Pssst, want to buy ‘fraction’ of a condo?

Pssst, want to buy ‘fraction’ of a condo?

Firm marketing shares in apartments; industry watchers still wary

By EMILYN YAP

(SINGAPORE) A new way of selling condominium units here has emerged amid the recent resurgence in the property market.

Registered three months ago, Primespace Investments Pte Ltd is marketing ’shares’ in apartments to investors with at least $62,000 to spare.

It has two studio units available - one at One-North Residences in Buona Vista and the other at One Shenton near Raffles Place.

While Primespace says it is selling ‘fractional ownership’, investors will not own the properties directly. The apartments will be bought and held by other private limited companies, and what investors pay for are shares in those vehicles. BT understands investors will not lodge caveats on the properties.

Each of these companies’ share capital will be split into 15 lots. An investor has to pay $62,000 for one lot in the company which owns the One-North unit, or $110,000 for one lot in the company that owns the One Shenton unit.

After the share capital is allotted to investors, Primespace will continue to manage and rent out the properties. It says it will distribute rental income to investors every year, and it is offering a guaranteed yield of 5 per cent for the first year of investment. If an apartment’s value increases by ‘a certain level (usually 40 per cent)’, Primespace will sell it and share the profit among investors.

Investors who wish to cash out before the homes are sold can sell their shares to other people. Or they can turn to Primespace, which says on its website that it guarantees repurchase of the shares ‘after a minimum commitment period (two years for most projects)… at fair market value less a re-marketing fee.’

The idea of pooling funds to invest in property is not new here - many friends and relatives already do it. But Primespace’s business is uncommon in that it lets strangers invest jointly in condominium units. It works like an unlisted property trust, which is more familiar to investors in countries such as Australia.

Primespace says its model allows those who ‘could not otherwise afford or choose to purchase’ property to still invest in it. Property consultants BT spoke to agree this is an advantage, especially in light of the downturn. But they also point out the drawbacks of investing in such private vehicles. For instance, investors may not have much say over the management, leasing and maintenance of the apartments, and they may find it hard to trade their shares.

Market watchers also urge investors to do thorough research. ‘Reputation, years of related experience and the track record of the offering company is critical,’ said Cushman & Wakefield Singapore managing director Donald Han. ‘Investors are depending on its capability and experience to generate maximum returns,’ said Mr Han.

Primespace’s website offers no details about its management. The firm is registered with the Accounting and Corporate Regulatory Authority and records show its director is Trisha Suresh, who could be 24.

The Consumers Association of Singapore (Case) executive director Seah Seng Choon said the investment model is not regulated and investors need to be cautious. For example, they should ensure that companies offering ‘fractional ownership’ cannot sell more than the agreed number of shares.

Chesterton Suntec International research and consultancy director Colin Tan says there are more safeguards for investors in listed real estate investment trusts. Those invested in private vehicles ‘may have to resort to costly litigation if things don’t pan out the way they expected,’ he says.

BT contacted Primespace to find out more about its business, but the firm declined to comment.

Source : Business Times - 28 September 2009

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S’pore within touching distance of OECD white list

S’pore within touching distance of OECD white list

9 of 12 required tax treaties have been signed; move out of grey list will spruce up image

By TEH SHI NING

(SINGAPORE) Singapore has now signed nine of the 12 tax treaties that it needs to get off the ‘grey list’ of the Organisation for Economic Cooperation and Development (OECD) and onto the white. These treaties are compliant with the internationally-agreed tax standard on exchange of information (EOI).

‘Stringent measures have been put in place … to ensure that foreign authorities cannot come here on a fishing expedition.’

- Mr Sandison

The speed with which governments worldwide have moved to pass required legislation and sign treaties speaks of the reputational implications that being left on the grey list could have. Already, areas traditionally thought of as tax havens for low or zero tax rate regimes, such as the British Virgin Islands and Cayman Islands, have made the white list.

Though not seen as a traditional tax haven, Singapore is still listed as a ‘financial centre’ on the grey list of jurisdictions which have committed to the standard but have yet to substantially implement it. Switzerland, which was also on the list, has already signed 12 tax treaties and says that it has been taken off the OECD list. Singapore hopes to take the same path.

‘Being taken off the grey list will undoubtedly help to enhance Singapore’s image as an open and conducive economic environment. It will also remove any stigma that might attach to Singapore being regarded as an outlier in the international economic community,’ said PricewaterhouseCoopers tax partner David Sandison.

Indeed, these changes are needed to ‘retain Singapore’s strong credibility as a commercial and wealth management centre underpinned by high standards of financial regulation and strict supervision’, said Owi Kek Hean, head of tax services at KPMG in Singapore.

Singapore has the advantage of a wide network of double taxation treaties (DTAs) with 60 countries, of which 14 have agreed to, and nine have signed protocols amending treaties in line with the OECD tax standard.

The necessary legislative changes for the signed amendments to take effect are expected to be passed before the end of this year, so that the signed amendments can take effect.

Wealthy individuals who are hiding behind foreign banking secrecy laws to evade their home countries’ taxation laws are expected to feel the impact of these changes hardest.

Mr Sandison said: ‘There may be some concerns that this commitment to openness will discourage certain people from using the local banking system.’

‘However, stringent measures have been put in place in the draft legislation to ensure that foreign authorities cannot come here on a fishing expedition, and that only serious and well-founded cases will be entertained,’ he added.

These include the requirement of a High Court order for information to be passed on an exchange request.

Countries, such as the US and the UK, which tax residents on worldwide income, would have interest in obtaining such information, though not the Singapore tax authorities, as the interest income of Singapore residents with bank accounts abroad is tax exempt anyway.

Under existing DTAs, there are already information exchange agreements, but the new laws widen the scope for EOI cooperation by lifting two previous barriers - that Singapore should have domestic interest in the information request, and banking confidentiality, as long as requests are clear, specific and relevant.

As for business interests, multinational corporations will likely be affected only as far as perceptions of the general public are. ‘If a jurisdiction bears the stigma of being a tax haven, then naturally major corporations are more reluctant to do business there,’ said Steve Towers, tax partner at Deloitte & Touche.

More action on the part of corporates might arise from the fact that some countries, such as France, now seem to be considering sanctions against companies with operations in tax havens. ‘So Singapore companies going abroad may want to review their global holding structures to eliminate intermediaries in tax havens,’ said Andy Baik, international tax services partner, Ernst and Young.

Mr Towers thinks that there will be an ‘irreversible flight to quality among MNCs worldwide’. Tax considerations will affect MNCs’ supply chain planning, and many ‘will likely move to jurisdictions with useful tax attributes, where they can build up substantial operations with senior decision makers stationed there as well’.

‘This is good news for locations such as Singapore and Hong Kong, which are still attractive tax-wise and have the economic substance,’ he said.

Missing from Singapore’s many DTAs is one with the US. And Singapore still remains on US’s list of offshore secrecy jurisdictions. The pressure to clinch a tax agreement with the US is mounting, with the recent demands of information from Switzerland on the UBS bank accounts.

In this respect, moving to OECD’s white list could ’send a clear message to the US that Singapore is serious in its desire to open its banking system to genuine request for tax information,’ Mr Sandison observed.

He added: ‘It was primarily a reticence to disturb Singapore’s stringent banking rules that have prevented any earlier progress towards a treaty with the US. The way is now clear.’

Source : Business Times - 28 September 2009

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MINDY YONG

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Shops near Marina Bay see a greater drop in sales than last year

Shops near Marina Bay see a greater drop in sales than last year

By Ong Dai Lin
 

There were more foreign F1 spectators in 2009, causing the sales in Marina Bay malls to drop even further.
   
  
SINGAPORE: The streets of Marina Bay were hot with race action this weekend but businesses in the area lost even more steam than they did last year.

When TODAY visited shops in Suntec City Mall, CityLink Mall and Marina Square last evening, many reported sales down by 20 to 75 per cent during the race period.

F&B outlet The Coffee Connoisseur in Suntec City saw a 75 per cent drop in business yesterday, compared to 50 per cent last year. Manager Evelyn Chua said: “We knew the sales would be affected, but to have them drop by this much is a surprise.”

Those that put in more effort this year did not fare better. Bag shop Hiroshima in Suntec City offered discounts after sales last year dipped by about 30 per cent on race day.

But the shop saw a 50-per-cent drop in business this time. A shop assistant, who did not want to be named, said: “Although there were road blocks last year, there were local shoppers. This year, the customers are mostly foreigners who come for F1.”

Retailers attributed the poorer sales to public perception of inconvenience caused by the roadblocks. But some F1 fans told TODAY, this year’s improved circuit park - with more F&B and entertainment amenities - meant they could have a fun time trackside without going to the malls.

Indian national Mrs Rashmi Bhagat, who was attending her second Singapore F1 race, said: “There’s so much going on in the circuit park that we don’t want to go out again after coming in.”

Singapore Management University student Liu Shun Hong said: “No one goes shopping during the race day. There are a lot of activities at the circuit park, and the fans will not want to miss them.”

- TODAY/sc

 
Source : Channel NewsAsia - 28 September 2009

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