Family Offices Only Acquired 4 Singapore Commercial Properties In Past 6 Years

SINGAPORE – National Development Minister Desmond Lee recently disclosed that there were merely 4 commercial real estate deals attributable to family offices in the past six years, reported The Business Times on Thursday afternoon (19 January, SGT).

These commercial property acquisitions by family offices account for about 0.04 percent of the overall commercial transaction value during the period, said Lee, who added that family offices were not involved in any residential deals over the same period.

Lee’s disclosure was in response to questions fielded by Desmond Choo, the Mayor of North East District, regarding the total commercial and residential property investment by family offices from 2020 to 2022. Choo had also queried how this compares to the three years prior to the coronavirus outbreak.

Market observers said the low numbers are not surprising despite stories of affluent foreigners buying up a large amount of Singapore properties recently. For instance, a Chinese national reportedly acquired 20 units at the CanningHill Piers condo for over S$85 million in 2022.

In the same year, a Thai citizen purchased the top office floor of the 44-storey Suntec Tower One for S$39.7 million, which works out to a record psf price of S$3,850.

Law firm Baker McKenzie Wong & Leow’s Head of the wealth management practice in Singapore, Dawn Quek, said one possible reason for the low number of commercial properties bought by family offices is that the local tax incentive schemes for funds overseen by family offices doesn’t apply to local real estate, and this potentially diminishes the attractiveness of such assets to family offices.

Credit Suisse’s Research Head for Asia Pacific Kum Soek Ching also shared that residential units purchased under a person’s name incur an additional buyer’s stamp duty rate of 30 percent, compared to 35 percent if it’s purchased under entities like a family office.

Ernst & Young’s Private Tax Leader for Southeast Asia Desmond Teo revealed that there’s many factors that influence a property acquisition. These include the funding method and the objective of the purchase, as well as stamp duty and real estate tax rates.

Homes purchased for personal use or wealth succession may be held directly by an individual owner or a trust. Meanwhile, a property holding firm may be specifically established to buy and operate a property to generate taxable rental income where financing is needed, added Teo.