What MinLaw didn’t POFMA: Revealing insights Into Singapore’s luxury property market

On Monday (23 Dec), Bloomberg and other media outlets were issued Protection from Online Falsehoods and Manipulation Act (POFMA) correction directions by the Minister for Culture, Community and Youth and Second Minister for Law Edwin Tong.

The directives responded to articles concerning transactions of Good Class Bungalows (GCBs), with the Ministry of Law (MinLaw) asserting that these articles contained false statements of fact.

Despite this, several aspects of Bloomberg’s original 12 Dec article, titled Singapore Mansion Deals Are Increasingly Shrouded in Secrecy, remain undisputed by MinLaw.

The article discussed rising trends of secrecy in GCB transactions, a highly exclusive property class in Singapore.

According to MinLaw, the article and related posts by The Edge Singapore, The Independent Singapore, and The Online Citizen contained falsehoods. These publications have since been directed to carry correction notices linking readers to the government’s clarifications.

MinLaw stated that the correction order aims to allow readers to “read both versions and draw their own conclusions.”

Below is an analysis of the identified falsehoods and uncontested points, providing a clearer picture of the issues and trends highlighted in the article.

Falsehoods Identified by the Ministry of Law

The following claims made in the Bloomberg article were identified as false by MinLaw:

1. Public Availability of Records:  MinLaw claims that the article stated that there are no publicly available government records of GCB sale transactions if caveats are not lodged.
2. Disclosure of Ultimate Beneficial Owners: MinLaw claims that the article suggested that the identity of the ultimate beneficial owner does not need to be disclosed to the government for GCB transactions involving trusts or shell companies.
3. Government Checks: MinLaw claims that the article claimed that GCB transactions can occur without any government checks on the identities of ultimate beneficial owners.
4. Responsibility for Combating Money Laundering: MinLaw claims that the article implied that the primary responsibility for combating money laundering in property transactions lies with property agents and other service providers, not the government.
5. Facilitation of Money Laundering: MinLaw alleged that the article claimed that the lack of transparency in GCB transactions allows parties, including Ministers and rich migrants, to transact in ways that facilitate money laundering.

Key Points Not Disputed by the Ministry of Law

1. Transactions Involving Ministers and Prominent Individuals

• The article reported that Singapore’s Minister for Manpower, Tan See Leng, purchased a GCB in Brizay Park for S$27.3 million in 2023.
• Another GCB transaction involved Wang Qianqian, a China-born Singapore citizen, who bought a Holland Rise mansion for S$50 million. This property was previously owned by former public housing minister Mah Bow Tan.
• Bloomberg also highlighted a transaction where UBS Trustees purchased a GCB in Queen Astrid Park for S$88 million, on behalf of an entity called the Jasmine Villa Settlement. This property was previously owned by the Minister for Home Affairs and Law, K Shanmugam. The identity of the ultimate beneficiary was not disclosed.

2. Significant Market Trends

• The article noted that nearly half of all GCB purchases by value in 2024 lacked property caveats, making these transactions more challenging to track.
• Total GCB transactions from January to early December 2024 amounted to S$1.1 billion, according to data compiled by Bloomberg News and List Sotheby’s International Realty.
• The median sale price for GCBs nearly doubled from 2019, reaching approximately S$36 million in 2024.

3. Use of Privacy Measures by Buyers

• Bloomberg described how wealthy individuals increasingly rely on shell companies, trusts, and non-disclosure agreements (NDAs) to maintain privacy during GCB transactions.
• Buyers were reported to pay premiums for off-radar transactions to avoid public scrutiny.

4. Growing Demand from Wealthy Migrants

• The article highlighted increasing interest from Chinese buyers in GCBs, with some seeking undeveloped plots for customization in anticipation of obtaining Singapore citizenship.
• Chinese buyers were noted to pay premiums due to GCBs’ freehold status and relative affordability compared to luxury properties in Hong Kong.

5. Expert Quotes Supporting Market Observations

• William Wong, founder of Realstar Premier Group, observed that “there are more and more buyers who prefer to be low profile.”
• Mabel Tan, senior partner at Joseph Tan Jude Benny LLP, reported growing interest from Chinese buyers, especially those anticipating future citizenship.

6. Regulatory and Tax Measures

• The article acknowledged that Singapore imposes a 65% tax on residential property purchases made using trusts, payable upfront in cash. Citizens can seek refunds under certain conditions.
• GCB ownership remains restricted to Singapore citizens and a small number of foreigners who receive government approval.

7. Comparisons to Global Practices

• The article compared Singapore’s handling of property transactions to other jurisdictions, noting measures in the UK and New York to combat money laundering and increase transparency.

Implications of the Undisputed Points

While MinLaw disputed specific claims about transparency and anti-money laundering checks, the undisputed points highlight key trends in Singapore’s GCB market:

• A significant portion of transactions occur without lodging caveats, underscoring privacy preferences among wealthy buyers.
• Ministers and prominent individuals are active participants in high-value GCB transactions.
• Demand from wealthy migrants, particularly from China, is contributing to rising prices and premiums in the GCB market.
• Buyers increasingly use trusts and shell companies to shield their identities, reflecting global trends in luxury real estate.

Bloomberg’s 12 Dec article has sparked discussion about transparency and regulatory measures in Singapore’s luxury property market.

While some statements were challenged by MinLaw under POFMA, many key observations remain uncontested. These provide valuable insights into how the GCB market operates, including the growing demand for privacy, rising interest from wealthy migrants, and the market’s increasing exclusivity.