The Council for Estate Agencies (CEA) earlier this week issued new guidelines for property agents and salespersons marketing foreign properties.
Industry players generally welcome the move, but some said the guidelines could pose challenges.
In the last couple of years, more Singaporeans have been buying properties overseas, in countries such as Malaysia and the United Kingdom.
To help consumers make informed decisions, CEA rolled out an online consumer guide on Monday.
It also issued a set of practice guidelines to sales agents.
Real estate agency PropNex said they provide a clear understanding of the agent’s obligations to help buyers assess their investment options.
PropNex has marketed about 25 projects in the last two years, in London, Tokyo, Malaysia and Australia.
The guidelines include the performance of due diligence on the foreign developer to make sure they are reliable with good financial standing, as well as carrying out inspection of the property title, tenure, location and features.
They also cover activities like training of agents and making sure they understand investors’ needs and inform buyers of restrictions on foreign ownership.
However, PropNex said the guide does not cover foreign developers who market their overseas projects in Singapore without the help of local agents, and it hopes they can be regulated.
Lim Yong Hock, key executive officer at PropNex, said: “Even though these cases may not be so rampant, but we see that it is increasing in trend – developers coming from all over the world… If the buyers do not know the risks and some of these regulations, the foreign developers who do not engage the local agencies or agents, no other due diligence can be done.”
Meanwhile, some agents said the guidelines – which apply to agents registered with the CEA – could pose some challenges.
Ku Swee Yong, CEO of Century 21, said: “Some of the items (in the guidelines), to be honest, are very costly for us to abide by.
“For example, to understand the financial strength of the developer and whether the developer might have the chance of going bankrupt during the course of construction – for that sort of financial due diligence, property agents must have the capability and the knowledge to do it. Secondly, how much cost will be involved? Do (firms) have to employ an auditor?”
JLL, which has marketed over 70 overseas projects in the past two years in London, New York and Tokyo, said emerging markets carry the most uncertainties.
On the other hand, developed markets like London offer good protection on investor’s deposit.
Doris Tan, director of international residential property services (Singapore) at JLL, said: “During the credit crunch in 2007-2009, these developers had funding problems in London so they could not continue to build.
“But because of the guidelines or the contracts, they are liable to refund the deposits if they cannot continue to build, so we have one project that we return all the deposits to the buyers, there was another project, they finally got their money from the banks, so they continued to build, so there was a delay of three to four years.”
Industry players said the guidelines will go some way to ensure that agencies bring good projects into Singapore.
However, they stressed that investors will still have to do their homework to understand what they are buying into and the risks involved.
Source : Channel NewsAsia – 19 Mar 2014