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Wednesday, December 14, 2011

S’pore loses lustre, investors considering other options like Hong Kong

SINGAPORE: The heavier stamp duties announced last week may have already dented Singapore's standing as a major property investment destination while giving rivals such as Hong Kong a boost, said analysts.

Britain-based consultancy Black Brick Property Solutions said it has received inquiries from Asian and overseas investors who had been thinking of investing in Singapore property, but who have been deterred by the new tax rules.

Other property agencies said they expected more clients to ask about their investment options after the festive period.

The new measures unveiled last week included an extra stamp duty of 10% on a home bought by a foreigner a move expected to dampen foreign demand while increasing interest in markets such as Britain and Hong Kong that do not have restrictions on foreign buyers.

Camilla Dell, managing director of Black Brick Property Solutions, said: “Stamp duty can be significantly reduced in Britain if the property is owned in a company name. Buyers pay very little or no tax on the acquisition.” She added that the tax system was more favourable, particularly for overseas investors who pay no seller's or capital gains tax if they were not British residents. This gives them a tax break of 28% when they sell their properties.

Julian Sedgewick, director of international residential sales at Savills, said: “London, in particular, could stand out because of the good currency exchange rate between the pound and the dollar”. The exchange rate is 1 to about S$2.

Hong Kong is looking attractive too, because of the government's adoption of a non-intervention policy, meaning no restrictions are placed on foreign property investments. Its government also recently said it might reverse some of the property cooling curbs if the economic situation worsens.

Another spin-off from the stamp duty move could be that foreign developers and agencies might get more aggressive marketing their properties here as investors in Singapore look elsewhere, said Chua Yang Liang, head of research at Jones Lang LaSalle (JLL).

Although local and foreign investors with a short-term outlook would have more of an appetite for properties outside of Singapore now, many analysts predict that the pool of foreign buyers in Singapore would not dry up. The Straits Times

These include buyers from Indonesia, Malaysia, India and China.

“Businesses are still investing in Singapore and the country is still considered an attractive place to work, live and visit,” said Chua.

By The Straits Times Singapore

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