In the first quarter of 2024, we’ve observed a 1.7% rise in prices for resale Housing Development Board (HDB) flats. This increase surpasses the 1.1% growth seen in the previous quarter, extending the trend of rising HDB resale prices for the sixteenth consecutive quarter since Q2 2020.

Despite the 6.2% year-on-year increase in HDB resale prices, there are indications that the market is stabilising. In 2023, resale prices rose by 4.9%, marking a decrease from the 10.4% increase in 2022 and the 12.7% climb in 2021. This suggests a trend towards a more balanced resale market.

This article explores the trends in HDB resale flat prices and discusses key points to consider as you navigate Singapore’s real estate market.

A Closer Look at HDB Resale Price Growth

The 2.8% price growth observed from Q4 2023 to Q1 2024 mirrors the cumulative increase witnessed between Q2 and Q3 2023.

During the first quarter of 2024, a total of 6,928 HDB resale flats were transacted, marking a 5.5% uptick from the corresponding period in 2023, where 6,567 units were sold. This surge in HDB resale transactions may be attributed to a growing number of first-time buyers opting for resale flats as an alternative to Built-to-Order (BTO) flats, seeking to bypass the lengthy waiting times associated with the latter. Additionally, the shift towards resale flats could be influenced by the reduced frequency of BTO sales exercises. Previously, BTO sales exercises were conducted four times a year, but starting from 2024, they will occur only three times a year— in February, June, and October.

Unprecedented Record Sales of Million-Dollar HDB Flats

In January 2024, an unprecedented 74 resale HDB flats were sold for at least $1 million each, setting a new record. This surge in high-value transactions was primarily driven by a heightened demand for larger resale flats. Notably, prices for resale flats saw an across-the-board increase in both mature and non-mature estates, with five-room flats experiencing the most significant uptick of 2.1%. The number of transactions involving five-room flats surged by 33.3%, from 456 units in December 2023 to 608 units in January 2024, marking the highest figure since September 2022. Notably, the number of resale HDB flats (five-room or larger) sold in Q1 2024 increased by 10% compared to the previous quarter.

Four-room flats constituted the majority of resale HDB transactions in January 2024, accounting for 45.6%, while five-room units made up 23.8% of transactions. Of the 74 million-dollar transactions recorded in January 2024, 19 involved four-room flats, 31 were five-room flats, and 24 were executive apartments (EAs). These transactions were primarily concentrated in mature estates such as Bishan, Bukit Merah, Kallang/Whampoa, Toa Payoh, Queenstown, and Ang Mo Kio, with a smaller number occurring in non-mature towns like Yishun, Punggol, and Woodlands.

The surge in million-dollar flat sales in January 2024 can be attributed to previous private homeowners who completed their 15-month wait-out period after selling their private properties. January 2024 marked the earliest month for this batch of private downgraders to become eligible to purchase resale HDB flats following the implementation of the wait-out period in September 2022 as a measure to stabilise the resale HDB market. In essence, this group of homeowners, who observed the 15-month wait-out period, also significantly contributed to the increase in resale HDB transactions.

It’s crucial to acknowledge that even though there has been a rise in the number of million-dollar transactions, these occurrences remain rare within the broader context of the HDB resale market. In January 2024, the remarkable 74 resale HDB flats sold for at least $1 million constituted just 2.8% of all resale HDB transactions during that period.

Considerations for Resale HDB Buyers

Based on the trends discussed above, there are several key points worth noting that can guide you in navigating your real estate journey effectively.

Higher Demand For Larger Flats

For first-time homebuyers, the current trend favouring larger resale HDB flats suggests that opting for such properties might be a prudent choice. Doing so could potentially benefit you in the future, as it would broaden your pool of potential buyers should you decide to sell the property down the line. However, it’s important to note that the increased demand for larger flats often translates to higher prices. Therefore, it’s crucial to conduct a comprehensive analysis of the available resale options and carefully consider your financial situation. This ensures that you make an informed decision that aligns with your long-term financial and lifestyle goals, without overpaying for your chosen property.

Preference For Newer Flats

In March 2024, resale flats with a remaining lease of 90 years or more accounted for the highest proportion of overall resale transactions at 26.8%. This trend contributed to the overall price growth of resale HDB flats, as newer flats typically command higher prices. Considering the remaining lease of your chosen flat is crucial when selecting a resale HDB flat. Opting for a flat with a shorter lease could limit your potential pool of buyers if you decide to sell in the future. Conversely, the strong demand for newer flats may drive up their prices, underscoring the importance of carefully assessing your options to avoid overpaying.

New HDB Classification Framework

The new HDB classification framework will be kicking in from the next BTO sales exercise in June 2024. The additional consideration of resale restrictions for Plus and Prime flats will become crucial for asset progression given the lengthy Minimum Occupation Period (MOP) of 10 years and limited pool of exit audience (income ceiling of $14,000). For current owners, the advantage is that there will likely be a stronger demand for flats near MRT stations and town centres that do not fall under the Plus or Prime categories. As the government steps in to further clamp down on the ‘lottery effect’ of the BTO system, aspiring homeowners should weigh their options carefully and project further into the future. 

Closing Thoughts

As we navigate these resale HDB trends, it’s crucial to consider key takeaways for potential homebuyers. The preference for larger flats suggests that opting for such properties may offer advantages in terms of future resale potential, albeit at potentially higher prices. Similarly, the preference for newer flats underscores the importance of considering the remaining lease when making purchasing decisions.

In essence, the HDB resale market continues to evolve, presenting both opportunities and challenges for buyers and sellers alike. By staying informed and conducting thorough assessments, individuals can make informed decisions that align with their long-term goals and financial considerations.

Looking to get a resale HDB flat? Check out our previous guide on navigating the HDB resale process here. If you are looking for further guidance in your real estate journey, feel free to reach out to us here. We will be glad to guide you through the process and offer a tailored consultation to help you reach an informed decision. 

Thank you for reading and following PLB. Do stay tuned as we bring you more updates and insights on Singapore’s real estate market.

The post Deciphering the Dynamics: Understanding the Upsurge in HDB Resale Prices appeared first on Insights by PropertyLimBrothers.

The Housing and Development Board (HDB) launched 6,057 BTO flats on 5 December 2023 across eight projects in Bedok, Bishan, Bukit Merah, Bukit Panjang, Jurong West, Queenstown, and Woodlands. 

The final BTO sales exercise of the year is typically launched in November, but it was pushed back to December due to the huge backlog created by the implementation of the new HDB Flat Eligibility (HFE) letter. The Sale of Balance Flats (SBF) exercise, typically launched together with the final BTO sales exercise, has been pushed to next year.

Since the HDB reclassification framework that was announced during this year’s National Day Rally 2023 has not been rolled out yet, the projects that are launched in this BTO sales exercise will either fall under the Prime Location Housing (PLH) model or the standard model. 

Shorter Wait Times

The government announced earlier in the year that HDB will be launching more BTOs with shorter waiting times starting from 2024 onwards, among measures to help first-timers address accessibility and affordability concerns. Tighter rules for non-selection of BTO flats and a new priority category were also introduced to strike a balance between addressing the urgent housing needs of applicants and maintaining fairness for those who succeed in the balloting process.

In this launch, about half of the flats on offer across four projects will have a wait time of less than four years. 

The Chai Chee Green project in Bedok, which offers Community Care Apartments and up to five-room flats, will see a waiting time of 3 years and 3 months.

Jurong Arcadia in Jurong West, another project offering bigger five-room flats, will also see a waiting time of 3 years and 1 month. 

Petir Park Edge in Bukit Panjang, a project offering only two- and four-room flats, will have a slightly longer waiting time of 4 years.

More significantly, the Sin Ming Residences project in Bishan will have a wait time of just 2 years and 8 months – the shortest wait time in this launch. There are a total of 732 three- and four-room flats, with prices ranging from $374,000 to $473,000 for three-room units and $519,000 to $665,000 for four-room units before grants.

Prior to the launch, there was already much hype surrounding the project given that it is the first Sin Ming flats to be built in the area in 35 years. With such a short wait time, coupled with the fact that it does not fall under the PLH model, it is likely to be the most popular project for applicants vying for a flat this time round. We predict that this project will be heavily oversubscribed. 

Higher Subsidies for PLH Projects

In this sales exercise, two out of eight of the projects launched fall under the PLH model. These are the Alexandra Peaks project in Bukit Merah and the Ulu Pandan Vista project in Queenstown.

To recap on the restrictions imposed on PLH projects, owners will have to serve a Minimum Occupation Period (MOP) of 10 years and will not be allowed to fully rent out their flat even after fulfilling the MOP. Additionally, resale of these flats will be subjected to a subsidy clawback. 

The Alexandra Peaks PLH project in Bukit Merah will have two-room flexi, three- and four-room flats, totalling 904 units. As the project is relatively close to Redhill MRT station, which is right on the city fringe, it is not surprising that HDB has classified this under the PLH model. Prices range from $380,000 to $512,000 for a three-room unit, and from $533,000 to $723,000 for a four-room unit. These prices are before grants.

The Ulu Pandan Vista project in Queenstown, with three- and four-room flats totalling 890 units, is located right next to Dover MRT station. It is the third and final project in the eastern half of Dover Forest in Ulu Pandan. Similarly, its location right on the city fringe and the Buona Vista office district puts it under the PLH classification. Three-room units range from $430,000 to $541,000, and four-room units are priced from $598,000 to $763,000 before grants. 

This makes the PLH projects the priciest at this launch, with the longest wait time of about four years and 11 months. 

The good news is that HDB has announced that these two PLH projects will be getting additional subsidies as a response to the increasing resale prices. However, HDB’s press release did not provide any specific information on exactly how much subsidies will be given. 

To ensure equity, those who sell their Alexandra Peaks or Ulu Pandan Vista flats after the 10-year MOP will face a higher subsidy recovery rate when they resell their flats. This rate will be 8% of the higher value between the resale price and the property valuation, an increase from the previous 6% rate applied to earlier PLH projects.

HDB further stated that they will reserve 20% of the PLH flats for families buying their first home, and 2% will be allocated for families purchasing their second home under the Married Child Priority Scheme (MCPS). The MCPS is designed to enable a married child to reside with their parents or live in close proximity for mutual support.

Closing Thoughts

Looking back on all the housing measures that have been announced and implemented this year, it is clear that the government is prioritising the needs of first-time homebuyers while carefully striking a balance between fairness and reducing the windfall effect. 

HDB has also ramped up the supply of BTO flats, with the December sales exercise bringing the numbers up to 22,780 in 2023. The next launch in February 2024 will see another 4,100 flats launched in Bedok, Choa Chu Kang, Hougang, Punggol, Queenstown, and Woodlands. These housing measures will work in tandem to ease housing shortage for first-time buyers.

The deadline for submitting applications is at 11:59 pm on December 11 via the HDB flat portal and the allocation of flats will be conducted through a ballot system.

The December 2023 BTO sales exercise looks to be an interesting launch with many excellent options to choose from. Will you be applying this time round? Or will you be opting for a resale flat instead? If you are a first-time buyer still torn between the two options, and are looking for more guidance and advice on your property journey, do reach out to us here and we will be glad to guide you through the financial assessments.

If you had already gotten a queue number or appointment date from the previous launch, check out this guide to navigate your HDB appointments (or save the link for when you get your queue number for this launch!). See you in the next one.

The post Dec 2023 BTO Launch Sees Shorter Wait Times, HDB Raises Subsidies For 2 PLH Projects appeared first on Insights by PropertyLimBrothers.

 

With inflation roaring and home prices soaring in the US, there are real concerns about the formation of a housing bubble. Are the high prices of homes justified? Is it sustainable to keep climbing up like this? Or is this a housing bubble that is going to pop like the one in the mid 2000s? We look at the housing market in the US and compare the situation there with the one here in Singapore.

In this article, we will look at how the Dallas Fed (US Central Bank) monitors their housing market and what we can learn from them. We look at how the rental market and income level grow, in tandem with housing prices. A bubble forms when the rise in housing prices is not supported by the rental and income level. This could be driven by FOMO buying behaviour, which can be catastrophic if done on a huge scale. Government intervention would be needed if the early signs of a housing bubble are in motion.

U.S. Housing Bubble 2.0

Inflation in the U.S. is more of a horror story than it is in Singapore. Not to mention how their real estate market has grown over the past 3 years. While real estate investments might be a good hedge against inflation, it is not immune to the formation of a bubble. When buyers pile into the asset class due to FOMO or a high volume of emotional transactions with little to no holding power, that is the sign of an unhealthy bubble growing.

Many financial institutions, investors, and even the central bank are worried about the formation of such a housing bubble. The previous housing bubble of 2006 and the subprime mortgage crisis that caused the Global Financial Crisis in 2008 was arguably a traumatic experience for the economic system. The market has evolved since then. Financial institutions have put in place many safeguards to make sure that home-buyers are not over-leveraged with no collaterals.

The Dallas Fed is actively monitoring the growth of the housing market. They have an exuberance indicator and price ratios with rent and income growth accounted for. The numbers in the charts are adjusted for inflation. Here is a look at some of their charts.

The real house price index has risen above 115% as of 29 March 2022. In January 2022, the year-on-year growth for the housing market in the U.S. was 11.2%. This double digit growth is considered abnormal. While some investors might be laughing their way to the bank, it is a worrying sign for regulators and financial institutions. The current home prices have risen above the previous high of 2006. And the start of a housing bubble might be in motion.

The shaded area on the chart covers the time when the housing price is above the 95% confidence interval for exuberance. Such as the period from 1998 to 2007, 2020 has marked the beginning of a new period of exuberance.

Rent is an important metric to look at in relation to the growth in housing prices. Why is it important? If there is low rental demand, it means that investors would have trouble having rental income to support mortgage payments. If housing prices stretch far above rental demand, investors might be biting off more than they can chew. The investment might not be sustainable unless they are staying in the property and have sufficient income to support the mortgage themselves without rental income.

In the above chart, housing prices since 2021 have deviated from the fundamentals of price-to-rent ratio. If the gap continues to grow, it signals an increase in risk of a housing bubble. Above and beyond these numbers, this also means that housing has become increasingly unaffordable for Americans. With housing prices rising exorbitantly and rentals climbing sky high, people from marginalised groups would be less able to afford housing options. We can think of the price-to-rent ratio as a first layer warning of a housing bubble. It is a leading indicator that tells us ahead of time, the health of the housing market.

If the price-to-rent ratio is the first layer warning system, then the price-to-income ratio is the second layer warning for a housing bubble. As mentioned above, rent and income should grow in tandem with housing prices because there needs to be a way to afford the high mortgage payments. It has to come from somewhere. In the case of the 2006 housing bubble, there were warning signs more than 3 years prior to the crash that the growth in housing prices were unsustainable. From the orange shaded area, we can see early warning signs since 2002. After 2004, it was clear that housing prices and outgrown income levels.

We see prices in 2022 creeping close to the upper bound of the exuberance indicator. Perhaps we are not in a housing bubble now, but given the steep trajectory of the curve, we might be in the very early stages of forming the bubble. The market is rather different now. One can hope that regulators will take faster action if the housing market shows signs of unsustainable growth. In J.P. Morgan’s research, there is a chance of a real estate correction in certain geographies. The US is experiencing the rapid rise in housing prices mostly in supply-constrained areas. Thus, it is not an across-the-board raging bubble as of now.

Is there a Housing Bubble in Singapore?

The good thing about Singapore is that regulators take swift action to prevent the real estate market from exuberant growth. The recent cooling measure in December 2021 is a good example. Regular cooling measures prevent the market from getting too hot, and reduces the risk of a large correction. Finding the equivalent measures of price-to-rent and price-to-income ratios in Singapore are difficult. We hope that URA or MAS eventually publishes these indicators as part of the quarterly update on the health of the real estate market. Despite this, we believe that the regulators are actively tracking these metrics as a leading indicator for when to implement cooling measures. Just to get a sense of the real estate market health, we look at SRX’s index for property prices and rental prices. We then look at a separate chart for income growth.

The property price index for non-landed private property has seen tremendous growth since 1995 (start of index) to present. Jan 2006 is indicated at 73.1, at the base of the massive acceleration upwards. The rental price index for non-landed private property (chart below) starts in Jan 2006. As you can see, the subprime mortgage crisis is also reflected in both markets, represented by the steep correction from the sharp run upwards. Generally, we see support from the rental market in terms of price. The rental market is rising in tandem with non-landed private property prices.

Over the past 2 years, the rental price for non-landed private condominiums and apartments grew 11%. Yet, transaction volume remains steady with some seasonal tapering. The question is if the rental market can continue to stomach higher prices. The rental index has recently surpassed the previous all-time-high of 134.4 (Jan, 2013) with a reading of 136.9 in April 2022. If rental demand slows down in terms of transaction volume, we might see the formation of a peak in rental prices.

Undoubtedly, the inflation story has a large part to do with the real estate market. Be it prices of homes or rentals, inflation is a core driver. In the chart below, inflation (black) is plotted against another rendition of the residential property index (blue). We can visually identify that the two lines are rather closely correlated. With inflation sometimes giving lead indication of the direction of housing prices. From 2012 to 2014 and from 2017 to 2018, inflation numbers were declining or stagnating a few years in advance of housing prices.

We were not able to find a good price-to-income ratio for the Singapore housing market. Instead, we plot the residential property index against the average monthly wages (chart below). We can see the natural cyclical fluctuations in the wage levels. This is typical of hiring cycles reaching its peak around the start of the year.

Here, we want to point out two things. Housing prices exhibited exponential growth from 2020, whereas wages have only grown logarithmically. In other words, wages grow faster at lower levels and decelerates at higher levels. Housing prices have done the opposite, their growth accelerates over time, with a faster speed at higher levels. Given these differences in growth rates, housing prices would outpace wage growth if there is no timely intervention from regulators.

Closing Thoughts

We have taken a look at property prices, rental prices, wages, and inflation charts. While it is not as accurate a comparison when compared to price-to-rent and price-to-income ratios, we use a very crude approach to approximate the relationships. Nonetheless, we hope that the insights generated are still useful for anyone looking to participate in Singapore’s real estate market.

There might be a moderate risk that we are at the early stage of forming a real estate bubble. While inflation might drive prices up, properties will soon become unaffordable at the current rate of growth. Unless wages grow at the same rate, it would be very difficult to sustain the current pace of property price growth.

If you wish to know more about how the Singaporean real estate market is doing, you can reach out to our experts here. We hope this helps on your property journey!

The post Is a Housing Bubble forming? A Study on U.S. & Singapore appeared first on Insights by PropertyLimBrothers.

Most of our articles take a strong focus on the local property market for what it is. To broaden this view, we have put out articles comparing Singapore’s real estate market with those of other countries. We have laid out an overview of the real estate market in Asia, how the rental market in Singapore compares to the rest of the world, the Evergrande crisis and Singapore as an investment destination, and how to buy real estate in Singapore as a foreigner. These articles set the stage for a deeper look at Singapore as an investment destination for luxury properties.

In this article, we look at how Singapore has performed consistently as a preferred destination for real estate investors. We look at some of the takeaways from corporate reports and translate them down to what it means for Singapore’s Luxury Property Segment.

Leaderboards for Real Estate Investing

In real estate, choosing the right location has been the singular focus. According to the PWC – Urban Land Institute’s 2021 report on the emerging trends in Asia-Pacific Real Estate, Singapore is the foremost choice in HNW investors minds. Singapore is ranked number 1 as an investment prospect and has the best city development prospects. Singapore also ranks number 2 on the likelihood of rental growth.

This is in no small part due to excellent city planning by URA and cooling measures that keep real estate investment sustainable by preventing bubbles from forming. Strong stability factors on geopolitics and natural disasters further add to Singapore’s appeal to investors both abroad and at home.

Overall, Singapore has a great track record among property investors across the world. In the past 4 years, Singapore has come in consistently at top 3 in terms of its investment prospect ranking. This consistency in terms of being a quality prospect means that Singapore is much better positioned to have a resilient property market, with its geopolitical stability and sound statecraft.

On top of being ranked as a quality investment, Singapore also has a geographical advantage. As an investment transit location and an investment decision itself (chart below), Singapore ranks top 3 for China’s HNWIs. With Hong Kong dropping in the ranks as an investment prospect in the table above, we expect that Singapore will soon surpass the U.S. and potentially Hong Kong as an investment decision for Chinese investors. We expect the foreign demand for Singaporean real estate to be strong despite government cooling measures due to its appeal as a safe haven for taxes and global-regional instability. In fact, active regulatory action at planned intervals that ensures the sustainability of long-term growth is a benefit not to be understated. It is a rare policy stance that we do not see in other destinations.

Singapore being a top 3 choice, according to the 2021 CMB–B&C survey, is going to set Singapore up to be in a great position to benefit from increased asset allocations to real estate by Chinese HNWI and Global Sovereign Wealth Funds. Chinese HNWIs have doubled their asset allocation from domestic to overseas (15% to 30%), the pandemic seems to have accelerated the transition to investment abroad. Sovereign Wealth Funds have a total estimated AUM of US$ 10.5 Trillion (Statista, 2021). We see a positive trend for their asset allocations into real estate.

Based on the information we have discussed thus far, Singapore is in an excellent position to benefit from global inflows of capital into its real estate market. Its outlook is still exceptionally bullish and resilient despite the global financial headwinds from rising interest rates, commodity prices, and geopolitical instability.

Market Sentiment in Singapore’s Property Market

The bullish case is supported by Morgan Stanley, along with our own research at PropertyLimBrothers. Morgan Stanley’s bullish case for Singaporean real estate will see prices double from 2018 to 2030. Strong GDP growth, investment outlook, foreign talent inflow, and controlled supply of land coupled signals strong fundamentals for growth over this decade. The market expects and prices in regular cooling measures, preventing demand from getting euphoric and speculative.

This puts the aggregate property market at approximately 6% Compound Annual Growth Rate (CAGR). Despite the COVID-19 pandemic, the bull case still stands with caveats to a decline in commercial real estate rentals. Nonetheless, we expect reasonable capital gains based on the healthy growth rates in price in spite of the pandemic and macroeconomic headwinds.

In PropertyLimBrothers, we have focused our attention on the Luxury Property Market in Singapore as one of the best segments to invest in. We define this segment as premium condominiums, landed property, and good class bungalows (GCBs) typically found in District 9, 10, 11 with price per square ft (PSF) of SG$3000-6000 and above. These properties are usually freehold, with a quantum of SG$5-20 million and up. These properties will be found in areas like (District 9:) Orchard Road, River Valley, Cairnhill, (District 10:) Tanglin Road, Farrer, Holland, Bukit Timah, Ardmore, (District 11:) Thomson, Watten Estate, Novena, and Newton.

Looking at the general price trend for private condominiums and landed properties in District 9, 10, 11, the luxury property market has made a great recovery. From the past 2 years we see a simple average annual growth rate of 5.5%. However, when we look at the recovery momentum from Q3 2020 to present, prices have grown a tremendous amount at 17% over the past 7 quarters.

In contrast, Singapore’s aggregate performance for the entire property market is a strong 21% over the past two years. We see the luxury market perform a lot more consistently with a healthier upwards trend. Strong macroeconomic fundamentals support this move, with a trend of HNW migrants coming into Singapore for both residential and commercial purposes.

We now compare the breakdowns of foreign investment into the landed and apartment-condo segments. We see that foreign interest in landed property (1%) is much lower than in apartments & condos (19%). Part of the reason might be government rules requiring foreigners to obtain approval from the government prior to being able to purchase landed properties. We also see that foreign ownership is more diverse for landed property (48%) than for apartments & condos (25%). A key demographic we wish to highlight is also the presence of Chinese investors in the landed properties (28%) as opposed to apartments & condos (34%). This might be due to the strict LDAU approval criteria by the SLA to buy Landed properties in Mainland Singapore.

Over the course of the decade, we expect to see this landed property segment experience seeing more foreign interest with Chinese investors leading the charge. This is provided that the government policy does not become more adverse to foreign capital.

At this juncture, we would like to remind you of the likely impact of the latest 27 Apr 2023 ABSD changes for foreigners and developers on the luxury market. ABSD for foreigners buying residential properties has doubled from 30% to 60% since 2021. Developers are also hit by a 30% increase in ABSD (from 35% to 65%). This will likely price out many investors looking to invest in Singapore, creating a selection effect on wealthier foreign investors. By extension, this could drive up foreigner demand for luxury properties in Singapore. Foreign investors who are priced out of the residential property market could go to commercial property as an ABSD-free option.

The low foreigner interest in Singapore’s Landed property scene might be due to LDAU approval required for purchase. Nonetheless, the current foreigner ownership at 1% is a modestly low level and can see potential rise in the coming years depending on URA policy.

Closing Thoughts

Singapore is a good prospect as an investment destination for luxury properties. It tops the leaderboards for investment, development and rental metrics. Strong policy factors back up the strengths of this choice. Looking at how capital is flowing from Chinese HNWI and sovereign wealth funds, the real estate market as a whole might see more capital (foreign or local) flowing in. This will propel the real estate market to new heights, despite global macro headwinds.

Whether you’re a local or foreign investor, we’re here to help you. If you like our content and wish to discuss more about how it relates to your portfolio and investment needs, feel free to reach out to us here for consultation.

Disclaimer: The information provided in this article is accurate as of the date of publication and is based on the rules and regulations concerning stamp duty rates and taxes in effect at the time. While we strive to update our past articles diligently, please be aware that tax laws and regulations can change frequently, and it is essential to verify the most current rules and guidelines from the relevant government authorities or consult with a qualified professional for the latest updates and accurate advice.

The post Singapore as an Investment Destination for Luxury Properties appeared first on Insights by PropertyLimBrothers.

Buying your first property is a huge milestone in your life. It is an achievement. Something to be proud of. To couples who have been long waiting to live together, the BTO flat could be a special and sentimental place. Filled with memories of building their first nest together. The process of homeownership is arduous.

For couples getting their first BTO, the application, paperwork, and decisions that need to be made can be time consuming and exhausting. This is completely understandable. Especially since it is likely the biggest ever purchase in their lives. One of the big decisions is choosing which loan to take. Are you going to go with a bank or HDB loan?

This topic has been covered extensively. However, recent developments in the global interest rate environment have pushed banks to raise interest rates on mortgage loans. With fixed rate bank loans now having higher interest rates than HDB loans, which one would you pick?

In this article, we cover the general considerations when considering a home loan for your BTO or Resale HDB. Thereafter, we will discuss how the interest rate changes would affect the decision on which loan to get. We will highlight factors for individuals to consider if their personal situation makes one loan more suitable over another.

What should I consider when taking a home loan?

There’s more to loans than just interest rates. You have to know the ins and outs of the application process, the required documents, and the terms of the loan contract. When you are making the decision to take up a home loan, you have to remember that the decision is time sensitive as the loan eligibility and approval process takes time. And you would need these documents prior to signing the Option-to-Purchase (OTP) for your HDB flat. Having a solid timeline is vital.

Rushing to get all the paperwork done on time can be very stressful and overwhelming. So to avoid those nerve-wrecking circumstances, it would be good to already know what decisions you will make ahead of time. The bottom line is that the approval for the loan should be settled one month before the purchase. You might want to decide what loan you are going for even before you confirm which property to buy. That way, you can focus on the application without the need to deliberate whether or not you are making the right choice.

Application Timing

For HDB loans, you would need to have a HDB Flat Eligibility (HFE) letter before you can sign the OTP. The HFE application will take approximately two weeks and will be valid for a period of nine months. Because the validity period is long, it might be a good idea to get the HFE early to avoid trouble and unexpected delays down the road. Here is the link of the HDB website that gives more information on the HFE letter.

Bank loans are considerably more flexible in terms of their application timing. The in-principle-approval (IPA) can be ready within a working day if you have all the documents prepared in advance. This IPA is valid for a period of one month, which means you have a month to sign the OTP after you have obtained the IPA. Otherwise, you would have to repeat the process to get another IPA in order to get the loan offer from the bank. For your easy reference, here are some links from DBS, OCBC, and UOB on the required documents.

Refinancing Concerns

Refinancing is a common decision made by home buyers who wish to switch a loan provider. This is typically done around the 5-year period when the property hits MOP (for BTO) or when Resale Private Property is past its Seller’s Stamp Duty penalty period. Refinancing is usually done to go for loans with lower interest rates to save some money. While you can easily refinance with bank loans, the decision to refinance on HDB loans is extremely tricky.

You may refinance a HDB loan with a Bank loan but not the other way around. Given this constraint, home buyers should think very carefully about the purpose of refinancing. If it is to optimise on interest rates, you have to look which loan the macroeconomic trend favours. Currently the interest rates are rising due to monetary tightening. This could last all the way into late 2023. However, most home loans have a fixed rate period for at least 2 years. By then, interest rates might have eased off a little.

Property Ownership History

Believe it or not, your property ownership history matters when it comes to considering a loan. If your previous property purchase was a private property, there is a 30 month waiting period before you can apply for a HDB loan or a BTO. You can still go ahead to buy a Resale HDB though. An important note here is that you can only take two HDB loans in one lifetime. However, a third loan is possible under extraordinary circumstances at the discretion of HDB.b

Basically, HDB loans favours buyers with a history of purchasing HDBs. If you have purchased a private property prior and wish to move to a HDB, you will either have to face the 30 month waiting period (where will you stay after selling the property?) or take up a bank loan for your resale HDB.

Age and Remaining Lease on Property

An important condition in both HDB and Bank loans would be your age and the remaining lease on the property. HDB is concerned about the property not being able to meet your housing needs when you reach your golden years. On the other hand, the remaining lease of the property is also a concern as that limits the ability to use the property as collateral against your loan.

Your new home should be able to cover the youngest buyer to the age of 95. If the remaining lease is insufficient, the HDB loan and CPF withdrawals will be hit with some limitations. Bank loans would likely lower your LTV to a lower level if the remaining lease is less than 60 years. If the remaining lease is less than 30 years, it might be extremely difficult to get a loan for the property. Basically, the older the HDB is, the more cash is required to make the purchase due to lower LTV and limits on CPF usage. Here’s a link on the CPF usage for more information.

Loan Quantum

A crucial consideration you must have is the loan quantum. The loan quantum may vary by a large margin because of the restrictions of the HDB loan and the way the quantum is calculated. First your CPF must be emptied or used till there is 20K remaining. If you are purchasing a resale HDB, 50% of cash proceeds from your previous HDB sale must be used for the payment. This is the Right-Sizing policy. Basically, to take a 2nd hdb loan.

The buyer must put in 50% of their cash proceeds from the sale of their first HDB property into the 2nd HDB property with HDB loan. The loan will cover the remaining amount. HDB loans have a maximum Loan-to-Valuation (LTV) of 85% with no minimum cash component. For buyers of resale HDBs, note that there might be a resale levy and the need to refund the CPF principal used with accrued interest back into the CPF OA. This is the downside of taking a 2nd round of HDB loan. Thus, households usually go for bank loans on their second HDB so that they can keep more cash from the sales of the first home.

For HDB Transactions it could go 2 ways in general.

1. You complete the sale transaction first, then wait 1 month for the CPF monies to be refunded back into your account and you get to bank in the cash proceeds etc. Then you complete the transaction for purchase. Assuming you are buying and selling between HDBs. This would involve you going to HDB 2 times, 1st time to give the keys, 2nd time to collect keys.

2. You can complete both Sale and Purchase transactions on the same day where the money does not leave HDBs “account” and they will write off each transaction based on the relative monies. Hence the term “Contra”. While this process seems more intuitive. There are a few regulations that render this process more complicated.

Generally, people wish to take advantage of higher loan quantums in order to enjoy the capital gains on the property with leverage. HDB loans have a limitation on this aspect. Loan quantums can be greatly reduced if you have a high CPF balance or have previously owned a HDB. This points to HDB loans favouring first time BTO buyers the most. Especially young couples who have yet to build up their CPF balance. The main challenge for this group of buyers would be to save up enough capital to afford the down payment on the HDB.

On the other hand, bank loans have a straightforward approach to loan quantum. With income level permitting, the bank loans usually go up to 75% LTV. The remaining 25% is usually paid with 20% from CPF OA and 5% in cash. A perk here is that your CPF balance will not be completely drained. It will be able to enjoy the interest in the CPF OA account instead. Subsequently, you would not have to worry about refunding the CPF principal used with interest (which is a normal source of “heart-pain” when going through the sales process).

Interest Rates Changes — How are things different?

HDB loans have a fixed interest rate of 2.6%, pegged at the CPF OA rate +0.10%. While the interest rates are rising globally, we do not expect the HDB loan interest rate to change. As doing so would require the government to increase the CPF OA rate or change the interest peg rule. Given that the priority of HDB loans is to ensure that public properties are affordable, there is reasonable doubt that HDB loans will increase the interest rates.

In our previous articles, we have described the differences between fixed and floating rates, as well as covered the different types of mortgage loans. To summarise the big points, fixed interest rates tend to be a little bit higher than floating rates upon application. Floating rates are usually based on the 3 month average SORA. With a rising interest rate environment pushing banks in Singapore to increase the mortgage interest rates, home buyers should make choices while taking into account this increase in loan interest rates.

With bank loans starting to exceed the 2.6% interest rate mark, and expectations of even higher interest rates, it will not be long before we see 3% as the norm. With DBS scrapping their 5-year fixed rate HDB package, even the banks are being conservative about the situation. These macro factors currently favour fixed rate mortgage rates. Unless you are confident that the higher interest rates will not be in play for a long time, you might consider going for a floating rate instead. Either way, it would seem that HDB loans would provide a better interest rate in the near term.

We monitor the interest rate changes closely. Since mortgage rates closely affect the general public’s ability to afford housing, there is an urgent need to make sure that we are aware of the interest rate hikes made by central banks such as the one in the U.S. Due to the inflationary issues faced by economies all over the world, it is very likely that higher interest rates would persist over the next year. At least until the issue of inflation is resolved, or if the financial markets get hit by an economic crisis.

Interest rates are only one of the many considerations that one should have when considering which home loan to take. In order to make an optimised and informed decision on this, you would need to have a deep grasp of your own personal circumstances and the pros and cons of each loan type. You should pick the one that suits you best.

Personal Circumstances and the Loan Decision

Income, credit history, future plans for housing, current financial situation. These four factors are very important in the loan decision process. Ultimately, these factors of your personal situation will shape which decision you might end up making. Having a certain financial background would make one loan more beneficial for you than the other. Knowing how your individual situation falls in place with the loan decision will help you make the right decision.

HDB loans have an income ceiling for applicants. If your average gross monthly income is more than S$14,000, you would not be eligible for the HDB loan. This amount is S$21,000 for extended families and S$7,000 for singles buying under the Single Singapore Citizen Scheme. If you face affordability concerns now or in the future, you might want to consider the HDB loan over the bank loan. If you are confident in the stability and level of income, bank loans might give you a more desirable loan quantum.

Credit history is equally important to both HDB and banks. The important part here is managing your repayments and making sure that you stay solvent. Cash flow management would be a vital skill here as you would need to control your expenses such that you can meet your debt obligations for the housing loan. Between the bank and the HDB, the government agency is more forgiving in terms of considering special cases on compassionate grounds. If you are unable to meet your debt obligations, the bank is entitled to take back your property as a collateral. HDB on the other hand goes through a case-by-case basis. If your appeal falls through, your property will still be taken back and put on the market as a Sale of Balance flat.

Your future plans for your HDB matter. Are you planning to upgrade immediately after 5 years? Or are you looking at a prolonged period of stay? People who are looking for a quick exit might find bank loans more attractive. Less CPF is used, and the refund would not be as painful. On top of that, you would likely enjoy a higher loan quantum if you have substantial CPF savings. On the other hand, if you are in it for the long run, you might want to consider the HDB loan. It offers better affordability and cash management, and better interest rates in the short term.

Ultimately, your current financial situation would immediately help you in making the right decision. For instance, if you are a first time buyer with not much CPF savings, the HDB loan might be a good choice for you. Especially given the current interest rate environment. If you are a repeat HDB buyer (looking at resale) and intend to upgrade to private property in five years, a bank loan might grant you the flexibility you need while only costing slightly more due to the rising interest rates.

Closing Thoughts

While the interest rate increase might influence some to choose a particular type of loan, it is mostly still motivated by personal situation and future plans. Having a good grasp of the advantages and disadvantages of the different types of loans and how it complements your personal situation will help you come out on top.

Interest rates might make people with high loan quantums feel the pinch of the rising cost of borrowing. Nonetheless, a major part of the loan decision is motivated by the role of CPF and the amount of loan quantum desired. These two aspects are arguably more important than interest rate concerns.

The issue of optimising on the loan decision is not simple. Careful deliberation is needed, especially if the situation is more complex. If you need help or advice in arriving at a decision for loan choice, feel free to approach any of our experts here.

The post Interest Rates are Rising, Should I go for Bank or HDB Loans for my BTO/Resale HDB? appeared first on Insights by PropertyLimBrothers.

 

The recent news on Channel News Asia have highlighted a high-profile case of illegal subletting on online platforms in Singapore. In a very elaborate case of renting and subletting the units in disguise, the subletting scheme managed to rack in a revenue of approximately S$1.25 million.

Subletting is the act of re-renting out the property you have rented to another set of tenants. It basically creates another layer of tenants. The hot rental market might have tempted many to illegally sublet their apartments for short-term gains. At the end of the day, it is a case of greed. People trying to exploit non-existent “loopholes” in the system to make a quick buck. It is not a matter of if they will be caught but when they will be caught.

In this article, we cover how different stakeholders share responsibilities in preventing illegal subletting, and why people seek to illegally sublet in the first place.

Stakeholders & Shared Responsibility

Everyone plays a role in preventing illegal subletting. Regulators actively enforce, communicate and educate the relevant parties. Landlords actively observe whether their property is being used unlawfully and take the necessary steps to safeguard their interests. Tenants need to be responsible in their usage of the property and know what is considered lawful or unlawful use.

Real estate agents play a crucial role in tying this all together. They disseminate the appropriate information to both Landlords and Tenants, educating and advising them whenever applicable, and take actions to prevent and remedy unlawful transactions and use of property.

Regulators are moving at a laser fast pace now. With MAS and CEA committed to enforcing rules on violations, real estate agents should keep in line and educate themselves to be compliant with the latest best practices. Even service providers such as Airbnb are working closely with regulators to make sure that their services and listings are compliant with what has been set out.

Landlords should also do their own due diligence, and not put their blind faith into their real estate agents. As much as the administration of setting up a rental contract may seem tedious, landlords can still be penalised for the misdeeds of their tenants. Thus, there is a real need even for landlords to know what they are responsible for, and how to keep their tenants in check.

For tenants in Singapore, rental might be getting more expensive, but the price of violating the law by subletting illegally will be even higher. Getting evicted and fined for unlawful gains would leave you worse off than if you had abided by the rules.

Subletting is illegal for HDBs and the government takes a very strong stance in enforcing this. Whereas for private property, landlords need to be more vigilant about their tenants’ activity. The government ultimately looks to landlords to be the one responsible for the lawful use of the property. Even though both landlords and tenants would be penalised for illegal subletting, the property owner is technically held to be the one who is more responsible to keep things in order.

That being said, most owners are not experts in regulations and legal issues regarding property. This is where real estate agents come into the picture. A competent real estate agent should know these regulations at the back of their palm. Being experienced might help with being familiar with such knowledge. But so often, even agents fail to keep themselves educated on such matters.

The bar needs to be raised. For real estate agents to reach their highest potential, they need to gain mastery over the subject matter. Not just focusing on the sales aspect alone, but on governance, compliance, and regulatory issues. This is underrated but will very soon be the baseline expectation from the public. To be considered as real estate advisors and experts, this should be considered elementary.

Why Sublet in the First Place?

People sublet properties to book a profit or subsidise the existing rental expense. The act of subletting itself already presumes you are re-renting out a property you have rented from a landlord. In some sense, a subletter is a “middle-man” between the landlord and another set of tenants.

In the case of HDBs, this is completely illegal whether or not the landlord consents. For private properties, the landlord must consent and the subletting must be done within legal boundaries. An example would be minimum tenancy periods and maximum number of occupants for the property.

When done legally and appropriately, subletting can be a beneficial activity for all parties involved. The landlord might be most interested in getting a tenant for a longer period of time to ensure consistency in rental income. Typically, this will lock in a main tenant to secure the landlord’s rental yield for a few years (if nothing goes wrong).

If the main tenant has spare unused space (spare bedrooms), and the landlord consents to subletting, the tenant may re-rent out parts of the property to a new set of tenants. The second layer of rental income here belongs to the main tenant and can help to subsidise the rental expense for the whole apartment.

In some rare cases, it might be possible to book a profit. One possibility is that the main tenant has a long term rental contract with the landlord. If the prices are locked in at the market rate then, and subsequently the market rate rises, the main tenant could sublet out short term contracts at a higher price. Over time, it might be possible to book a profit if the market rate rises a substantial amount.

With how the rental market has performed over the past two years, this might not be so hard to imagine. The rental market is incredibly hot. Some landlords might facepalm having signed an agreement to a lower rental rate before the pandemic. But these market movements are often out of sight for landlords (especially those who seek stable returns).

At the end of the day, it is possible for a win-win deal. The landlord gets stability and less fuss over negotiating multiple rental contracts. The main tenant can get subsidised rent or book a small profit for subletting in exchange for managing subletting agreements. The second-level tenants might be able to find a place that accepts short term rentals or rentals for just a small space and not the whole apartment.

Greed is not Good

Contrary to a famous quote, greed is not good. Quite often, what could be a win-win situation is quickly thrown into a moral dilemma or legal battle because of greed getting the better of a person. In the case of illegal subletting, the main tenant is usually the perpetrator. Landlords often have a tough time catching illegal subletting before it’s too late (and regulators take action). Having landlords consent to subletting itself is already not a common occurrence.

The main tenant might have friends or people that they know seeking to rent out only a small space and/or for a short period of time. In a bid for an illegal deal here, the main tenant might be tempted to sublet the apartment without the landlord’s permission and knowledge.

Do note that while the topic is on subletting, landlords themselves are not allowed to rent out their properties beyond the legal number of occupants and under the minimum rental period (3 months for private properties). The HDB regulations are more complex. The minimum period is 6 months in addition to other regulations.

Whether you are the tenant or the landlord, greed isn’t good for you. It will eventually bite you back later on in the future.

A Tip for Landlords

There is something Singaporean landlords can learn from the rental markets in other developed countries. In order to lower the likelihood of their properties being used to conduct illegal activities, landlords invest a lot more time into the selection process for tenants. To make sure that the tenants they get can comfortably afford the place, and are decent people by any standard.

In the United States, United Kingdom, and Australia tenancy interviews are commonplace. But not so much in Singapore. Much of it might be left in the hands of real estate agents on a trust basis. Landlords need to take more responsibility moving forward.

In a tenancy interview, people typically do a more in-depth qualitative background check on their tenants. Precisely what they are doing, what their plans are for residency, etc. The bottom line is to get to know them better and identify any red flags that could hint to future misconduct.

Apart from playing a little bit of minority report here, landlords really need to be less of a yes-man and be more selective than they currently are with tenants. Though rental income and yields are important, so is having a responsible and good tenant.

Closing Thoughts

The news is often littered with events such as the one featured on CNA. This is definitely more of an anomaly than a norm. Most tenants and landlords in Singapore are responsible and take the right steps.

Nonetheless, we need to make sure that moving forward, Singapore improves its practices in the rental market. There are still a lot more processes that can be improved in our market. It is definitely far from ideal.

If you are still unsure about the legalities of Singapore’s rental market and wish to find out more, contact our experts here. They would be happy to help you on your rental journey whether you’re a landlord or tenant.

The post Is your Property Subletting Illegally? Airbnb & HomeAway Case appeared first on Insights by PropertyLimBrothers.

The new URA Long-Term Plan has hit it off with an exciting exhibition, “Space for Our Dreams”. It highlights important changes and upcoming shifts in the planning of land use in Singapore moving forward. An ambitious Long-Term Plan in itself is not something beyond imagination. Nor is it surprising, given the very forward-looking approach of URA and the Singaporean government.

Many things can change in the span of 50 years. Singapore has come a long way. But in order to continue forging the path forward, we will need to have our eyes up-front and focus on a new way of progressing and developing our small city-state. What has brought us this far might not continue to bring us to where we want to be in the future.

That is what the URA Long-Term Plan is for. A game plan moving forward into the future. The 50-year plan, which is reviewed every 10 years, will have 7 areas of focus. Chiefly, the plans revolve around living, working, playing, moving, cherishing, stewarding, and sustaining. There is also a special feature for Paya Lebar Air Base.

News outlets are churning out more information on the URA Long-Term Plan faster than the public can digest. The goal of this article series is to go in-depth into each of these 7 areas of focus and be the mental probiotic to help you digest all the information on the URA Long-Term Plan. In this particular introductory piece, we will cover the broad stroke of how URA plans to create the space needed for our Singaporean Dream to thrive.

What Motivates the Long-Term Plan? URA and Singaporean Society

Let us examine the big picture to give us more clarity on the purposes of the Long-Term Plan and to contextualise the plan within contemporary Singapore. URA is ultimately an arm of the Ministry of National Development. The URA is tasked with urban planning. It has a strong people-focus and long-term approach to city planning.

Policy-making in the URA is thus slightly different from what we are used to. Singapore is famed for its modern economic focus and evidence-based policy decisions. While generally successful, no policy move is ever perfect. Singaporean society today faces some key issues that still need to be addressed from a policy angle.

What motivates the URA Long-Term Plan? How does it aim to improve the lives of the people who live in Singapore? The answer to these questions lies in the problems that typically populate social and political discourse. Even if they are not at the top of your mind, they should be familiar problems that pop up every now and then in the news or discussions with your opinionated friends.

In this decade, three prominent topics dominate the discourse. Social inclusion, sustainability, and mental wellness. These are the top concerns on the societal, environmental, and individual levels respectively. While we are not making a complete social commentary on this, it might be useful to expand a little bit on what these issues are.

Social inclusion in the discourse has focused on topics such as elitism, classism, privilege, nationality, discrimination, and the pitfalls of meritocracy. Social inclusion also goes along the lines of race, socioeconomic status, age, religion, gender, political affiliation, and basically any way you can substantially label or categorise a person. Given some high-profile stories on the news and social media, it is definitely not a concern that can be dismissed in contemporary society.

Environmental concerns have also been a pressing issue. With the younger generation taking great ownership of the problem, many are making significant lifestyle changes to contribute to a greener and bluer planet. Organisations (both public and private, profit and non-profit) are picking up the pace on integrating these societal concerns into their business models and practices. The Singaporean government has also made a huge commitment to the global community to go net-zero on emissions by mid-century.

Mental wellness has been an ongoing concern. Social and medical infrastructure to improve the well-being of residents is being improved incrementally. From students, and workers, to the elderly, the mental wellness of people living in Singapore has not received as much attention as now. Still, some have remarked that the current level of effort on this front is lacking, arguing that the approach to mental wellness has been more of window-dressing than serious action. We choose to take a more conservative stance, that plans to improve this are in motion, and results would not be observable overnight. The point is, that we can always do more. Enough never seems to be enough.

Each of these issues is, in its own right, tremendously complex and delicate. It is no surprise that the government is taking a multi-prong approach to alleviating these concerns. If you pay careful attention to the URA Long-Term Plan, you will notice that these concerns are weaved into their plans. They are making an attempt to address societal concerns from the perspective of urban planning, addressing them through the use of space and the way it is organised.

We see the Long-Term Plan as the government’s way to address these societal issues. In an attempt to improve the lives of those residing in Singapore, deep and serious thinking seems to have gone into the planning process to address each of the above-mentioned concerns.

From Planning to Impact — How will the Long-Term Plan pan out?

With big ambitions, and big issues to overcome, how does URA’s Long-Term Plan take us one step closer to creating a conducive environment for residents? Going from planning to impact is a huge leap. There are many steps in-between before we can realise any of these dreams. A plan is, after all, just a plan. That is the biggest caveat with the URA Long-Term Plan. Certain aspects might change and some features may not materialise.

Nonetheless, the societal issues to be addressed remain a constant. And perhaps a guide for however the Long-Term Plan may evolve. Let us take a look at the Long-Term Plan as it is for now. The seven areas of focus consist of the following. The creation of more living spaces that are inclusive, future-ready, mixed-use, and diverse. The provision of more flexible workspaces that are integrated with nature and recreation, and re-designed mixed-use industrial estates. The integration of more recreational spaces near homes, with more green and blue natural space. The improvement of transport, logistics and recreational mobility infrastructure. The preservation of cultural, communal, and historical spaces for national identity and public appreciation. The stewardship of natural spaces and integrating nature into urban areas for climate resilience. The sustainable planning and development of new spaces through land reclamation, decarbonising and diversifying energy sources.

That was a mouthful. And probably impossible to cover in detail within a short article. We will instead have an article elaborating on each of these thrusts. It is more than just levelling up all the current infrastructure. Urban planning is delicate in the sense that it will be cast in stone (literally) for decades, if not close to a century. The planning process must be robust, thorough, intentional, and consultative. This is to make sure that the plans correspond to the actual needs and wants of the residents.

Needless to say, it is a difficult task. But perhaps, not at all a thankless one. Residents and real estate agents alike look forward to every URA release. Be it the performance of the market or the new plans to be released, there seems to be a very positive response to URA on that front. In some sense, each URA Long-Term Plan brings with it good news to property owners. Removal of amenities and negative news is rare. The Long-Term Plan usually announces the opposite. New infrastructure, amenities, hub status. These are boons to property prices and also the quality of life for people staying rather than investing.

We will also dedicate an article or two to the tangibility of URA Long-Term Plan. What is likely to materialise and what isn’t? What kind of factors weigh into URA decisions to write off certain parts of the plans? These are the topics we will explore as well.

In the end, long-term plans such as the URA Long-Term Plan takes time to pan out. When we talk about impact, we really are talking about decades into the future. As much as we are trying to make Singapore “Future-Ready”, the new features in our city-state may only come just on time. Who knows how much of our island will be underwater by 2050?

What do the 7 areas of focus have in common?

Seven areas in total really make it difficult to grasp the essence of the plan. Living, working, playing, moving, cherishing, stewarding, and sustaining are all distinct activities but the solutions to future-proof these parts of our lives have some things in common. We sum up 3 main approaches throughout these different aspects.

Integration. Integration. Integration. This word pops up a lot throughout the entire Long-Term Plan. There is integration between work, residence, retail, nature, industrial, recreational, and more. Integration in the Long-Term Plan is intricate. It is an intentional mix and match of uses to make different activities more interconnected (without having to travel far between them). Most people have been enjoying working from home. Imagine if your office is in the same building as your residence, you don’t have to spend more than 5 minutes to get there. After work, you might want to hit the gym or go for a walk in the park. 5 minutes. Need to go shopping for something? 5 minutes.

Integration might not solve all the problems but it will reduce transit time, make life more convenient, and make life in neighbourhoods more self-sufficient and exciting. Integration is also planned on the level of private-public housing. Neighbourhoods of the future will be a diverse mix of different classes of wealth. This is an attempt at fostering more social encounters between different parts of Singaporean society. Ideas of elitism and social exclusion form when we are in our own bubbles. Having a lack of diversity contributes to the formation of extreme ideologies. This might actually be a good solution to sowing some empathy into people of all socioeconomic backgrounds.

The second commonality among all 7 areas of focus is sustainability. This directly addresses the key environmental concerns. The Long-Term Plan puts out concretely how they are planning to address this. Across the island, green and blue spaces will be preserved. Defragmentation of the natural spaces will allow for biodiversity to thrive. At the same time, the public will have access to more of these spaces, hopefully fostering a deeper understanding and appreciation of nature. Climate resilience is also a huge part of the future-ready plan. In case water levels or temperature rise to an unsavoury level, there are measures planned to mitigate those effects. Preventive measures are also being implemented by the development of carbon-neutral buildings and alternative energy sources, which will aid in reaching the net-zero emissions goal. The Singaporean government is taking the issue of climate risks seriously, and so should we.

The last main approach is the focus on play and recreation in the development plans. This is more of a pre-emptive approach to mental wellness in Singapore. While factors like culture, work, and family are important in affecting mental wellness, we temporarily put them aside now to purely discuss areas for play. In general, the idea behind play and recreation is to reduce stress levels. A popular saying like “work hard, play hard” is probably what they’re going at here. By creating more areas for play & new attractions (and making them more accessible), more opportunities are available for people to unwind. This move is coupled with community, nature, arts and culture to give a more diverse and dynamic environment for recreation. Hopefully, the Singapore of the future will not have people complaining that there is nothing to do on this island.

Closing Thoughts

We are excited to cover the many things the URA Long-Term Plan 2022 has to offer. How will Singapore create Space for the Dreams of our future? Look forward to our article series on the Long-Term Plan to find out more!

If you can’t wait to know the entire story, talk to any one of our experts here. Find how the new Long-Term Plan will affect you and your family. Last but not least, how it might affect your property journey moving forward into the future.

The post How will Singapore create Space for Our Dreams? URA Long-Term Plan 2022 appeared first on Insights by PropertyLimBrothers.