SINGAPORE: An Introduction to Real Estate

Authors: Dorothy Marie Ng, Monica Yip, Tan Teck Howe 

SINGAPORE REAL ESTATE OVERVIEW  

(A) Continuing impact of COVID-19 pandemic

The COVID-19 pandemic continued to impact the Singapore economy in the latter part of 2020 and throughout much of 2021. In response, the Singapore Government implemented additional measures to help mitigate the effects of the COVID-19 pandemic on businesses. These measures included a further extension to the temporary relief measures for property developers affected by disruptions to construction timelines, and rental waiver support to tenants and occupiers in the form of a four (4) week rental waiver for qualifying tenants on Government-owned commercial properties and a two (2) week rental relief cash payout for qualifying tenant-occupiers and owner-occupiers of privately-owned commercial properties. Private landlords were also required to provide two (2) weeks of rental waiver to eligible tenant-occupiers of qualifying commercial properties during the period of Singapore’s phase 2 “Heightened Alert.”

(B) Property investment activity  

Notwithstanding the COVID-19 pandemic, property investment activity was healthy with demand from both local and foreign investors. The residential market continued its upward trajectory with “work from home” becoming accepted and well received in many cases, resulting in the realisation of the need for more space in homes. High-end good class bungalows remain keenly sought after resulting in new highs in prices. The commercial market remained active with local and foreign investors competing for assets in the business district. A transaction of note is the proposed S$2.2 billion acquisition of Singapore Press Holding (with a substantial property portfolio) by the Keppel Corporation Group following a hotly contested tender. The industrial market was not left behind either with an increased number of assets changing hands and the proposed merger of two listed Real Estate Investment Trusts. Shophouse transactions in 2021 surpassed levels in 2019 and 2020, with investors drawn to commercial shophouses for the capital preservation during economic uncertainty due to their strong heritage value and limited supply.

(C) Developments in real estate legislation and practices

Land Betterment Charge Act 

The Land Betterment Charge Act, which provides for the imposition of a new land betterment charge, was passed by Parliament on 10 May 2021. The Act will come into operation on a date to be notified in the Government Gazette. The land betterment charge is a tax on the increase in land value resulting from a chargeable consent given in relation to the land. After the Act comes into effect, it will consolidate and replace the existing charges applicable to the development of land, namely, (a) the development charge or temporary development levy imposed by the Urban Redevelopment Authority under the Planning Act in respect of enhancement in land value resulting from the grant of planning permission for a development proposal; and (b) the differential premium imposed by the Singapore Land Authority in respect of enhancement in land value resulting from the lifting of certain title restrictions in State titles.

Code of Conduct for Leasing of Retail Premises 

A new Code of Conduct for Leasing of Retail Premises in Singapore developed by the Fair Tenancy Pro Tem Committee ("Committee") was introduced by the Singapore Business Federation on 26 March 2021. The Code serves as a set of principles and guidelines to facilitate a fair and balanced position for lease agreements entered into on or after 1 June 2021 with a tenure of more than one (1) year for premises permitted to be used for the “Qualifying Retail Premises” as set out in the Code, including restaurants, retail shops, clinics and commercial schools. Landlords of Qualifying Retail Premises should ensure that their lease templates are consistent with the leasing principles set out in the Code which covers various areas such as rent structure, security deposit amount, pre-termination by tenant due to exceptional conditions and pre-termination by landlord due to landlord’s redevelopment works. The Code also sets out a governance framework to ensure compliance with the Code and a dispute resolution framework. Either party may refer non-compliance matters to the Fair Tenancy Industry Committee ("FTIC") during lease negotiations. In the event that parties have agreed to vary clauses where the Code allows for deviation, a joint declaration of deviation shall be filed with the FTIC within 14 days of signing the lease agreement. Any disputes that arise in respect of non-compliance with the Code can be escalated to the Singapore Mediation Centre. A number of major retail landlords from the private sector and all government landlords have committed to abide by the Code with effect from 1 June 2021. While the Code does not yet have the force of law, the Government has accepted the recommendation of the Committee to make the Code mandatory via legislation.

Updates to Qualifying Certificate Regime 

Under the Residential Property Act, a housing developer that is not a Singapore company must apply for a Qualifying Certificate (“QC”) prior to the acquisition of residential land for development (unless purchased from the Government) and must comply with certain timeframes in relation to the completion of the development and disposal of units therein. This is to ensure that developers will build and sell residential units in a timely manner, and do not hoard and speculate in residential land. In 2020, the Ministry of Law (“Minlaw”) allowed publicly listed housing developers to apply for an exemption from the QC regime on the basis that they have a substantial connection to Singapore. Applicants are assessed by reference to the following criteria: (a) incorporation in Singapore; (b) primary listing is on the Singapore Exchange and principal place of business is Singapore; (c) the chairperson and the majority of the company’s board are Singapore citizens; (d) a significantly Singaporean substantial shareholding interest in the company ("shareholding interest criterion"); and (e) track record in Singapore. Further refinements were introduced in 2021 for the assessment of the shareholding interest criterion to take into account: (i) shares that are held through whitelisted nominee companies and (ii) collective interest held by members of the same family.

(D) Digitalisation and information technology

Singapore Land Authority’s digital transformation

The Singapore Land Authority (“SLA”) has continued its various digitalisation efforts in recent years. As part of such efforts, SLA has digitalised its Temporary Occupation Licences processes from front-to-end by having all Temporary Occupation Licences now digitally signed and issued in electronic format.

SLA has also been engaging various stakeholders to develop a Digital Conveyancing Portal to provide a fully integrated, secure, efficient and also a transparent end-to-end conveyancing process.

OneMap3D 

OneMap is the national map of Singapore developed by the SLA. On 15 September 2021, OneMap3D was officially launched to provide a dynamic visualisation platform and presents an immersive experience of a user’s surroundings.