Singapore has one of the most expensive real estate markets in the world and was placed only second behind Hong Kong in 2020, with prices averaging at USD 874,372 per home.
To protect its middle class and locals in general, a series of new regulations have been imposed on foreign buyers and speculators. Truth be told, Singapore is not the easiest place to buy land as a foreigner, but it is possible.
In this article, we cover the most important information for land buyers.
Topics covered:
- Can foreigners buy land in Singapore?
- Regulations to Foreign Property Ownership
- Buying Property on Sentosa Cove
- How much does it cost to buy property in Sentosa Cove?
- Is Sentosa Cove freehold?
- Restrictions to Foreign Ownership of Property
- How can I contact the SLA for land purchases?
- Who owns the most land in Singapore?
- What taxes do I have to pay when buying land?
- Land Sale Procedures
Can foreigners buy land in Singapore?
Singapore might have a transparent system and the ease of doing business is significantly high compared to other regional countries.
However, due to its small size and the great influx of foreign investors, there are protectionary measures in place to prevent foreigners from acquiring certain types of real estate.
Property types that foreigners generally don’t have any issues to buy include:
- Condominium units and apartments
- Strata-landed houses in approved condominium developments
- Landed properties on Sentosa Cove
- Leasehold units in landed residential property with a leasehold term that does not exceed 7 years. You can also be granted an option for renewal
To encourage foreigners to invest in real estate, the exclusive island of Sentosa Cove was launched where it’s comparably easy to get access to residential land.
Regulations to Foreign Property Ownership
Buying land in Singapore is tricky in the sense that you have to fulfill the following two requirements as a foreigner:
- You should be a permanent resident of Singapore for at least 5 years
- Make significant economic contributions to Singapore
These two requirements are assessed by looking at your employment income assessable for tax in Singapore. As mentioned, each purchase is scrutinized on a case-by-case scenario.
Fulfilling the second requirement is always a gray area and it’s, of course, generally easier to get hold of real estate if you have decent financing.
With that said, many foreigners decide to incorporate a company to invest in real estate.
To become classified as a local, incorporating a local company or private fund are two of the most popular options.
Yet, this requires that you work with an experienced partner that is reliable and sufficient knowledge of local regulations.
If you fit into this category, feel free to send us a message through the form or write a comment below, and then we will review your request.
Buying Property on Sentosa Cove
Sentosa Cove is a high-end and established waterfront development located right at the oceanfront in Singapore.
It’s a residential community and the only area where foreigners can freely buy landed properties, without the need of going through lengthy approvals first.
Purchases can sometimes be done in as little as 48 hours.
Interestingly, Sentosa Cove is managed by Sentosa Cove Pte Ltd (SCPL) that belongs to Sentosa Development Corporation.
It’s a government statutory board that manages the infrastructure development, project management, planning, and all the land sales at Sentosa Cove.
The first land plot was sold as late as 2001 and the first residential development finalized in 2003. Not surprisingly, real estate prices are in the upper range and some of the most expensive in the city here.
How much does it cost to buy property in Sentosa Cove?
To give you a better understanding of how expensive Sentosa Cove is, I have randomly selected a handful of landed properties that are up for sale on PropertyGuru.
Below you can find the units listed, including details and the listing prices.
Unit 1
- Price: SGD 17,790,000 (USD 13,276,119)
- Size: 2,092 sq.ft. (882.89 sq.m.)
- Tenure: 99-year Leasehold
- Rooms: 6 bedrooms, 5 bathrooms
- Facilities & Amenities: Audio System, Balcony, Bathtub, Private Garden, Lake View, Furniture, Outdoor Patio, Private Pool, Walk-in-wardrobe
Unit 2
- Price: SGD 30,000,000 (USD 22,388,059)
- Size: 9,500 sq.ft. (194.42 sq.m.)
- Tenure: 99-year Leasehold
- Rooms: 5 bedrooms, 7 bathrooms
- Facilities & Amenities: Balcony, Bombshelter, Garage, Private Garden, Jacuzzi, Maids Room, Outdoor Patio, Private Pool, Roof Terrace, Sea View, Terrace/Roof terrace, Walk-in-wardrobe
Even if prices are still some of the most expensive, we’ve seen major drops in the past decade. Since 2011, prices have been reduced by as much as 30%. Instead, the interest has shifted towards the mainland.
The island has suffered greatly from the great increases of the buyer’s stamp duties, which are primarily targeted at foreign investors. This is a measure taken by the government to cool down the market and to prevent speculations.
Is Sentosa Cove freehold?
On the contrary in the mainland in Singapore Sentosa Island and Sentosa Cove only have leasehold properties.
This is the reason why many wealthy locals have turned to the mainland instead and to get access to freehold property, which is widely available there.
Restrictions to Foreign Ownership of Property
The Singapore Land Authority (SLA) was founded as late as 2001 and succeeded the Land Office, Singapore Land Registry, Survey Department, and Land Systems Support Unit.
In short, they primarily work with development and regulatory issues related to land resource optimization.
According to the SLA, have to get approval from the Land Dealings Approval Unit before you buy any of the following property types:
- Vacant residential land
- Semi-detached houses
- Terraced houses
- Bungalow/detached houses
- Shophouses for non-commercial use
- Strata-landed houses that are not part of a condominium development under the Planning Act
Worth mentioning is that each case is reviewed on a case-by-case scenario and foreigners who can secure “significant financial contributions” will see a greater chance of getting accepted.
How can I contact the SLA for land purchases?
It’s easiest if you send them an email through their website with more information about your request. There’s also plenty of information available about regulations and land purchases in general.
You can also visit them in person, but if you’re located overseas that might not be an option. Besides, it’s always good to give them a call before showing up unnoticed.
Who owns the most land in Singapore?
On the contrary to Hong Kong where all land is controlled by the state, more than 3/4 of all land is owned by the Singaporean state and controlled by the Singapore Land Authority (SLA) mentioned above.
The remaining 1/4 is owned by other government authorities and private actors who possess freehold land.
What taxes do I have to pay when buying land?
The Inland Revenue Authority of Singapore (IRAS) has written a short guide that explains what taxes you have to pay when buying vacant or development sites.
It’s important to mention that once you have received the Notice of Transfer from the IRAS, the record of ownership will be changed. This will allow you to pay the taxes accordingly.
Property Tax
IRAS has property tax calculators available on the website. The tax is simply calculated by multiplying the Annual Value (AV) of your land by the property tax rate.
The rate is currently 10% and for freehold property, the annual value is assessed at 5% of the value.
Property tax is calculated by multiplying the Annual Value (AV) of your land with the prevailing property tax rate.
The AV is assessed at 5% of the estimated freehold land value. The current tax rate is 10%. You can use this calculator to calculate your tax payable.
Taxes can differ for en-bloc sale and where an actor sells two or more units to one buyer. This is sometimes referred to as collective sales. For more information on the specific rates, visit IRAS’ website or send them an email.
Stamp Duty
As mentioned, the stamp duties differ depending on if you buy real estate as a foreigner or as a local. Foreigners are subject to significantly higher rates, a reason why many incorporate a local company before acquisitions.
There are three different stamp duties available:
- Buyer’s Stamp Duty (BSD)
- Additional Buyer’s Stamp Duty (ABSD)
- Mortgage Duty
The stamp duty should be paid within 14 days of the Contract/Agreement finalization.
Land Sale Procedures
So-called Land Sale Procedures starts with the Government Land Sales (GLS) program. The program includes the sites on the confirmed and Reserve Lists and is published every sixth month.
The purpose behind the Land Sale Procedures is to streamline and make the supply of land more flexible and efficient.
Thanks to the high level of digitization in Singapore, developers can apply their interest for specific land plots when the government has provided detailed sales conditions in the eDeveloper’s Packet.
This document includes information such as:
- Conditions of the tender
- Technical conditions of the tender
- Application form/ Form of the tender
- Additional documents related to the tender and the Land Parcel
That’s it for today. I hope that you found this article interesting and useful. If you have any questions about land acquisitions in Singapore, feel free to send us a message through the form below or write a comment.