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The Leading Professional and Representative Body for the Real Estate Industry



Daily News – 20th February 2018

Top Story

Budget 2018: S$700m bonus; and some delayed pain for long-term gain
A widely-expected increase in the Goods and Services Tax (GST) will not take effect this year, but Budget 2018 laid the foundations for a hike sometime between 2021 and 2025.  This comes as the Singapore government positions its coffers to cope with the country’s rising spending needs – a major theme in this year’s Budget.  Finance Minister Heng Swee Keat delivered a wide-ranging Budget speech which sought to address short-term business concerns, as well as longer-term challenges in the face of seismic shifts in the global economy and Singapore’s ageing population.

Singapore Economy

GST up 2 points to 9% – but only from 2021-2025
As widely expected, the government announced plans to increase the GST to 9 per cent from the current 7 per cent – but this will only kick in, at the earliest, in three years’ time – keeping its 2015 promise that it has sufficient resources to meet spending needs till 2020.  The government plans to raise GST by two percentage points, from 7 per cent to 9 per cent, some time in the period from 2021 to 2025, said Finance Minister Heng Swee Keat in his Monday Budget speech.

‘Netflix tax’ from 2020 for a new revenue stream
The “Netflix tax” will in two years hit the pockets of Singapore digital consumers and some businesses, with the government setting a 2020 deadline in charging the goods and services tax (GST) on imported services.

Singapore will follow jurisdictions such as Australia, the European Union, Japan and Korea, in taxing services sourced from abroad.

Big surplus, lower spending, one-off bonus for Singaporeans
Singapore is expected to rack up a hefty budget surplus of S$9.61 billion for FY17 – significantly higher than the S$1.91 billion estimated a year ago – which will be partly used to dish out a one-off bonus for Singaporeans.  At S$9.61 billion, the surplus for the fiscal year which ends March 31 equates to 2.1 per cent of gross domestic product. This is the largest surplus in absolute value in the last three decades or so, although not the biggest in terms of percentage of GDP. In contrast, the budget surplus for FY16 was S$6.12 billion.

OIC will accelerate innovation and digital transformation
The Open Innovation Programme (OIP) is a welcome initiative that will accelerate innovation and digital transformation among Singapore businesses, industry players told The Business Times. But for it to bear fruit, it must support iterative development and have business leaders properly identify their digital requirements and understand what “going digital” really means for them.

Businesses to get S$1.8b boost over next 3 years
The Wage Credit Scheme (WCS) will be extended for an additional three years till 2020, but with gradually reduced levels of co-funding by the government, said Finance Minister Heng Swee Keat at his Singapore Budget 2018 speech.  It will provide 20 per cent co-funding for 2018, 15 per cent for 2019, and 10 per cent for 2020.  The scheme, which aims to encourage employers to share productivity gains with staff, will cost the government about S$1.8 billion over the next three years.

Singapore Budget 2018: New Infrastructure Office for projects in Asia
To help firms tap infrastructure opportunities in Asia, such as those created by China’s Belt and Road Initiative, Singapore will set up an Infrastructure Office this year.  It will bring together local and international firms across the value chain – from developers and institutional investors to legal, accounting and financial services providers – to develop, finance and execute projects.

Govt could provide guarantees on borrowings
The government is considering providing guarantees for long-term borrowings made by statutory boards and government-owned companies to build critical national infrastructure.  This will help lower financing costs while also making sure that Singapore does not draw directly on its reserves to fund major infrastructure spending, Finance Minister Heng Swee Keat said.

S$550m increase in spending on health and social services
The government will integrate its health and social services for seniors, and spend S$550 million more to better serve the needs of ageing Singaporeans.  The consolidating of social- and health-related services for seniors will enable such services “to be planned and delivered holistically”, Finance Minister Heng Swee Keat said in his Budget Speech on Monday.

Singapore Budget 2018: Companies Fostering tie-ups at home and in region
A regionwide enterprise network and a simplified grant scheme for industry tie-ups are in the works to help Singapore companies reap the benefits of innovation.  One new development is an Asean Innovation Network – an initiative that Singapore will pursue as it chairs the regional bloc this year.  Partnerships with overseas counterparts will anchor Singapore as a “node of technology, innovation and enterprise” in Asia and the world, noted Finance Minister Heng Swee Keat.

Singapore Budget 2018: Singapore’s carbon tax to start at S$5 a tonne
Industry observers welcomed Singapore’s soft start in its implementation of a carbon tax through an initial price lower than the range provided earlier by the government, though some affected companies continue to hope for benchmarks to be used together with the tax.  The gradual increase upwards will help companies to decide whether they want to pay the tax or spend on projects to reduce their carbon emissions, said Nanyang Technological University (NTU) department of economics head Euston Quah.

Six major challenges ahead
The Budget not only addresses Singapore’s immediate needs and concerns, but is also a strategic plan that helps position the country for the future. In his Budget speech, Finance Minister Heng Swee Keat highlighted key trends that will shape Singapore’s spending needs for the next decade.

Singapore Real Estate

Impact of buyer’s stamp duty hike to be felt most for big-ticket purchases
The impact of the 1-percentage point hike in the top marginal buyer’s stamp duty (BSD) rate on the portion of a residential property’s value exceeding S$1million will be felt most for big-ticket purchases.  JLL senior consultant Karamjit Singh said: “These include expensive condo units, bungalows and what is happening more rampantly nowadays – land and en bloc property purchases by developers.”

Reit ETFs to enjoy tax transparency
Tax transparency treatment for Singapore-listed real estate investment trusts (S-Reits) will soon be extended to exchange traded funds (ETFs) invested in these Reits – a long-awaited move cheered by market watchers.  Taking effect on or after July 1, the tax concessions for Reit ETFs will ensure parity in tax treatments between investing in individual S-Reits and Reit ETFs.  Industry players noted that the much-lobbied move is positive for the growth of the Reits sector and will strengthen Singapore’s status as a Reits listing hub.

Bigger handouts under enhanced Proximity Housing Grant
Singles who buy a resale public housing flat to live near their parents will now receive S$10,000 under the enhanced Proximity Housing Grant (PHG) scheme.  The one-time grant is currently given only to singles who buy a resale flat to live with their parents. Under the enhanced PHG, the grant for this category of singles is now increased to S$15,000.  For families buying a resale flat to live with parents or children, the PHG grant is also raised from S$20,000 to S$30,000.

Singapore developers seeing some en bloc fatigue?
A spate of en bloc sales, coupled with a rebound in the property market at the start of the year, may indicate that Singapore developers will be more cautious in adding to their landbanks and about their pricing strategies, analysts say.  Collective apartment sales in the first two months of 2018 totalled over S$3.1 billion, almost twice the S$1.66 billion seen in the last peak of the en bloc market in 2007, Nomura analyst Sai Min Chow wrote in a note dated on Monday.

S’pore invited to develop 3 Indonesian zones
Indonesia’s Industry Minister Airlangga Hartarto said yesterday that he has encouraged Singapore to develop three industrial estates in the country.  Speaking in Jakarta, Mr Airlangga said the estates being offered for development were Tanah Kuning Industrial Estate in North Kalimantan, Kuala Tanjung Industrial Estate in North Sumatra and Bitung Industrial Estate in North Sulawesi.

Companies’ Brief

Frasers Property to buy German, Austrian logistics assets
Frasers Property is set to acquire 22 logistics and light industrial assets in Germany and Austria mainly owned and managed by developer Alpha Industrial for 282.5 million euros (S$460.5 million).  The assets include 16 completed logistics and light industrial facilities, with a combined gross leasable area (GLA) of 393,800 square metres that are located in key industrial and logistics hubs in Germany and Austria.

Views, Reviews & Forum

One for the long haul: Ensuring a sustainable fiscal future
As budgets go, the 2018 fiscal statement delivered yesterday by Finance Minister Heng Swee Keat is quintessentially Singaporean in more ways than one.  Going by the scope of the measures he announced, and the broad-sweep socio-economic and business backdrop outlined, the statement came across more like a “State of the Union” address than a government’s annual financial report card.

Singapore Budget 2018: Measures to bolster R&D and IP tax regime are heartening
Finance Minister Heng Swee Keat stressed early in his Budget 2018 speech on the importance of encouraging pervasive innovation throughout the economy, as well as the key role intellectual property (IP) plays for companies operating in today’s highly competitive and rapidly-changing business environment.  It is thus heartening to note that Budget 2018 has introduced several measures to bolster Singapore’s research and development and IP tax regime.

Singapore Budget 2018: Calibrated approach to future-proof Singapore’s plan for sustainable future
Budget 2018 espouses the values of thrift, self-reliance, caring for the young, old and needy and planning for the future.  It reflects the Singapore government’s consistent message to its people and businesses to embrace technology and continuously upskill to remain relevant.

Tackling challenges of next decade
With real GDP growing 3.6 per cent in 2017, and property prices beginning to stir anew, Finance Minister Heng Swee Keat was able to report a revenue bonanza that gave him enormous fiscal headroom. Compared with a budgeted overall surplus of 0.4 per cent of GDP, the actual outcome was a surplus of 2.1 per cent of GDP (S$9.6 billion).

Singapore Budget 2018: A fiscally sound but politically risky Budget
This could have been a pure sugar Budget with its huge surplus and SG Bonus for all adult Singaporeans. Instead, Finance Minister Heng Swee Keat coated the sugar with a strong lacing of lemon.  The goods and services tax (GST) will be raised from 7 per cent to 9 per cent “sometime in the future from 2021 to 2025”. Some analysts had forecast a hike to 10 per cent over two years, so the impending hike is gentler and slower than expected. But it still carries quite a sting.

Budget deficits, bad faith and ‘balance’
Over the past couple of months, Republicans have passed or proposed three big budget initiatives. First, they enacted a springtime-for-plutocrats tax cut that will shower huge benefits on the wealthy while offering a few crumbs for ordinary families – crumbs that will be snatched away after a few years, so that it ends up becoming a middle-class tax hike.

Working together for the collective good
Budget 2018 is aptly themed “Together, a better future”.  Tax policy changes are what Singaporeans and Singapore businesses often focus on in each year’s announcement. However, this year’s theme brings us back to the core purpose of government fiscal budgets.

Dialogue key to conservation
After a public outcry and more than a year of deliberation, the authorities will now retain a larger portion of the conserved Ellison Building in Selegie, which stands as evidence of early Jewish presence in the area. This has been seen as a victory for Singapore’s heritage landscape.

Singapore Budget 2018: Lower-income groups worry about GST hike
With the impending goods and services tax (GST) hike, Mr Tony Teng, 43, worries about his young family’s growing expenses.  The ambulance driver supports his one-year-old daughter, pregnant wife and elderly parents on a $1,800 monthly salary.

Who bears the credit risk in a sharing economy?
As the sharing economy gains steam, there is a fundamental change in the risk profile of certain assets underway with a consequential direct impact on the financing of these assets. This may have far reaching consequences down the line if not anticipated and understood.

Global Economy & Global Real Estate

Global inflation may take a while to stir

‘End of the boom’ for London housing: Rightmove

UK commercial deals still strong despite Brexit

Asean’s digital economy key to unlocking growth

Alternative Belt and Road plan may be in the works

China’s mobile payments surge to $17 trillion

Alibaba, Tencent rally troops amid retail battle

Japan exports grow but manufacturers’ mood sours as rising yen clouds outlook

Thai economy grows at fastest pace in 5 years

German property prices up to 35% overvalued: Bundesbank

Trump junior to wine and dine luxury flat buyers in India

Australia’s Domain steady in slipping property market

Additional Articles of Interest – Local & Overseas Real Estate

Local & Overseas Real Estate – Full Article

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