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New HDB rental rules for work permit holders

Since Jan 1, non-Malaysian work permit holders from the manufacturing sector have no longer been eligible to rent a whole Housing Board flat, and can only rent rooms.

Those currently renting can stay on until their existing subletting approvals expire.

The rule change, reported by Chinese daily Lianhe Zaobao yesterday, affects about 3.5 per cent of HDB households that are subletting all or part of their flats.

It is unclear how many households this represents. As of Sept 30, there were 52,394 wholly sublet HDB flats. The HDB does not release figures on the number of flats that are partially sublet.

On June 1, 2016, the HDB sent a letter to flat owners who currently sublet their flats to non-Malaysian manufacturing work permit holders "to inform them of the change, so that they would have time to make the necessary preparations".

In response to queries, the HDB said: "This revision in subletting conditions is part of the Government's longer-term plan to house non- Malaysian work permit holders in purpose-built dormitories and approved workers' quarters with facilities to better cater to their needs."

Work permits are for semi-skilled foreign workers in the construction, manufacturing, marine, process or service sectors.

Since Nov 7, 2006, non-Malaysian work permit holders from the construction sector have not been able to sublet HDB flats or rooms. This was extended to the marine and process sectors from May 1, 2015.

Now, only non-Malaysian work permit holders in the service sector can rent whole flats. Asked if the rules will be changed for them too, the HDB said only that it "reviews its rules regularly to maintain the balance between the needs of flat owners and sub-tenants".

The HDB said Malaysian work permit holders can still rent HDB flats and rooms "due to the close historical and cultural similarities between Malaysians and Singaporeans".

The rule change is unlikely to have much impact, said employers.

Some firms, such as timber product manufacturer LHT Holdings, house workers in dormitories.

Mr John Kong, managing director of M Metal and a council member of the Singapore Manufacturing Federation, said most firms that do not house workers in dormitories are not involved in their workers' housing choice.

Adapted from: The Straits Times, 24 January 2017

UOL buys Amber Road site for $156m

A site in Amber Road that has housed a landscaping and nursery business for more than 30 years has been sold to property developer UOL for $156 million.

The plot of about 70,000 sq ft at 45 Amber Road, which was owned by developer Sin Lian Huat, is sandwiched between two condominiums - The Shore Residences and The Sea View.

Mr Richard Yeo, senior manager of Ban Nee Chen nursery, said the nursery was not informed that the land had been sold.

He said the nursery would move if it had to.

Mr Liam Wee Sin, UOL's deputy group chief executive, said in a statement to The Straits Times that the deal was an opportunity to acquire a rare freehold residential site.

"The site will be able to accommodate about 190 apartment units in a 22-storey block. We believe there will be very strong demand for a freehold apartment in the Amber Road/Marine Parade area," he added.

Mr Liam said the deal was also a "timely replenishment of our land bank, given the successful sell-out and completion of 70 St Patrick's".

UOL's most recent East Coast residential project, 70 St Patrick's, which was launched in 2014, had 186 apartments going at an average price of $1,600 to $1,700 per sq ft.

Analysts said the Amber Road plot was attractive for several reasons.

The quantum of the site is relatively low and it is close to many amenities, established primary schools, eateries, and within walking distance of upcoming MRT stations Marine Parade and Tanjong Katong, which are estimated to be completed in 2023.

The site is also close to East Coast Park.

The purchase is the latest property deal linked to veteran banker Wee Cho Yaw, the chairman of UOL's board of directors.

Last week, he made waves in the property market by buying 45 units at luxury condominium The Nassim for $411.6 million through his company's private real estate arm, Kheng Leong.

Adapted from: The Straits Times, 24 January 2017

Anti-speculation property measures have their side effects

Qualifying certificate (QC) rules have generally been effective in curtailing property speculation, but pressured developers, using innovative ways to escape the harsh penalties, raise the question of whether the policy's efficacy outweighs some of its unintended consequences.

QC rules were enacted to prevent foreign developers from hoarding or speculating on residential land in Singapore. After the global financial crisis, developers tended to delay their project launches and hold out for a good launch window.

But they can no longer do so, with the rules now requiring all foreign and listed developers to finish building their projects within five years of acquiring the site; they also have to sell all the units within two years of obtaining a temporary occupation permit.

If they fail to meet the deadline, the penalties are punitive. They incur extension charges at 8 per cent of the land purchase price in the first year; this goes up to 16 per cent in the second year and 24 per cent a year in the third and subsequent years.

This rule essentially shortens the window that a developer can hold onto a site. Where developers could hang onto a plot of land for much longer in the past and still expect to profit from it, they now find it tougher to make a profit if they miss the current window - the penalties will eat into their profit margins.

Without the luxury of time to build and sell, developers should thus temper their prices when bidding for land.

QC rules are not the only bugbear of developers; the other is the approaching deadline for remission of the additional buyer's stamp duty (ABSD).

Under this ruling in force since late 2011, developers have been required to develop any residential site they buy, and sell all units in the project within five years to qualify for ABSD remission.

Failure to do this attracts an ABSD of 10 per cent on land cost with interest (5 per cent simple interest per annum); a higher 15 per cent ABSD applies to sites bought from Jan 12, 2013.

Credit Suisse estimates that the combined QC and ABSD charges could rise as high as S$1.3 billion this year.

Together, these two measures force developers nearing one or both deadlines to choose between paying a tax penalty and dumping their stock at a probable loss.

Indeed, some developers have opted to make a loss. Last week, CapitaLand announced that it was biting the bullet and bulk-selling the leftover 45 units in its luxury project, The Nassim, to a company owned by veteran banker Wee Cho Yaw's family at a steep discount of 18 per cent from current sale prices.

Tiong Aik's Meadows Property, Wing Tai, City Developments and Heeton Holdings have all made similar moves recently, offloading unsold units at discounts of 16 per cent to 23 per cent.

City Developments went a step further; it injected some of its residential properties into "profit participation securities" (PPS), a private-fund platform that pays out returns to its holders.

This is a kind of creative financial engineering, as the transfer of unsold units from the listed developer to a group of Singaporean investors enables the developer to bypass the QC rules, which cease to apply once the units are wholly owned by Singaporeans.

The danger, however, is that because the structure of PPS is so complex and not easily understood, they could essentially be shifting the risks of the property assets onto their investors - accredited and sophisticated though they may be.

Delisting is another route developers have taken to avoid QC penalties. Two examples are the formerly listed Popular Holdings and SC Global.

Granted, the number of developers who have delisted for QC reasons have been few, and that for them, it was likely that a confluence of factors, including difficult operating conditions, led to that decision.

But it is a downer for the Singapore equity market. Besides dampening its vibrancy, it may inadvertently hurt security investors. If controlling shareholders are taking the companies private when valuations of the assets are low, then delisting merely allows the majority shareholders to buy over the assets cheaply while depriving minority shareholders of future gains.

Overall, while it is inevitable that companies will find ways to work around policies, it would perhaps be wise at this juncture to study certain side effects of the QC and ABSD rules to assess whether they are detrimental to the wider economy and need to be addressed.

Innovative financial engineering and delisting may be unintended consequences of these policies, but bulk sales, on the other hand, are completely consistent with - maybe even the desired outcome of - the government's continued efforts to push private property prices down.

Adapted from: The Business Times, 24 January 2017

OFFICE MARKET

Lendlease adopts WELL building certification at Paya Lebar Quarter

Paya Lebar Quarter by Lendlease, a S$3.2 billion mixed-use development, is the first in Singapore to register for the International WELL Building Institute's (IWBI) WELL Core and Shell Certification for nearly one million square feet of Grade-A workspaces across its three office towers.

Administered by public benefit corporation IWBI, the WELL Building Standard (WELL) is the world's first building standard focused exclusively on increasing the well-being and productivity of occupants.

The programme uses a performance and evidence-based system, based on medical and scientific research, to provide investors and tenants with measurable benefits addressing health and well-being concerns for workplaces.

Features of Paya Lebar Quarter that will align with the principles of the WELL Building Standard include the 100,000 sq ft of green public spaces that are connected to the Park Connector Network and end-of-trip facilities for the office tenants such as showers, lockers and bicycle lots that promote active lifestyles.

The office towers will incorporate enhanced air filtration beyond industry standards to optimise the amount of outdoor air being supplied into offices based on office occupancy and outdoor air quality. Future office occupants at Paya Lebar Quarter can also access the Wi-Fi-enabled public spaces for opportunities to take their work outdoors.

Other health and well-being considerations include floor-to-ceiling glazing that invite natural daylight into the workspaces and provide excellent window views of the green public realm, while maintaining thermal comfort to boost concentration for focused work.

"Registration for WELL Certification aligns with our mission to create a happier, healthier and ultimately more productive workforce and community here in Paya Lebar Quarter," said Richard Paine, managing director of Paya Lebar Quarter by Lendlease.

"Healthy workplaces can lead to improved productivity and reduced absenteeism, staff turnover, and medical or insurance claims," he added. "Organisations now look beyond the monetary cost of occupying a building; they are placing emphasis on the productivity of the workforce occupying it."

Lendlease and Delos, the pioneer of Wellness Real Estate and founder of the WELL Building Standard, had in November 2015 announced their tie-up to bring human health and wellness innovations to Lendlease's markets worldwide through adoption of the WELL standard. Lendlease has also adopted the WELL Core and Shell Certification for Barangaroo South Sydney, Sydney's largest urban renewal project since the 2000 Olympics.

Adapted from: The Business Times, 24 January 2017

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