Singapore: Overview

RENTAL YIELDS

Slightly higher yields in Singapore at 3.5%

Gross rental income on apartments in Singapore have increased but are still considered very poor. The average yield is at 3.52%, with smaller units getting returns only as high as 4.19%.

Apartments at the centre are still expensive, with a 120-sq. m unit selling at US$10,723 per sq. m. Prices average around US$13,686 per sq. m.

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TAXES AND COSTS

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%
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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

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

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

Small city-state is an economic giant

Singapore is a small island-nation (only 93 sq. km.) at the tip of the Malaysian Peninsula in Southeast Asia. With a population of 4.5 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, and a wild array of experiences for tourists.

Singapore is remarkable in many aspects of development. But it is heavily dependent on trade, making it vulnerable to shocks in the global economy. This fact was highlighted by the contraction in 1998 due to the Asian Crisis, and a recession in 2001 due to various international events, primarily the 9-11 terrorist attack on the US.

The recent recovery in the housing market is mainly due to strong economic growth, boosted by strong manufacturing sector growth. The GDP growth rate in 2007 was 7.7%, after 7.9% growth in 2006, which again followed strong GDP increases in 2005 (6.4%) and 2004 (8.7%).