Someone mentioned about a mid-market project in Philippines which is very appealing to Singaporean investors who buy bulk Studio units. Want to find out more? Connect with me.
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Brief write-up on Philippines Property
Showing posts with label Overseas Property. Show all posts
Showing posts with label Overseas Property. Show all posts
If You Are Considering Overseas Property - JAPAN
Why invest in Japan?
1. Supportive economic policies
Japanese government is determined to end a two decade period of lacklustre growth. Its new prime minister, Shinzo Abe, has pushed through aggressive economic reforms called “Abenomics” in a bid to kick-start growth and end stagnation. It involves a massive increase in fiscal stimulus through government spending, a massive increase in monetary stimulus through unconventional central bank policy and a reform program aimed at making structural improvements to the Japanese economy. In some ways, this is effectively the same strategy that has been used in both the United States and the United Kingdom and is known as quantitative easing. Quantitative easing has been the stimulus for housing prices in both the US and UK.
2. Political stability
With the Liberal Democratic Party (LDP) winning both the Lower House and Upper House Elections in 2012 and 2013 respectively, the Abe government will not see another election until summer 2016. This would give the Abe government sufficient time and power to implement “Abenomics” effectively. This is favourable to foreign investors as the political stability of the Japanese government would imply lower overall risks for foreign investors in general.
3. Rising land prices
Developed land prices in Japan have started to rise in general, with data showing that 81% of intensively used land in Japan showed increases in prices in 4Q2013. Rising land prices bodes well for the Japanese real estate market, and would provide considerable upward pressure for property prices to increase.
4. Strong rental market
Like Singapore, major cities in Japan enjoy high occupancy rates. Based on fund and REIT data, the residential occupancy rates for Tokyo is around 95%. Furthermore, rents in Tokyo seem to be non-cyclical in nature, remaining resilient even during downturns. High occupancy rates and stable rental yields would drive demand for investment in Japan.
5. Olympic boost
Winning the rights to host the world’s biggest sporting event is positive for Japan’s revival efforts. The 2020 Olympics would be the best opportunity to showcase Japan’s developed infrastructure, high standard of living and unique culture. This would drive tourism growth and create increased demand for Japanese real estate.
Source: OrangeTee.com retrieved 22 Aug 2014
If You Are Considering Overseas Property - AUSTRALIA
Australia is a developed country with the world's 12th largest economy. In 2012, Australia's capita per income was the world's fifth highest. Australia comprises the mainland of Australian continent, the island of Tasmania and numerous small islands.
To buy a completed property in Australia, you must have been a resident for at least 12 months or be buying in partnership with a resident if you meet certain conditions. If you do not qualify as a resident, you may still buy a newly developed property (uncompleted from housing developers).
Property Type
Residential ownership in Australia is usually freehold, unless it is in Canberra. Canberra is also known as the Australian Capital Territory (ACT) , where land or housing unit is leased to the purchaser for a period of 99 years under a “Crown Lease”. At the end of that period, the Crown Lease will usually be extended for the payment of an administration fee.
Restrictions
For resale property, owners can only resell their properties to the local residents. Under Australia's Foreign Investment Review Board (FIRB) rules, a foreigner needs permission from FIRB before they can purchase residential property in Australia.
Australian Visas
With the exception of Australian citizens, anyone entering Australia requires a visa. The Australian visa system is complex as there are many visa categories: apart from the Visitor category, there are also temporary resident (e.g. business long term or retiree visas), or permanent resident categories (e.g. Family Migration, Skilled Migration, Employer Nomination or Business Skilled). Each category has its own range of visa subclasses.
Notable Locations
Melbourne is the capital and most populous city in the state of Victoria, and the second most populous city in Australia after Sydney. It is also home to approximately 4 million people. Melbourne is rated highly in education, entertainment, healthcare, research and development, tourism and sports.
Sydney is the state capital of New South Wales and the most populous city in Australia.
Brisbane is the capital and most populous city in the Australian state of Queensland and the third most populous city in Australia. Brisbane's metropolitan area has a population of 2.24 million, and the South East Queensland urban conurbation, centred on Brisbane, encompasses a population of more than 3 million.
Perth is the capital and largest city of the Australian state of Western Australia. It is the fourth most populous city in Australia, with an estimated population of 1.97 million living in Greater Perth. Located at the very edge of Western Australia, it boasts a modern city with a rich history and the best beaches in Australia.
Sydney is the state capital of New South Wales and the most populous city in Australia.
Brisbane is the capital and most populous city in the Australian state of Queensland and the third most populous city in Australia. Brisbane's metropolitan area has a population of 2.24 million, and the South East Queensland urban conurbation, centred on Brisbane, encompasses a population of more than 3 million.
Perth is the capital and largest city of the Australian state of Western Australia. It is the fourth most populous city in Australia, with an estimated population of 1.97 million living in Greater Perth. Located at the very edge of Western Australia, it boasts a modern city with a rich history and the best beaches in Australia.
Location rules
For investors, the best locations are usually in suburbs 4-8 km from the CBD. For standalone houses, the best locations tend to be a little further out, around 6-12 km from the central areas.
Financial Regulations for Foreigners:
When a person buys a property, the purchaser can pay the full amount for the property, or borrow part of the purchase price from a financial institution. In the latter case, in exchange for the loan, title in the property would normally be held by the financier as security.
| Loan*: | Up to 70% of purchase price | ||
| Tenure: | 25 years or Age of 75 (whichever is lower) | ||
| Interest rate: | 3M Sibor + 2.5% | (Loan in SGD) | |
| Or | |||
| 3M Sibor + [2.75% to 3.25%] | (Loan in AUD) | ||
*In order to qualify for loan, the property has to be more than 50 square metres in size.
Stamp Duty:
0.3% to 2.5% of the purchase amount, depending on where the property is. Annual land tax might also be imposed if property is worth more than a certain amount. The amount depends on property classification for tax purposes and property location.
Tax Incentive:
| Building write-off: | 25% of Building Value | |
| Depreciation value: | 15% of expenses required to maintain building. | |
| Borrowing expenses: | Depends on each case |
Residents:
Residents are taxed at a progressive rate on their annual income, from 0% to 45%. A 1.5% Medicare levy is also imposed.
Non-Residents:
The income tax rates for individuals ranges from 29% to 45% for non-residents.
Capital Gains
Individuals are subject to a 50% reduction of the taxable gain if the asset is held for at least 12 months. Capital gains follow the individual income tax rates, at rates from 29% to 45% for non-residents.
Inheritance
There are no direct taxes on inheritance.
Roundtrip transaction costs
All costs associated with opening and closing a financial or other transactions are usually 7% to 12% of the property value. The costs include registration fees, legal expenses, listing fees, agent's commission and transfer taxes. Stamp duty on property transfers ranges from 1.5% to 6.75%, and is paid by the buyer. The duration taken to complete the procedures needed to register a property takes around 10 to 11 days.
Source: OrangeTee.com retrieved 22 Aug 2014
If You Are Considering Overseas Property - MYANMAR
Why invest in Myanmar?
1. Political & Economic Reforms
The country is in the midst of political and economic reforms. Recent changes to the Foreign Investment Law improved its clarity and enhanced its attractiveness for foreign investors. Asian Development Bank expects Myanmar to become a middle-income nation by 2030 with an average annual growth rate of 7-8 percent for the next decade.
2. Strategic Location
Myanmar, second largest country in Southeast Asia, has a population of over 59 million. It has a geo-strategic location, bordering China, India, Bangladesh, Thailand and Laos. Once the country is opened up, it has great potential to become a prosperous trading hub in ASEAN.
3. Potential in property market
The supply situation in Myanmar is very tight, attributed by the lack of new project development over the past few decades. A one-bedroom serviced apartment can be leased for about US$2,000 per month, comparable to many metropolitan cities around the world. Due to the latest development in the country with expatriates and companies rushing in to invest, investors could gain first-mover advantage should the country continues to open up to the outside world.
Source: OrangeTee.com retrieved 22 Aug 2014
If You Are Considering Overseas Property - MALAYSIA
Property Tenure/ Ownership
| ♦ | Freehold | |
| ♦ | Leasehold [Term not more than 99 years] |
Ownership of property is denoted by a register title.
Title Deed
An entire piece of land during construction and development phase will most probably fall under a single “Master Title”
Normally, multiple houses or apartments would be built on this land and sold off individually. After the subdivision, the individual lots will fall under a new title.
For landed properties : Individual Title
For high-rise properties : Strata Title
For landed properties : Individual Title
For high-rise properties : Strata Title
Transfer of Ownership
A memorandum of transfer has to be filed in order to transfer ownership.
|
Notable Locations
| Kuala Lumpur : | KLCC, Mont Kiara, Bangsar, Damansara, Cyberjaya, Kenny Hill | |
| Penang : | George Town, Batu Ferringhi | |
| Johor : | Iskandhar |
Restriction on ownership
For non-residents investing in real estate, they must purchase properties that are worth at least RM1 million. If they purchase landed property in Penang, the value has to be at least RM2 million.
Foreigner’s ownership quota on Johor properties
|
Financial Regulations
Loan-to-Value(LTV) Limits
| Non-Singaporean foreigners : | 60% of Purchase price | |
| Singaporeans : | 80% of Purchase price | |
| Locals : | 90% of Purchase price |
For Johor properties; however, the LTV limits are different.
Loan-to-Value (LTV) Limits (JOHOR)
| Non-Singaporean foreigners : | 50-60% of Purchase price | |
| Singaporeans : | 70% of Purchase price | |
| Locals : | 80% of Purchase price |
Loan Tenure
35 years or age of 70 years [whichever is earlier]
Interest Rate
Base Lending Rate(BLR in short) – (fixed rate)= interest rate
The Base Lending Rate (BLR) is a minimum interest rate calculated by financial institutions based on a certain formula. This formula takes into account the institutions cost of funds and other administrative costs.
The current BLR is 6.6%, fixed rate ranges from 2.1%-2.4%.
Upfront Costs
Fees and other costs that a buyer incurs upon property transaction are known as upfront costs. When investing in Malaysian properties, some of the upfront costs include:
Foreign Investment Committee/ State Consent Costs
| Johor : | 2% of Purchase price | |
| Other States : | RM2000 (estimation) |
Sales and Purchase Agreement [SPA] legal fee
| RM150,000 - 00 or below | - 1% (minimum fee is RM300) | |
| RM150,001 - RM1,000,000 | - 0.7% | |
| RM1,000,001 - RM3,000,000 | - 0.6% | |
| RM3,000,001 - RM5,000,000 | - 0.5% | |
| RM5,000,001 - RM7,500,000 | - 0.4% | |
| > RM7,500,000 | - Negotiable but shall not exceed 0.4% |
Stamping of loan agreement
0.5% of loan amount
Loan legal fees (Based on loan amount)
| RM0 - RM150,000 | 1% | |
| RM150,001 - RM1,000,000 | 0.7% | |
| RM1,000,001 - RM2,000,000 | 0.6% | |
| RM2,000,000 & above | 0.5% | |
| Additional RM600 charged for miscellaneous fees. | ||
Holding Costs
| Maintenance & Sinking Fund : | (0.3cents- 0.45cents) per square foot | |
| Tenancy Management Fee : | 5%-8% of gross rental |
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Taxes
Individual Taxation
| Real property gain tax | 1ST 5 Years: 30% | |
| 6TH year and subsequent: 5% |
Personal Taxation
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Gains arising from the disposal of real property situated in Malaysia or of interest, options or other rights in or over such land as well as the disposal of shares in real property companies, are charged Real Property Gain Tax(RPGT).It is levied on progressive rates and depends on the property’s ownership period and holding period prior to sales.
RPGT rates
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Personal Taxation
Assessment Tax: Based on Malaysian government's rent value and on a % of the AV (Maximum: 35% of Annual Value)
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No specific tax is levied on property owners. However, individual state governments levy a land tax known as ‘quit rent’ which is payable yearly.
Quit Rent: 1-2 cents per square foot (rate varies with land category and size.)
Corporate Tax
Income and capital gains earned by companies are subjected to corporate income tax: 25% (Rate falls to 24% with effect from 2016)
Capital gains tax
|
Others
Carparks are included in purchase price. Payments for developments under construction, are made progressively, based on payment schedule.
Source: OrangeTee.com retrieved 22 Aug 2014
If You Are Considering Overseas Property - PHILIPPINES
Consisting of 7,107 islands, Philippines is a sovereign island country in Southeast Asia situated in the western Pacific Ocean. The Philippines is also a tropical country with fascinating landscapes. By law, foreigners do not have the right to acquire land in the Philippines. The simplest way for a foreigner to acquire real estate properties is to have a Filipino spouse purchase a property in his/her name.
Reasons to Invest In Philippine Real Estate:
1. Philippines economy is poised to rise
Philippines GDP rose 7.2 percent in 2013, after gaining 6.8 percent in the previous year. A recovery in developed economies may help the Philippines reach its GDP growth target of 8.5% in 2014 as it aspires to transform into a manufacturing hub. The World Bank forecasts growth will exceed 6 percent every year until 2015. With tame inflation, higher foreign exchange reserves, and a $16 billion infrastructure program, the Philippines economy is poised to rise.
2. More capital inflows expected
In 2013, Philippines credit ratings were upgraded to investment grade by all 3 credit rating agencies. Securing a better credit rating would allow Philippines to attract more capital as it is deemed to be less risky. Foreign direct investment in the Philippines has increased by 20 percent year on year in 2013. Overall business conditions would improve and flourish as more foreign capital is invested. This would have positive spillover effects on the real estate market.
3. Developing tourism industry
The Philippines recorded 4,681,307 visitor arrivals in 2013 compared to 4,272,811 in 2012, representing a 9.6% year on year increase. South Korea remained the biggest source of tourists accounting for 25% of the country’s visitor arrivals in 2013. Visitors from America, and China made up about 15% and 9% respectively of the total tourist arrivals in 2013. Chinese visitors are set to increase due the opening of new regular and chartered air services and increase in cruise itineraries. The booming tourism industry correlates positively for properties in the Philippines.
Property Type
Freehold
In the Philippines, only Filipino citizens or corporations with more than 60% equity held by Filipinos are allowed to own freehold private land. Foreigners and foreign establishments may own up to 40% of condominium development. 100% ownership of the unit can be under their names with individual condominium titles or Condominium Certificate of Title.
Leasehold
Only Philippine nationals are allowed to own public lands on leasehold tenure. Foreign corporations seeking to lease private land are subject to certain restrictions.
In the Philippines, only Filipino citizens or corporations with more than 60% equity held by Filipinos are allowed to own freehold private land. Foreigners and foreign establishments may own up to 40% of condominium development. 100% ownership of the unit can be under their names with individual condominium titles or Condominium Certificate of Title.
Leasehold
Only Philippine nationals are allowed to own public lands on leasehold tenure. Foreign corporations seeking to lease private land are subject to certain restrictions.
Resale
Purchasers can re-sell the property to either local, foreign, or corporation buyers. Same taxes apply to local or foreign buyers.
Title
Transfer Certificate of Title (TCT) – title for land
Condominium Certificate of Title (CCT) – for condominiums and townhouses
Condominium Certificate of Title (CCT) – for condominiums and townhouses
Notable Locations
Metro Manila, is an urban area that composes different cities and the surrounding urban fringe. With a land area of 636 square kilometres, Metro Manila has a population of more than 10 million. Quezon, the biggest city in Manila, holds more than 2 million inhabitants.
Financial Regulations for Foreigners
Loans for foreigners are possible with a loan quantum of up to 60%. The maximum loan tenure is 5 years and interest rates ranges between 6.88% and 9%.
Costs involved when buying a unit
| • | Documentary Stamp Tax: 1.5% of zonal value or price whichever is higher | |
| Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or property incident thereto. The DST should be paid within 5 days after the close of the month when the taxable document was made, signed, issued or transferred. | ||
| • | Transfer Tax (for Makati City): 0.6% of zonal value or price whichever is higher | |
| A transfer tax is imposed on tax on the sale, donation, barter, or any other mode of transferring ownership or title of real property. The transfer tax provides evidence of its payment is required by the Register of Deeds of the province concerned before registering any deed. | ||
| • | Registration Fee = 0.45 to 0.50% of price (Payable upon TOP) | |
Other Taxes
| Capital Gains Tax | |||
| Capital Gains Tax is a tax imposed on the gains presumed to have been realised by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional sale. | |||
| Value Added Tax | |||
| Transactions involving sale, lease or sub-lease of real property by persons engaged in the business of selling, developing, leasing or sub-leasing of real property are subject to VAT .VAT rates are as below: | |||
| 12% of the gross receipts for lessors; | |||
| 10% of the gross selling price or zone value, whichever is higher, for cash sale or deferred plan sales; | |||
| 10% of instalments received or constructively received for instalment plan sales. | |||
| Creditable Withholding Tax | |||
| Transactions involving sale, transfer or exchange of real property classified as ordinary assets, shall be subject to creditable withholding tax. CWT is charged on: | |||
| 1. | Any person with respect to payment made in connection with his trade or business (to be registered as withholding agent of the BIR). | ||
| 2. | Individual buyers not engaged in trade or businesses are also constituted as withholding agents but they need to register as such with the BIR. | ||
| If seller or transferor is habitually engaged in real estate business with proof of registration with HLURB or HUDCC: | |||
| 1.5% of Purchase price - selling price < P500, 000 | |||
| 3% of Purchase price - Selling price is > P500, 000 but < P2 Million | |||
| 5% of Purchase price - Selling price is > P2 Million | |||
Individual Taxation
Individual resident citizens are taxed on their worldwide income, while non-resident citizens as well as resident and non-resident foreigners are taxed on income derived in the Philippines only. Foreigners who are permanent residents of the country but do not have citizenship, are subject to a flat tax rate of 25 % on gross income that is derived from within Philippines if their stay in the country does not exceed 180 days. (exchange rate 1 Philippine Peso = 0.029 Singapore Dollar)
Source: OrangeTee.com retrieved 22 Aug 2014
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