http://www.businesstimes.com.sg/arch...radar-20130923

Published September 23, 2013

Property investment seminars on CEA radar

Authorities urged to act as investors are lured with no-cash outlay claims, fee waivers

By Mindy Tan [email protected]


[SINGAPORE] Bold claims by property experts of wielding the secret technique of buying homes with no cash outlay or owning multiple properties have proliferated in recent months, as investors look for ways to circumvent the successive rounds of cooling measures.

This has inevitably raised alarm bells in some quarters.

"There is a need for the authorities to regulate the content and claims by these speakers," said PropNex Realty chief executive Mohamed Ismail. "When the industry is moving towards professionalism and consumer protection, allowing such unregulated claims may be damaging to the industry and not in the interests of the public.

"This is especially with the implementation of cooling measures and the Total Debt Servicing Ratio (TDSR), with more Singaporeans looking at foreign properties to invest in," he said.

Indeed, generating high returns, having the right opportunities identified and served up on a platter, and gaining financial freedom are some of the enticements dangled by newspaper advertisements on a daily basis.

Ranging from a quarter to half page, these advertisements often entice investors to investment seminars by waiving the registration fees for early birds. Investors who attend these seminars are not only drawn in by claims that these experts, who range from authors to enterprise award winners, have made millions from the property scene, but also that they get to waive the registration fees which can cost a few hundred dollars.

According to Yeap Soon Teck, deputy director (licensing), Council for Estate Agencies (CEA), the regulatory body is aware of such property investment companies inviting members of the public to attend seminars on property investment.

"We have conducted checks including on-site inspections of these seminars to ensure the companies comply with the Estate Agents Act," he said.

The Estate Agents Act covers the conduct of estate agency work - including introduction of a vendor to a purchaser or assistance in the negotiation of a transaction between them as well as subsequent work relating to the transaction - in Singapore, even if the property to be transacted upon is located outside the country.

According to Wendy Kwek, founder of WK Events and a salesperson registered with Real Centre Consultants Pte Ltd, it is possible to own properties with minimal cash outlay and without paying the additional buyer's stamp duty (ABSD), but only if you approach the question creatively.

"What we do is teach people how to view properties and structure deals from a business perspective," said Ms Kwek. "If you look at it from the average buyer's mindset, you will look at property and say if I cannot come up with the 20, 30 per cent downpayment required, I cannot play the game - property investment is out for me; only the rich can play the game. We are here to debunk that mindset."

In her seminar, which is held on a weekly basis and sees between 30 and 80 participants, Ms Kwek walks clients through the different ways of structuring deals.

Co-ownership, for example, involves multiple investors pooling together their funds to purchase properties.

"What we do, as an organisation, is source for undervalued properties, or properties that are poised for good gains . . . which investors can go in for together," said Ms Kwek.

To that end, the organisation conducts extensive due diligence which includes meeting the developer, conducting background checks into the developer's track record and financial records, as well as sourcing the best value propositions available in the market.

The key, according to Ms Kwek, is that her organisation, which has a network of about 3,000 to 4,000 investors, is able to invest in bulk, compared with a single investor. As a result, developers are more open to offering better discount packages.

Another strategy is through project financing. In this case, investors pump funds into the greenfield or redevelopment project and get a share of the profits, said Ms Kwek.

While such investment clubs often conduct extensive research on behalf of members, buyers should always do their own homework, said Steven Tan, managing director at OrangeTee.

Forms of due diligence investors can take include conducting their own research and looking at the viability, pricing and terms of conditions of the purchase, instead of relying solely on the advice of others.

According to Marco Robinson, founder of The Wealthrevolution Group, a lot of time is spent teaching members how to gauge the investment potential of an asset. Breaking it down into three core areas - population growth, development plan and economic factors - Mr Robinson said beyond sending members reports, his team sometimes takes members on property tours as well.

In the meantime, eyes are set on overseas projects rather than local ones because there is still some upside there.

Ms Kwek, for instance, focuses mainly on industrial and commercial properties in countries such as the Philippines, Australia, the UK and the United States. She also likes Iskandar Malaysia.

"Currently, the Singapore market is not a prudent or wise investment. The property cycle is at its peak, prices have flattened and seven cooling measures mean even if you try and buy and sell you lose money in the short term," said Mr Robinson.

While overseas markets may offer bigger capital gains and rental yields, consumers should school themselves in the risks.

Said Mr Yeap: "Consumers should consider carefully and exercise due diligence when buying foreign properties. They should find out pertinent details such as their eligibility to buy the particular property and all the costs involved, for example taxes, if any."

Added Mr Tan: "Ultimately, whatever framework we have here is to make sure we don't overgear and overcommit. So, even if you go into another market and overcommit, you're taking a risk."