on foreigners

    Published June 28, 2007

    Landed property: Ministry says no plans to lift curbs on foreigners

    Scarcity calls for special approval for purchases by foreigners

    By KALPANA RASHIWALA


    (SINGAPORE) There are no plans to liberalise the existing restrictions on foreigners buying landed properties in Singapore, the Law Ministry said yesterday.

    'In land scarce Singapore, landed properties have to be treated as a special category where purchases by foreigners are subject to special approval,' a MinLaw spokesman said.

    Earlier this week, BT reported on a paper by Goldman Sachs (Singapore), which argued a case for lifting restrictions on foreigners buying landed homes in Singapore. The Goldman Sachs paper said such a change would serve as a catalyst for further foreign buying of private homes and boost the current residential property upcycle.

    Removing the restrictions would result in some positive spinoffs, and residential developers could gain from even greater foreign buying interest given the positive message such a move would send.

    'We think relaxing restrictions on foreigners buying landed property would accelerate Singapore's efforts to attract foreign talent,' the Goldman Sachs paper had said.

    However, some BT readers take a different view. One, Singaporean Patrick Chia, managing director of Hospitality Associates, who is a landed property owner, said: 'If foreigners are allowed to freely buy landed property, all the non-government owned landed property could theoretically and practically be bought up, because in this 21st Century, the world is flush with liquidity.

    'The current abundance of petro-dollars from the oil-rich Middle-East countries and Russia can easily buy up Singapore. So can the current American and European funds with their billions. Bankers and real estate agents can confirm that foreign funds are looking for Singapore property assets to buy.'

    Mr Chia, who has nearly 30 years' experience in the Singapore property business, also recapped the historical circumstances in the early 1970s that led to the government introducing the Residential Property Act in 1973. That law bars foreigners, including permanent residents, from buying landed property here without prior government approval.

    'Way back in 1973, with the first oil shock when oil prices sky-rocketed, then-rich neighbours, Indonesians and Malaysians, were able to freely buy Singapore landed property and much of the prime landed real estate were bought by them.

    'The government, realising the future implications of such a scenario if left unchecked, wisely instituted the current curbs to foreigner purchase of landed property,' Mr Chia added.

    And over the past 30 years, the government has continuously relaxed the curbs as needed, and pointed out that the Singapore government has been very accommodating in this regard compared with many other countries. In Singapore, foreigners have to be PRs before they can receive permission to buy landed homes on mainland Singapore, and Sentosa Cove is the only location where foreigners who are not PRs are allowed to purchase landed property. Even then, foreign would-be buyers must seek permission from the Land Dealings (Approval) Unit under the Singapore Land Authority.

    Foreigners, including PRs, can at any one time own only one landed home in Singapore and must occupy it themselves rather than renting it out.

    Among the criteria that the Minister for Law will consider when asked to approve foreigners/PRs buying a landed home in Singapore are the applicant's qualifications and whether the applicant has made, or will be able to make, adequate economic contribution to Singapore.

    Typically, it takes about four weeks for approval to be granted, but on Sentosa Cove, the time has been cut to less than 48 hours under a special fast-track approval scheme.

    The landed properties that foreigners and PRs may be permitted to buy must have a land area of no more than 15,000 sq ft, although exceptions have been made, with some PRs buying Good Class Bungalows, which have a plot size of at least 1,400 square metres (about 15,070 sq ft).

    Foreign buyers may acquire an unlimited number of non-landed private homes, that is, condominiums and apartments. The only foreigners who may buy HDB flats on the resale market are PRs.

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