Rising rents, property prices worry US execs here

“More expressing unhappiness with rising costs in new business survey”

By Ng Sook Zhen (June 9, 2007 Straits Times)

“RISING rents and housing costs are becoming more of a worry for senior executives at United States firms here, a new American Chamber of Commerce (AmCham) survey found.

And as local property prices and rentals rise in both residential and office markets, these American executives are increasingly expressing their dissatisfaction.

Amcham’s annual Asean Business Outlook survey found that of the 95 senior executives in Singapore surveyed, 61 per cent were dissatisfied with housing prices, up significantly from 42 per cent last year.

The proportion of those unhappy with office lease prices also rose sharply to 45 per cent, from 29 per cent last year.

The Singapore results were part of a wider survey of AmCham members in the region. Together, AmCham members in the six countries surveyed represent an estimated US$50 billion (S$76.6 billion) of regional investment.

‘Basically, it’s very low levels of satisfaction for housing costs and office rents in Singapore,’ said Mr Dom LaVigne, executive director of AmCham Singapore, at a press conference yesterday.

Residential property prices in prime districts – where these executives are most likely to live – rose 25.4 per cent last year. Islandwide, home rentals also climbed 10 per cent last year.

Changes to US taxation policy have also not helped American expats either, Mr LaVigne said.

Before last year, US citizens did not have to pay tax for a large part of their housing allowances, as any amount above US$11,894 was tax-free.

But new laws introduced last year introduced a cap on the tax-free component, so that any amount exceeding US$42,900 is taxed.

‘The cap on housing allowance tax exemption has not been revised, and it’s not an accurate picture of the true housing costs in Singapore,’ said Mr LaVigne.

As for office rentals, American businesses see the increases as ‘cyclical’, or due to the strong Singapore economy, Mr LaVigne said. ‘I think they are willing to ride it out.’

The survey also found that American executives were worried about the shortage of places at international schools here.

‘We estimate about 200 expatriates will bring 300 schooling children – many of them are looking for an American- styled education,’ said Mr LaVigne. ‘As it stands, there is a waiting list of hundreds of students.’

Notwithstanding these concerns, American firms are here to stay. Some 82 per cent of the Singapore-based members expect their companies’ business to grow in the next two years, and 71 per cent expect to increase their profits.

None of the executives surveyed expect a reduction in business for their companies.

Elsewhere in the region, sentiment among the 382 American executives surveyed was equally bullish. Some 62 per cent believe the region will be more important to their company’s revenue, given the recovery of the regional economies, improvements in infrastructure and limited growth opportunities in other regions.

‘Asean is still a very, very attractive destination for the US,’ said Mr LaVigne.

sookzhen@sph.com.sg

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