SINGAPORE Trends and Developments Contributed by: Benjamin Tay, Chou Ching, Norman Ho, Vikna Rajah, Chun Kiat and Marcus Tay, Rajah & Tann Asia
Singapore has evolved from a destination for invest - ment into the primary launch pad from which capital set aside for real estate is deployed throughout the region and beyond. Asset managers headquartered in Singapore routinely structure acquisitions by way of share purchases and unit acquisitions rather than purchasing properties directly. The advantages are well established: preservation of existing contractual arrangements, continuity of regulatory approvals, stamp duty efficiencies and flexible exit options. For a general counsel overseeing a portfolio transac - tion from Hong Kong, Tokyo or Sydney, this means engaging Singapore counsel who can project-manage regional workstreams as much as advise on domestic law. That capability is no longer optional. Club deals and co-investment structures, whether through SPVs, limited liability partnerships (LLPs), limited partner - ships, variable capital companies (VCCs) or unit trusts, have become the norm for sizeable acquisitions. The family office sector has added a further dimen - sion. Singapore had granted 1,100 single-family office licences by the end of 2023, and real estate forms a core allocation for many of them. These investors bring different expectations around governance, dis - cretion and multi-generational holding periods, and their growing participation in the market is reshaping how transactions are structured and negotiated. Share and unit acquisitions v asset sales The choice between a share or unit acquisition and a direct asset sale remains one of the most conse - quential structuring decisions in any Singapore real estate transaction. Put simply, an approximately 0.2% tax cost versus an approximately 5% tax cost is not a close call. For asset managers managing portfolios across multiple jurisdictions involving Singapore enti - ties, structuring the transaction as a share or unit sale is now the default. This structural preference has practical implica - tions that go well beyond stamp duty. It shapes how properties are held from the outset, how financing is arranged, how representations and warranties are negotiated, and how exits are planned. Experienced practitioners will advise clients to think about the eventual disposal structure at the time of acquisition,
not as an afterthought when a sale process is already underway. Stamp duty For non-residential property, direct asset acquisi - tions attract buyer’s stamp duty (BSD) at progressive rates of up to approximately 5%. By contrast, shares in a property-holding company attract stamp duty at 0.2%. That differential alone explains why asset man - agers overwhelmingly prefer to structure non-residen - tial acquisitions as share purchases and even asset purchases via SPVs to ensure exit efficiency. With careful structuring, further efficiencies can be achieved through holding structures, the sequencing of corporate steps or the interposition of entities in jurisdictions where share transfers attract little to no equivalent duty. The position for Singapore residen - tial property is materially different. Additional buyer’s stamp duty (ABSD), which is a tax levied on top of the standard BSD for residential property purchases, may apply at rates as high as 65% for entities, and since 2017, additional conveyance duties (ACDs) have applied to equity interests in property holding entities (PHEs) under Section 23 of the Stamp Duties Act. Crucially, purely commercial or industrial property- holding entities are not caught. For the asset classes that dominate institutional activity, the approximately 0.2% stamp duty share sale remains the preferred route. Practitioners should also be alert to the conditions under which stamp duty relief is available for intra- group restructuring. Section 15 of the Stamp Duties Act provides relief for reconstructions, amalgama - tions and transfers between associated companies, subject to holding period requirements, a bona fide commercial purpose condition and the anti-avoidance provisions in Section 33A. These conditions must be carefully satisfied: the Inland Revenue Authority of Singapore scrutinises relief claims, and transactions structured primarily for stamp duty saving without genuine commercial substance remain at risk of chal - lenge.
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