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Govt to toughen rules on foreign property ads

Posted on 7 May 2015 | Comments Off

Given the higher risk involved in overseas property investments, the authorities plan to strictly regulate advertisements put up by foreign developers in Singapore, media reports said.

In fact, the Council for Estate Agencies (CEA), the Monetary Authority of Singapore (MAS) and Advertising Standards Authority of Singapore (ASAS) are currently working together to review the advertising code.

At present, the code only covers general principles. For example, it stipulates that advertisements “should not mislead in any way by inaccuracy, ambiguity, exaggeration, omission or otherwise”.

Under the proposed amendments, advertisers would be required to disclose the investment risks involved, their financial position and whether the property project has secured the necessary approvals from relevant agencies.

According to ASAS Chairman Tan Sze Wee, they are thinking of imposing fines on advertisers who repeatedly air misleading ads and also intensify existing punishments.

Last year, the agency received nine complaints regarding property ads compared to just six in 2013, while the Consumers Association of Singapore (CASE) recorded 13 complaints concerning foreign property purchases in 2013 and 2014.

In one case, a consumer complained that a Philippine developer refused to update him about his property investment even though he had forked out over $100,000.

“Investing in an unfamiliar foreign market holds high risks… Some of these deals have turned sour when prices declined sharply, resulting in investors losing a large sum of their money,” said CASE President Lim Biow Chuan.

Furthermore, there have been cases where the projects were abandoned after the foreign developer went bankrupt, he added.

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CASE urges caution on buying overseas

Posted on 5 May 2015 | Comments Off

The Consumer Association of Singapore (CASE) is warning investors here to be cautious of buying properties overseas, after receiving 13 complaints regarding such purchases in 2013 and 2014.

Overseas property purchases by Singaporeans have soared in recent years with a large number of foreign properties being advertised and marketed in the city-state.

In a statement, CASE said the majority of complaints involved consumers who had invested abroad after being lured by promises of high rental yields or capital growth, but were unable to get back their promised returns or pay outs.

There were instances where consumers did not receive updates on their investment and even lost contact with the property investment company. Some cases involved significant losses of more than $100,000 by the consumer.

Another example included the foreign property developer becoming insolvent and thus unable to continue with the development, resulting in a total loss of the investment.

Commenting, the consumer watchdog’s president Lim Biow Chuan warned investors to be mindful of their financial needs and commitments as well as the risks involved.

“CASE is very concerned about the recent proliferation of advertisements on foreign property investments. Such advertisements often make positive claims about the investment value of the properties and the potential returns, but they seldom clearly disclose the risks and the legal and regulatory framework in foreign markets which are very different to Singapore,” he shared.

Investing in an unfamiliar market holds high risks, such as foreign currency fluctuations, property market trends, sovereign risks and interest rate risks, noted CASE.

The recent warning by analysts from Maybank about the housing glut in Iskandar Malaysia is also a timely reminder about the potential risks involved.

Going forward, CASE is proposing that developers selling foreign properties provide fact sheets to investors to better understand what they are getting into when signing the contract.

The fact sheet should include the developer’s financial standing, clear and comprehensible information about obligations for developers and investors, and proper valuation of the property.

Lim added: “We strongly urge the relevant authorities to review existing legislation to ensure that developers who sell their foreign properties locally abide by the same minimum standards in information disclosure that local developers have to meet. They should commit to truthful and honest claims and not make misleading or false representations to investors in order to sell their properties.”