Building Wealth in Singapore: What First-Time Luxury Property Buyers Must Know

singapore aerial view waterway city
Everything a first-time luxury property buyer should know about Singapore’s wealthy neighborhoods.

Singapore’s wealthy neighborhoods often come to mind when luxury property buyers and investors think about building wealth. Since 2020, more people have focused on acquiring larger homes because of a bigger need for space.

The trend emerged as part of adapting to the “new normal” post-pandemic. As expatriates and locals in Singapore became forced to acclimate to remote work, many realized that living in confined quarters can be more stifling than you expected.

Whether it’s a high-end apartment or luxury home, first-time buyers should take note of the following nuances for purchasing properties in Singapore’s wealthy neighborhoods.

brilliance capital singapore real estate company city profile

Brilliance Capital is a full-service real estate agency that assists and advises UHNWIs, local and foreign families, as well as property developers, publicly listed companies, and local and overseas private funds on the purchase and sale of real estate assets.

Choose A Reputable Agent

Finding a reputable agent is arguably the most important step before you engage in a luxury property transaction in Singapore or elsewhere. A legitimate real estate agent or brokerage must be registered with the Council for Estate Agencies (CEA). Prospective buyers can find a company or individual’s registration details from the CEA website.

Once you enter a registration number, you’ll discover key information such as a registrant’s awards and disciplinary actions. This helps you with conducting due diligence, but it’s also useful to look into a company’s overall reputation in the industry.

For example, Brilliance Capital is a full-service real estate agency with over SGD 400 million (US $291.7 million) in successful transactions during its debut year. The agency has worked with ultra-rich individuals and publicly listed companies. For this reason, its services align with a buyer’s goals of acquiring property in Singapore’s wealthy neighborhoods.

Singapore, Singapore Gorgeous Industrial-Style Semi-Detached House in Singapore

This industrial-vibe residence in Singapore’s Greenbank Park area is listed for SGD 9.98 million (about US $7.4 million). (Brilliance Capital)

Know The Annual Rate Of Property Taxes

Many first-time luxury property buyers tend to forget the implications of taxes, especially on a yearly basis. For example, the Inland Revenue Authority of Singapore (IRAS) imposes taxes on owner-occupied luxury properties by calculating their annual values (AV).

Let’s say you plan to buy a gorgeous industrial-style, semi-detached house in Singapore for almost SGD 10 million (US $7.4 million).

If the property’s current annual value reaches SGD 30,000 (US $21,880), you can expect to pay SGD 3,000 (US $2,190) in annual taxes. Here are the steps for determining the AV:

  1. Find out the property’s AV.
  2. Check the tax rate corresponding to the AV.
  3. Multiply the AV with the tax rate (e.g. SGD 30,000 x 10%).

The IRAS allows anyone to check the current AV of a property and during the last five years through the Check Annual Value of Property service. Each successful inquiry costs SGD 2.50 (US $1.80). The IRAS waives the fee if you’re checking the AV of your own property.

Remember that you mustn’t rent out the property to enjoy tax rates for owner-occupied residences. The same rule applies if you buy a luxury apartment.

singapore condominiums at night

Condominiums in Singapore’s wealthy neighborhoods are popular among investors because the purchase does not require approval from the government.

Learn About Industry Regulation For Foreign Property Purchases

Many foreigners purchase homes in Singapore’s wealthy neighborhoods because they can be purchased without needing approval from the Singapore Land Authority (SLA). These types of properties include:

  • Private condominiums
  • Private executive condominiums
  • Landed (e.g. stand-alone homes) in Sentosa Cove
  • Other landed properties with SLA’s special permit

Foreigners also acquire private properties such as condos because the rules are less strict. Several private properties are also near Singapore’s central business district, which is a key selling point for buyers who want convenience.

While buying non-landed private properties is relatively easier, foreigners still encounter challenges when acquiring landed property on the main island. You must contact the SLA’s Land Dealings Approval Unit if you plan to buy any of these properties:

  • Bungalows or detached houses
  • Semi-detached homes
  • Shophouses for non-commercial purposes
  • Townhouses or cluster homes
  • Vacant residential lots

The SLA will more likely approve purchases applications if buyers can prove “an exceptional economic contribution to Singapore,” according to the government authority. These economic factors include your assessable taxes and income. You should also be a permanent resident for more than five years.

looking up at the sky at a plane passing over singapore skyscrapers

The usual option period for luxury property purchases in Singapore lasts for two weeks, but you can negotiate an extension for up to two months.

Ask For An Iron-Clad Contract

An option-to-purchase (OTP) contract exists to provide buyers with exclusive purchasing rights. Think of it as a reservation for buying a property at an agreed-upon date. In other words, you don’t have to worry about a competing bid for a property if you sign an OTP agreement.

The usual option period for luxury property purchases in Singapore lasts for two weeks, but you can negotiate an extension for up to two months.

First-time luxury property buyers in Singapore’s wealthy neighborhoods should also take note of fees for processing. The standard rate is 1% of a luxury property’s purchase price. While the actual rates may vary, an OTP agreement must contain the following details:

  • Applicable option fee
  • Option period
  • Property details
  • Buyer and seller information

The CEA provides specific guidelines for OTPs to educate buyers about the best practices in Singapore.

the singapore skyline and neon lights at night

An option-to-purchase (OTP) contract exists to provide buyers with exclusive purchasing rights.

Conclusion

First-time luxury property buyers in Singapore’s wealthy neighborhoods should find a competent agent or broker before anything else.

By doing so, you can ask them to explain anything that you don’t understand about contracts, property taxes and regulations. Click here for a full directory of brokerages in 135 locations worldwide.

get the best forbes global properties luxury real estate insights in your inbox each month

Author

Randolf Santos has covered different segments of the real estate industry since 2014. He worked at S&P Global Market Intelligence before joining Forbes Global Properties as a contributor. You can reach him at randolf.santos@gmail.com.

Properties You Might Also Like

SGD 6,860,000 (US $5,086,100)
Singapore, Singapore, Singapore

A prestigious development and one of the largest in Singapore

SGD 9,980,000 (US $7,399,312)
Singapore, Singapore

Gorgeous Industrial-Style Semi-Detached House in Singapore

Related