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HK housing curbs may be a boon for Singapore property

Singapore’s three-year decline in home prices could see relief from an unexpected quarter in 2017: Hong Kong.

So say analysts who expect the slide in the city-state's home prices to end this year as foreign investors turned off by Hong Kong's move to increase the stamp duty for overseas buyers look to Singapore instead.

One of them said that Singapore house prices are approaching their trough, with a forecast price move of flat to minus 2 per cent. Another forecasts Singapore prices to rise one per cent on average this year.

The fallout from the stamp duty could be beneficial for Singapore as Singapore is always seen as a place where you can preserve capital and interest from foreign nationals is expected to come back.

Hong Kong's November increase in stamp duty to 30 per cent for foreigners makes Singapore's 18 per cent rate more attractive to overseas buyers, particularly mainland Chinese who are seeking investments abroad to help shield them from a further weakening of the yuan.

That will help limit the decline in Singapore property values to about 1.5 per cent this year, according to the average estimate of five analysts surveyed by Bloomberg. Home prices have fallen 11 per cent since 2013, when the government implemented the strictest of its own cooling measures.

The outlook for Hong Kong is more bearish, with prices in the secondary-housing market seen dropping 8 per cent, according to the average of seven analyst forecasts. While figures for new homes aren't available for Hong Kong, early indications are that prices in this segment will be more resilient as developers offer incentives to offset higher stamp duties.

Adapted from: The Business Times, 20 January 2017

Shanda gaming empire co-founder buys GCB

The Chinese turned Singaporean co-founder of Shanda Group is understood to have picked up a Good Class Bungalow (GCB) along Cable Road for S$23 million.

The price works out to S$1,518 per square foot (psf) based on the freehold land area of 15,148 square feet.

Chrissy Luo, who bought the bungalow in trust, is the wife of Chen Tianqiao. The couple, who now reside in Singapore, in 1999 founded Shanda Interactive Entertainment Limited, which expanded to a big-time online entertainment developer and publisher in China before it became a privately-owned global investment group a few years ago.

Shanda Group is now headquartered in Singapore, with "main offices" in Shanghai, Beijing, Hong Kong and Menlo Park, according to information on the group's website. It invests across a variety of asset classes, including venture capital (VC), private equity, public securities and real estate, primarily focused on the financial services, technology and healthcare sectors. It is the single largest shareholder of three famous US listed companies - Legg Mason, Lending Club and Community Health Systems.

Shanda's VC portfolio comprises 11 advanced tech companies (eight in the US, two in Israel and one in Iceland), and more than 120 Chinese companies primarily focused on Internet and mobile applications. The group's property arm has operations in China and the US. "We are also one of the largest timberland owners in North America," Shanda said on its website.

Having made their fortune, the Chens are also active in philanthropy. Through the Tianqiao and Chrissy Chen Institute, they have been working with leading universities and research institutions in the US and China on fundamental brain research with a particular focus on brain discovery, treatment and development. Last month, the Chens were in the news in the US for a US$115 million donation to the California Institute of Technology or Caltech in Pasadena to set up a neuroscience research centre.

The couple made the donation after viewing a news clip of a Caltech scientist helping a quadriplegic use his thoughts to control a robotic arm so that - for the first time in more than 10 years - he could sip a drink unaided, the Los Angeles Times reported.

Mr Chen is chairman and CEO of Shanda Group and his wife, the vice-chairman.

The Singapore bungalow along Cable Road that Ms Luo bought recently is within the Chatsworth Park GCB Area. Spanning two storeys and with five bedrooms, it was developed in 2005 by The Straits Trading Company, which sold it later in the same year for S$9.2 million to a Japanese family who are Singapore permanent residents (PRs). They held it for 11 years before selling it recently to Ms Luo; the transfer was registered early last month.

Inclusive of this deal, 2016 ended with 37 transactions in GCB Areas totalling S$788 million - an improvement on the 33 deals totalling S$715 million in 2015 and 28 deals amounting to S$626 million in 2014.

Despite the steady improvement in GCB sales volume, last year's showing is way shy of the recent high in 2012, when 54 bungalows totalling S$1.17 billion changed hands in GCB Areas.

Bungalows in GCB Areas are the most prestigious form of landed housing in Singapore, with planning conditions to preserve their exclusivity and low-rise character.

Only Singapore citizens are allowed to buy landed residential properties in GCB Areas under a policy change that took effect in the second half of 2012. Prior to that, Singapore PRs could seek the Singapore Land Authority's approval to acquire such properties provided the land area did not exceed 1,393.5 square metres (around 15,000 sq ft).

Adapted from: The Business Times, 20 January 2017

FOREIGN PROPERTIES

Square Yards slapped with fine, six-month ban

The Council for Estate Agencies has taken Square Yards Singapore Pte Ltd to task for failing to provide a written advisory message to an investor to draw his attention to the risks involved in purchasing foreign properties.

Besides slapping a financial penalty of S$7,500 on the two-person agency, CEA has - for the first time concerning foreign properties - imposed a condition to Square Yards' licence that it is not to market or transact in any foreign property for six months with effect from March 1, 2017.

The previous time a licence condition was imposed was last year, when HSR International Realtors was banned from undertaking any collective sale work for one year from April 220, 2016.

In the case of Square Yards, the investor had bought a property in North Dakota in the United States for US$74,950 through the agency. He made partial payment of US$33,982.50 to the US developer in 2014 and was not able to recover the sum after the developer was charged for alleged fraudulent activities.

Square Yards was charged for breaching the Practice Guidelines for Estate Agents and Salespersons Marketing Foreign Properties (PGMFP) and the Code of Ethics and Professional Client Care (CEPCC) under the Estate Agents Act.

In early August 2014, Square Yards and US developer North Dakota Developments LLC conducted a seminar in Singapore to promote and sell the Transhudson Hotel, Parshall Project, located in North Dakota. The US developer also introduced its other project - the Great American Lodge, Montana Project - to prospective investors at the seminar.

After the seminar, the investor bought a unit at the Transhudson Project through Square Yards at a purchase price of US$74,950. He paid a total of US$33,982.50 to North Dakota Developments LLC in mid-September 2014, which included the booking fee, closing fee, and balance of the first stage payment. Square Yards subsequently received about US$3,900 as commission for this transaction.

"Throughout the transaction process, Wai Yin Peng Shermaine, key executive officer of Square Yards, and her property agents did not provide the investor with a written advisory stating that he must conduct due diligence," the CEA said.

"They did not highlight to the investor the risks that are involved for foreign property consumers and that the transaction is subject to foreign laws, and to any change in policies and rules in the US."

Investigations also revealed that Square Yards had facilitated the sale of two other units - one investor had purchased a unit at the Transhudson Project, and another investor at the Montana Project. The three investors paid a total of US$112,279.50 to North Dakota Developments LLC.

But around May 5, 2015, the US Securities and Exchange Commission charged North Dakota Developments LLC for allegedly raising over US$62 million fraudulently from investors worldwide through the sale of interests in the development of housing projects based in the US, including the Transhudson and Montana Projects.

These three investors have not recovered the amounts they have paid to North Dakota Developments LLC.

Under the PGMFP, however, estate agents appointed by the developer "shall provide a written advisory message to the consumers that they must conduct due diligence, drawing their attention that risks are involved for foreign property consumers and that the transaction is subject to foreign laws, and to any changes in policies and rules in the country where the property is located".

Estate agents and salespersons must also perform their work in accordance with applicable laws and must not perform estate agency work that they are engaged to perform unless they have the relevant knowledge to do so, including having to be fully conversant and compliant with the Estate Agents Act and the policies, practice circulars and guidelines of the CEA.

Adapted from: The Business Times, 20 January 2017

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