Property Investment

Square Yards slapped with fine, six-month ban

Square Yards slapped with fine, six-month ban

The Council for Estate Agencies has taken Square Yards Singapore Pte Ltd to task for failing to provide a written advisory message to an investor to draw his attention to the risks involved in purchasing foreign properties.

SPR News - Recovery in Luxury Homes and Offices

SPR News – Square Yards slapped with fine, six-month ban

Besides slapping a financial penalty of S$7,500 on the two-person agency, CEA has – for the first time concerning foreign properties – imposed a condition to Square Yards’ licence that it is not to market or transact in any foreign property for six months with effect from March 1, 2017.

The previous time a licence condition was imposed was last year, when HSR International Realtors was banned from undertaking any collective sale work for one year from April 220, 2016.

In the case of Square Yards, the investor had bought a property in North Dakota in the United States for US$74,950 through the agency. He made partial payment of US$33,982.50 to the US developer in 2014 and was not able to recover the sum after the developer was charged for alleged fraudulent activities.

Square Yards was charged for breaching the Practice Guidelines for Estate Agents and Salespersons Marketing Foreign Properties (PGMFP) and the Code of Ethics and Professional Client Care (CEPCC) under the Estate Agents Act.

In early August 2014, Square Yards and US developer North Dakota Developments LLC conducted a seminar in Singapore to promote and sell the Transhudson Hotel, Parshall Project, located in North Dakota. The US developer also introduced its other project – the Great American Lodge, Montana Project – to prospective investors at the seminar.

After the seminar, the investor bought a unit at the Transhudson Project through Square Yards at a purchase price of US$74,950. He paid a total of US$33,982.50 to North Dakota Developments LLC in mid-September 2014, which included the booking fee, closing fee, and balance of the first stage payment. Square Yards subsequently received about US$3,900 as commission for this transaction.

“Throughout the transaction process, Wai Yin Peng Shermaine, key executive officer of Square Yards, and her property agents did not provide the investor with a written advisory stating that he must conduct due diligence,” the CEA said.

“They did not highlight to the investor the risks that are involved for foreign property consumers and that the transaction is subject to foreign laws, and to any change in policies and rules in the US.”

Investigations also revealed that Square Yards had facilitated the sale of two other units – one investor had purchased a unit at the Transhudson Project, and another investor at the Montana Project. The three investors paid a total of US$112,279.50 to North Dakota Developments LLC.

But around May 5, 2015, the US Securities and Exchange Commission charged North Dakota Developments LLC for allegedly raising over US$62 million fraudulently from investors worldwide through the sale of interests in the development of housing projects based in the US, including the Transhudson and Montana Projects.

These three investors have not recovered the amounts they have paid to North Dakota Developments LLC.

Under the PGMFP, however, estate agents appointed by the developer “shall provide a written advisory message to the consumers that they must conduct due diligence, drawing their attention that risks are involved for foreign property consumers and that the transaction is subject to foreign laws, and to any changes in policies and rules in the country where the property is located”.

Estate agents and salespersons must also perform their work in accordance with applicable laws and must not perform estate agency work that they are engaged to perform unless they have the relevant knowledge to do so, including having to be fully conversant and compliant with the Estate Agents Act and the policies, practice circulars and guidelines of the CEA.

Adapted from: The Business Times, 20 January 2017

Singapore investors pumped US$9.7b into Asia-Pac property in 2016

Singapore investors pumped US$9.7b into Asia-Pac property in 2016

Singapore investors ploughed more capital into real estate in the Asia-Pacific last year than a year earlier, with land and offices topping their list of purchases, even as their acquisition fervour back home continued to ease.

SPR News - Singapore investors pumped US$9.7b into Asia-Pac property in 2016

SPR News – Singapore investors pumped US$9.7b into Asia-Pac property in 2016

Outbound real estate investments in the region by Singapore investors rose 31.8 per cent to US$9.7 billion, while domestic investments slipped 20.7 per cent to US$4.8 billion.

The S$4.1 billion acquisition of commercial property Century Link in Shanghai Pudong by a fund set up by Singapore-listed ARA Asset Management with China Life and South Korea’s Peninsular Investment Partners stood as the biggest single-property purchase in the region last year.

With cooling measures still in force in their home market, Singapore developers have continued to look for opportunities abroad.

Depreciation risks of the yuan also spurred more real estate deals by Chinese investors outside the country. Their outbound real estate investments in the Asia-Pacific surged 66.2 per cent to US$13.4 billion, while their investments within mainland China grew 6.9 per cent to US$337.7 billion.

Amid lingering concerns over yuan weakness, well-capitalised Chinese developers piled into land and office deals in Hong Kong, setting new price benchmarks there. Being at the doorstep and having a currency pegged to a strengthening greenback, Hong Kong ticked all the boxes.

While the broad outbound trend among Singapore and Chinese investors is likely to persist in the medium term, global macroeconomics will dictate investment dynamics and allocations this year.

If the Fed hikes rates continually, the strengthening US dollar could benefit the region as Asia-Pacific investors focus their firepower at home, and the region will also offer more value to European and US investors.

Chinese and Singapore investors were the region’s dominant real estate investors, making up a third of total foreign investments in the region. Notably, China and Singapore were also the top two Asian sources of foreign capital in the US and Europe last year. Real estate investments by Chinese investors in the Americas jumped 57.1 per cent in 2016 to US$16.3 billion.

Singapore developers, Reits and institutional investors will remain the most active outbound investors and are looking to raise their exposure in the emerging markets of India and South-east Asia.

Chinese insurers are also expected to shore up their overseas real estate allocation, which now represents only 2 per cent of their total assets, below the 15 per cent ceiling. However, new capital controls implemented by China could slow the overseas buying seen in the last two years. While more cross-border transactions will be inevitable, the days of mega-deals are likely over.

Last year, office and land deals each accounted for 24 per cent of global investments by Singapore investors. Land deals made up 88 per cent of all real estate investments by Chinese investors, followed by office (6 per cent) in 2016.

Opportunities to buy into prime office assets in the region’s gateway markets remain limited and highly sought-after by core investors.

Given healthy occupancy rates, office assets in the region still offer good earnings visibility, so the lower yields are an acceptable trade-off for core investors. Meanwhile, developers in Singapore and China also have a ready home market to tap when selling overseas residential projects, especially in top-tier cities.

Last year, the top overseas destinations for Singapore real estate investors were China, the UK, the US and Australia; while the US, Hong Kong and Australia were the top outbound venues for mainland Chinese real estate investors.

Adapted from: The Business Times, 13 January 2017