Singapore: Overview

RENTAL YIELDS

Last Updated: May 07, 2009

Singapore, unchanged at 3.51%

Gross rental yields in Singapore average 3.51%, unchanged from last year.

Buying prices average US$12,295 per square metre, somewhat lower than last year’s average prices of US$13,686.  This reflects the rather substantial price falls Singapore has experienced.

The price fall in the 1st quarter this year was particularly bad, with a 14% price drop reported by the Urban Redevelopment Authority, and a 21% price fall over the year (or 22.7% after inflation).

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TAXES AND COSTS

Last Updated: Jan 30, 2008

Rental income tax in Singapore is high

Effective Tax Rate on Rental Income
Monthly Income	US$1,500	US$6,000	US$12,000
Tax Rate	15.1%	15.1%	15.1%
Click here to see a worked example
Source:			Disclaimer

Rental Income: Net rental income earned by non-residents is taxed at 20%. Property tax, insurance, maintenance and repairs are all deductible from gross rental income.

Property Tax: Property tax for rental properties is set at 10% of the annual value (i.e. the estimated rent if rented out). Foreigners pay an additional 10% surcharge.

Capital Gains: There is no capital gains tax.

Inheritance: Inheritance of properties located in Singapore is subject to estate duties at 5% and 10%.

Residents: Residents are taxed on their income at progressive rates, ranging from 3.75% to 21%.

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BUYING GUIDE

Last Updated: Nov 16, 2006

Roundtrip buying costs in Singapore can reach 6.45%

The total roundtrip costs are about 3.15% to 6.45%. Stamp duty is around 1% to 3%, and estate agent’s fee at 3% (2% paid by the seller and 1% paid by the buyer). Because Singapore uses a common database of all property listings, there is no sense in hiring more than one agent. To register the property, there are three procedures, typically done in nine days.

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LANDLORD AND TENANT

Last Updated: Jun 23, 2006

Singapore favours landlords

With the passage of the Control of Rent (Abolition) Act in 2001, the law in Singapore became clearly pro-landlord.

Rents: The parties can freely determine the rent and the rate of rent increase. Tenants usually pay a security deposit of one month’s rent for every year of lease.

Dispute Resolution: Most landlord and tenant disputes are resolved through mediation or Alternative Dispute Resolution, usually through groups such as the Consumer Association of Singapore (CASE) and Singapore Mediation Center (SMC).

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ECONOMIC GROWTH

Last Updated: Oct 16, 2008

Economic recession hits Singapore

Singapore is a small island-nation (only 93 sq. km.) at the tip of the Malaysian Peninsula in Southeast Asia. With a population of 4.6 million, it also has one of the highest population densities in the world. It boasts of a high standard of living (one of the highest in Asia and the world at US$32,082) per capita, world-class infrastructure, a highly competitive electronics export industry.

Singapore is remarkable in many ways. But it is heavily dependent on international trade, making it vulnerable to shocks in the global economy. This fact was highlighted by the contraction in 1998 due to the Asian Crisis, the global economic slowdown in 2001 and the current global financial crisis.

The economy is now officially in recession as of the third quarter of 2008, with GDP contracting by 6.3% in an annualised seasonally adjusted quarter-on-quarter basis, following a 5.7% fall in the second quarter. Overall economic growth for 2008 is expected to be around 3%.

The economy grew by 7.7% in 2007, following 7.9% GDP growth in 2006, 6.4% in 2005 and 8.7% in 2004.

Inflation soared from an average of 2.09% in 2007 to around 7.5% from April to June 2008, the highest in 26 years. Although inflation eased to 6.4% in Aug 2008, it was still way beyond the government’s target.

In response, the Monetary Authority of Singapore (MAS) shifted its foreign exchange policy from “modest and gradual appreciation” to “zero percent appreciation.” Monetary authorities said that the move was intended to boost competitiveness and economic growth.

However, authorities are in a dilemma. Keeping the exchange rate at its current level implies that inflation will be allowed to remain at a high level.