A $18.6m Property Purchase Regret (And Will There Be Property Inheritance Tax?) - Stacked

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4 min read

Sometimes, not being seen as a property expert is an advantage

In a recent case, a buyer’s attempt to sue a real estate agency over an $18.6 million Good Class Bungalow (GCB) didn’t go well. The issue? A drainage reserve of 278.8 sq. ft. on the property, which couldn’t be redeveloped.

(Drainage reserve is part of the land that you can’t build on, in case the government needs to build a drain there)

The buyers contended that the marketing brochure for the bungalow didn’t reflect this drainage reserve. Fast forward to the conclusion: the attempt to sue failed because the buyer’s father is the founder of a boutique property development firm. As such, it was decided that with their experience in real estate, they would have known redevelopment layouts can change, and that not the entire land area could be redeveloped.

Also, outside of the legal system and in the public eye, there’s probably a whole “they can afford a GCB, they don’t need sympathy” thing going on.

But honestly, I’ve been involved in real estate for a while, and I can’t say that this is exactly on them. I understand about redevelopment limits and land parcels and such; but I wouldn’t have guessed that the drainage area is as much as 278.8 sq. ft.; and if it is that much, I would frankly expect it to be indicated in the sales materials.

Regardless given how everything has played out, this is one big reason why getting your architect to go along with you before purchasing any landed home for redevelopment is important. Besides details such as this, you may have a better idea of if the piece of land is suitable for what you have in mind.

Speaking of wealthy people with GCBs…

Someone might be looking to slaughter, or at least violently poke, one of the sacred cows in Singapore: our devotion to creating a low tax environment.

Here’s an interesting question: ABSD aside, would we see some kind of inheritance tax in Singapore soon? This might be the thing that finally does what countless rounds of cooling measures have failed to do: kill off some of the enthusiasm for real estate.

It may also be interesting to see if the Singaporean love for freehold status remains intact. If inheritance taxes on property are high enough, perhaps more Singaporeans will be happy to settle for leasehold properties (even older ones that last only for their lifetime), and just leave other forms of inheritance to their children. Perhaps there’s a psychological answer to the “99-year timebomb” in that.

In any case, the debate also remains if an inheritance tax (as part of a broader wealth tax) would really be that effective in balancing the inequality in wealth. Some have argued that wealth transfers should be taxed more heavily than income tax, because these recipients are viewed as “better off” and they don’t have opportunity costs to give up to inherit that wealth.

But with more countries that have given up wealth taxes than kept them (the recent case of Norway pushing out their billionaires because of a new wealth tax is one), there are clear issues too. Besides pushing the rich out (and their money) it’s expensive to administer, it’s “not fair” on those who have assets but are cash poor, and there’s much to be said about how not much revenue is really raised at the end of it.

Meanwhile, in other property news…

Weekly Sales Roundup (25 December – 31 December)

Top 5 Most Expensive New Sales (By Project)

PROJECT NAME	PRICE S$	AREA (SQFT)	$PSF	TENURE
WATTEN HOUSE	$14,157,000	4080	$3,462	FH
MIDTOWN MODERN	$4,353,000	1464	$2,974	99 yrs (2019)
THE RESERVE RESIDENCES	$4,333,696	1625	$2,666	99 yrs (2021)
THE LANDMARK	$3,314,880	1141	$2,905	99 yrs (2020)
THE REEF AT KING’S DOCK	$3,240,040	1249	$2,595	99 yrs (2021)

Top 5 Cheapest New Sales (By Project)

PROJECT NAME	PRICE S$	AREA (SQFT)	$PSF	TENURE
THE ARDEN	$1,315,000	721	$1,823	99 yrs (2023)
PICCADILLY GRAND	$1,395,000	624	$2,234	99 yrs (2021)
THE LAKEGARDEN RESIDENCES	$1,419,900	678	$2,094	99 yrs (2023)
THE LANDMARK	$1,436,608	495	$2,901	99 yrs (2020)
PULLMAN RESIDENCES NEWTON	$1,598,000	463	$3,453	FH

Top 5 Most Expensive Resale

PROJECT NAME	PRICE S$	AREA (SQFT)	$PSF	TENURE
FOUR SEASONS PARK	$12,500,000	3821	$3,271	FH
D’LEEDON	$7,888,888	4252	$1,855	99 yrs (2010)
ST REGIS RESIDENCES SINGAPORE	$7,200,000	2756	$2,613	999 yrs (1995)
THE ORANGE GROVE	$5,100,000	2336	$2,183	FH
BOTANIKA	$4,850,000	2260	$2,146	FH

Top 5 Cheapest Resale

PROJECT NAME	PRICE S$	AREA (SQFT)	$PSF	TENURE
EUHABITAT	$770,000	538	$1,431	99 yrs (2010)
ALEXIS	$820,000	527	$1,555	FH
BELLA CASITA	$820,000	463	$1,772	FH
EIGHT RIVERSUITES	$845,000	441	$1,915	99 yrs (2011)
GUILLEMARD SUITES	$845,000	603	$1,402	FH

Top 5 Biggest Winners

PROJECT NAME	PRICE S$	AREA (SQFT)	$PSF	RETURNS	HOLDING PERIOD
THE MARBELLA	$3,638,000	1582	$2,299	$2,478,000	19 Years
THE ATRIA AT MEYER	$3,180,000	1475	$2,156	$2,250,000	19 Years
THE STERLING	$3,160,000	1518	$2,082	$1,903,200	23 Years
THE CENTREPOINT	$2,450,000	1119	$2,189	$1,720,000	22 Years
JERVOIS LODGE	$2,400,000	1216	$1,973	$1,140,000	14 Years

Top 5 Biggest Losers

PROJECT NAME	PRICE S$	AREA (SQFT)	$PSF	RETURNS	HOLDING PERIOD
OUE TWIN PEAKS	$2,310,000	1055	$2,190	-$525,840	7 Years
ICON	$1,060,000	581	$1,824	-$40,000	11 Years
D’LEEDON	$3,365,000	1679	$2,004	-$15,000	2 Months
KATONG REGENCY	$1,128,000	570	$1,977	$28,990	12 Years
CLEMENTIWOODS CONDOMINIUM	$850,000	592	$1,436	$50,000	11 Years