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SC Global Developments boss Simon Cheong yesterday bought a freehold bungalow at Garlick Avenue for $7 million at auction, BT understands.

Garlick Avenue

The price for 70 Garlick Avenue works out to $769 psf, based on the 9,100 sq ft of land. Bidding opened at $6.8 million and the property drew three would-be buyers.

The property is within an area zoned for Good Class Bungalow (GCB) use although its plot size is significantly shy of the minimum 1,400 sq metres (about 15,069 sq ft) required for a GCB.

There is a renovated, single-storey detached house in fairly good condition on the site, which was put up for auction by its mortgagee bank. The auction was conducted at Amara Hotel yesterday by DTZ Debenham Tie Leung.

Three other properties also changed hands at the auction. One was a three-bedroom apartment on the sixth storey of the freehold Avalon development at Anderson Road, which was sold by its owner for $2.7 million or $1,707 psf based on its strata area of 1,582 sq ft. A freehold maisonette at 104A Owen Road, near Farrer Park MRT Station, sold for $811,000 or $457 psf based on its strata area of 1,776 sq ft.

A single-storey, freehold terrace house at 27 Casuarina Road off Upper Thomson Road fetched $700,000 or $467 psf based on its land area of 1,500 sq ft. The Owen Road and Casuarina Road properties were mortgagee sales.

A three-bedroom apartment at the freehold Eunos Mansion at Jalan Eunos which had been put up for auction by its mortgagee bank was withdrawn from sale yesterday morning on speculation that a collective sale could be in the works at the estate, which could result in the unit fetching a higher price, BT understands.

Source : Business Times - 27 Jun 2007

A Hong Kong company has won a case against the Comptroller of Income Tax who slapped it with a $3.3 million-plus tax bill after it sold 17 units in upscale Leedon Road.

The tax department said the sale by Madison Lighters & Watches Company, a wholly-owned subsidiary of Hong Kong property developer Far East Consortium International, was in the ordinary course of business and the profit was taxable.

But the company’s lawyer Edwin Lee, of Rajah & Tann, argued that the property was an investment and the gains were therefore capital in nature and non-taxable.

Madison appealed against the Inland Revenue Authority of Singapore’s (IRAS) ruling.

And the Income Tax Board of Review, chaired by former High Court Judge Goh Joon Seng, ruled in favour of the company.

Madison bought 17 of the 18 units at Leedon Court in September 1987 for a total of $10.77 million. Being a foreign entity, it could not buy the whole block, so the remaining unit was bought by a related company, Hepworth Investment.

All the units were sold en bloc to unrelated Glory Development on Nov 25, 1993 for $24 million, with Madison getting $22.67 million. IRAS served the company with a demand for $3.34 million tax in June 1995, being 27 per cent of its profit of $12.38 million for Year of Assessment 1995.

Madison’s auditors lodged an objection on July 4, 1995 saying the gains were capital in nature and therefore not taxable.

They also said that loan interest incurred in buying the property ought to have been tax deductible against rental income, and that with the exception of one item, IRAS had failed to convert the figures from Hong Kong dollars into Singapore dollars.

The review board, in finding in favour of Madison, notes that the company had consistently classified the property as an investment and ‘fixed assets’.

It also notes that the property was held for six years and was sold collectively in one lot to an unrelated buyer who made an unsolicited offer, that Madison was in a position to hold the property for the long-term and that it ‘was actually in a tax-paying position for most of the years during which it held the property’.

The board said: ‘We therefore find that it was the intention of the appellant (Madison) to acquire the property for long-term investment and for resale at a profit.’

It allowed the expenses to be deductible with the tax to be discharged on account of the bank loan interest agreed at $87,635.52.

The board also said IRAS wrongly used Hong Kong dollars in its computation of chargeable income and the tax to be returned as a result of this error was agreed at $265,009.59.

Source : Business Times - 27 Jun 2007

Its mortgage offers will use just one variable rate pegged to interbank rate

DBS Bank has become the first bank in Singapore to adopt full transparency in home loans by pegging all its packages to a public benchmark rate.

The move - described by DBS as ‘creating a new playing field’ - means it will use just one single variable rate in its new mortgage packages which will be pegged to the 12-month Singapore Interbank Offered Rate (Sibor).

Sibor is the rate at which banks lend to each other and because it is publicly disclosed, customers can get a clear indication of how their mortgage rate is calculated.

But it may not mean cheaper loans as Sibor reflects market forces, so customers may in fact be paying more than existing rates at certain times. But if Sibor falls, DBS customers could benefit more as other banks may be slower in lowering rates in tandem with market rate movements.

DBS’ move kicked in on June 15, the same day new industry guidelines took effect to give customers more clarity on how their mortgage rate changes over time.

DBS said its new policy is designed to ‘give customers more certainty about how their rates are determined’.

Its new floating rate loans will now be pegged to the 12- month Sibor - which is now at about 2.56 per cent plus a mark-up of 1.25 per cent added by DBS. This gives a floating rate of 3.81 per cent.

In contrast, OCBC Bank’s floating rate package is 3.25 per cent in the first year but hits 4 per cent in the third.

The 12-month Sibor for new packages is revised monthly depending on interest rate movements while DBS can alter the premium component as it wishes.

‘This is what customers have been asking for…we are now taking the lead to set a new standard for more benchmarked board rates,’ said DBS’ head of home loans, Mr Koh Kar Siong.

New customers will also avoid volatility as the 12- month Sibor for their particular package is adjusted annually in line with market forces, while the premium part is fixed for the loan duration.

DBS will also continue to offer its POSB Home Ideal package pegged to the Central Provident Fund rate, which is highly stable.

Consumer Association of Singapore executive director Seah Seng Choon praised DBS’ move: ‘We believe consumers will benefit as the interest rates are better understood. We expect the other banks to announce their own formula so that overall transparency will be enhanced.

But other banks are not following suit just yet. OCBC said the needs of customers ‘have become increasingly diverse’ so it is keeping its suite of fixed and variable rate packages and loans pegged to the Swap Offer Rates. These comprise the Sibor plus a bank’s lending costs.

‘On occasion, our loan packages may come with promotional interest rates that will be lower than our regular board rates,’ said Mr Gregory Chan, OCBC’s head of consumer secured lending.

Mr Kevin Lam, head of United Overseas Bank’s loans division, said the bank reviews its packages to ensure they are competitive.

Banking analysts noted that DBS had undertaken ‘a bold move’ as the effective rates of its new packages could in fact be higher than those of its rivals that have not pegged their rates to the Sibor. They may even be higher than DBS’ previous rates.

But Mr Koh said there cannot be ‘a direct apples-to-apples comparison’ between DBS’ Sibor-linked rates and other banks’ rates. ‘You would just be comparing DBS’ clear box to other banks’ black box.’

One analyst noted that DBS may have to offset a ‘marginal loss of market share with the higher spreads it can earn from charging a premium on the Sibor’.

Source : Straits Times - 27 Jun 2007

While the recent en-bloc property boom is making a million or two each for home owners, one of Singapore’s major Hakka clan associations has really hit the jackpot.

The Char Yong (Dabu) Association will pocket a cool $128 million from the sale of the 93,300 sq ft Char Yong Gardens condominium in the Cairnhill area.

The association - which owned 36 of the 106 units in the condominium sold to CapitaLand recently for $420 million - is now looking at how to best use the windfall.

Discussions have started on enriching clan activities, developing its youth wing, providing better care for old or needy members, as well as expanding its charity work.

The need for these talks nearly did not arise as some clan members had opposed the sale, despite the support of the 41-strong management council, said association president Lang Chin Ngau, 59.

If the dissenters had prevailed, the sale would have failed as the clan’s 36 units gave it more than the 20 per cent of votes needed to scrap the deal.

The opponents had noted that the flats sat on ancestral land and wanted it to stay that way. They also said a tree planted on the grounds in 1963 by Mr Lee Kuan Yew, now the Minister Mentor, should not be disturbed.

The issue was put to a vote in a special general meeting on Aug 27 last year. Of the 209 members who showed up, 168 voted for the sale and 23 opposed it. The other votes were declared void.

The Char Yong (Dabu) Association, founded in 1857, now has more than 2,000 members.

It bought the land in 1947 to house its office and the Khee Fatt School founded in 1906. But pupil numbers kept dropping and the school was handed over to the Ministry of Education in 1985.

The same year, the clan struck a deal with DBS Land and Char Yong Gardens was built in 1991. The clan’s 36 units were managed by The Ascott Group as service apartments, earning $4,000 a month each in 1995 - but rents slid to $1,500 in 2005.

Talks to sell the property began the next year.

Although the deal has now been sealed, the clan’s link to the land will not be completely lost

Said Mr Lang: ‘CapitaLand will give us priority to buy a few units in the development before it is open to the public.’

The tree planted by MM Lee will stay at the site or be relocated.

The focus now is on how to best use the $128 million, which the clan will get in 11/2 years’ time.

Its constitution dictates that one-third will go to the association for its operations, activities and charity work. The rest will go to the Char Yong (Dabu) Foundation for educational and cultural work.

Every year, the association hands out $250,000 in scholarships to pupils from Qifa Primary and Da Qiao Primary schools, and to members’ children. It also donates to charitable and cultural groups.

It recently gave $300,000 to the Confucius Institute Fund, making it the largest donor to the fund set up this year to establish a World Chinese Literature Award, and to fund the institute’s research projects and other events.

Mr Lang said plans to use and invest the money from the sale will be discussed thoroughly at management council and general meetings.

The association has three other properties which it rents out.

Source : Straits Times - 27 Jun 2007

MY FIANCEE and I joined the balloting for a four-room HDB flat in Bukit Merah in February under the Selective En-bloc Redevelopment Scheme (Sers) and we received a queue number in excess of 2,000.

Altogether, there were more than 2,100 applications for the four-room flats, of which only the first 1,000 applicants were invited to select from among 400-plus units.

According to the HDB website then, priority would be given to first-time buyers and those under the Married Child Priority Scheme (MCPS).

However, this did not appear to be the case in our case. My fiancee and I are first-timers and we qualify under the MCPS. We would thus have had four times more chances in the balloting than those who were second-timers or who were not living near their parents. If we had been given priority, why was our queue number in excess of 2,000?

I would like the HDB management to relook the balloting procedures for the Bi-monthly, Sers and other schemes.

Why not give priority to first-timers in the balloting? Newlyweds need a new home in which to start a family. Having just started working, resale flats, which cost much more, are beyond their reach, even with the $40,000 housing grant, especially amid the soaring property market.

Second-timers wanting to upgrade or downgrade their home can wait because they have a house to live in.

Moreover, the Government is encouraging young people to set up families early and to live near their parents.

How can we set up a family without a roof, especially when our parents’ place (a four-room flat) is small and congested?

I hope the HDB will look into this matter and resolve the problem quickly.

Leonard Tan Choa Wei

Source : Straits Times - 27 Jun 2007