Martin Lee @ Sg
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Residential Land and HDB Ownership

In an article published in the Sunday Times yesterday, it was mentioned that the HDB ruling which states that HDB flat owners are not allowed to concurrently own an HDB flat and private property (local or overseas) within the minimum occupation period (MOP) will also apply to residential land (even if its vacant) held in other countries.

This might have implications for investors in land banking projects.

A HDB owner who has not yet to meet his MOP will therefore need to be careful when investing in landbanking projects as he or she might have to dispose of land initially not zoned residential if it later acquires residential zoning (if ever).

I find this HDB ruling to be messy and not thought out carefully in its implementation. Over the past few weeks, we have seen clarification that it applied to overseas properties. Now, another clarification that it applies to residential land. These clarifications are not through a proper press release from HDB but only came about in news articles when HDB were asked the appropriate questions by SPH journalists.

Are there more restrictions that we do not know of?

I am going to fall off my chair if HDB were to one day say that REITs would also be included. They can justify that after all, it’s a collective ownership in property.

On another note, I feel that the restriction on land banking can turn out to be a good thing if it ends up having the effect of deterring people from investing in land banking. There are a few dubious land banking projects around and the man in the street might be better off staying clear of them.

Since MAS is not going to regulate land banking as they always insist that land falls under a form of real estate ownership, it is just as well that we have HDB provide some form of regulation (restriction) instead.

The full article can be found here:

HDB Rules Apply to Land Banking

Leave a Comment:

Steve says 10 years ago

Its about time. The idea that Land Banking is an investment product is ridiculous. If you were to look across all of the Land Banking companies that have operated in Singapore in the last 5 years you would find that the average returns are less than a single spin on the Roulette wheel at Marina sands.

Foreign land banking is a either a huge gamble or a huge scam depending on which company you deal with. It should certainly not be used as a savings scheme.

Ahnoniemouse says 10 years ago

No worries, only REITs which invest all or substantially (90+%) into residential properties will be disqualified. All others OK. This goes for any other property unit trusts too. As almost all are not fully into residential, so the impact is minimal or none.

Agree with the landbanking restriction. Unfortunately, the conman will restructure and change into non-residential landbanking. They will exaggerate and paint too-good-to-be-true stories about future commodities & agriculture inflation, and sell you landbanking in farmland or speculative land that may have gold deposits, oil, oilsands, rare earth deposits, minerals etc.

Like that you might as well deposit your money with proven investors like Warren Buffet, Marc Faber, Jim Rogers, all of whom have in recent years invested in actual productive farmland or in commodity trusts.

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