Wednesday, 6 May 2015

Stricter advertising rules on foreign properties, gold investments

By Jessica Lim, Consumer Correspondent, The Straits Times, 5 May 2015

AS THE lure of overseas properties comes with higher risks, foreign developers trying to woo Singaporeans will face stricter advertising rules.

The Advertising Standards Authority of Singapore (ASAS) is working with the Monetary Authority of Singapore and the Council for Estate Agencies to review Singapore's advertising code.

Under the proposed new regime, advertisers could be forced to disclose their financial position, the investment risks involved and whether development approvals have been obtained, The Straits Times understands.

Measures to deal with advertisers who repeatedly place misleading advertisements, said ASAS chairman Tan Sze Wee, will also be toughened. It is considering levying fines for such cases.

The tougher rules will also apply to those who market investments in gold and other physical assets.

Currently, the code consists of general principles. It stipulates, for instance, that ads "should not mislead in any way by inaccuracy, ambiguity, exaggeration, omission or otherwise".

The advertising watchdog flexes its muscles by getting media owners and various agencies to withhold ads that flout the rules.

Last year, ASAS received nine complaints against property ads, up from six in 2013.

The Consumers Association of Singapore (CASE) received 13 complaints regarding foreign property purchases in 2013 and last year.

In one case, a consumer here invested in a property in the Philippines. He has paid more than $100,000 so far, but the firm has refused to update him about his investment.

Yesterday, CASE also asked buyers here to exercise caution.

"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.

There have also been reported cases where the developers became insolvent and were unable to deliver the projects, he added.

Conveyancing lawyer Tan Seow Peer from Joseph Tan Jude Benny LLP advised buyers to do their research.

"Even if the aggrieved buyer succeeds in pursuing the matter in Singapore or international courts, if the sellers do not have assets or a presence in Singapore, it will just be a paper judgment," he said. "So enforcement of the court order may pose a problem, which means the buyer may not be able to recover his losses."

Mr Michael Yong, director of Funtasy Island Development, a local firm that markets homes on Pulau Manis, a cluster of six small islands 3km off Batam, said he received a call from ASAS last week.

He said he supports the new rules as he does not want "black sheep to spoil the market", but pointed out that it has to apply to all foreign developers.

"We will follow it if it becomes an industry standard", he said.

Additional reporting by Toh Yong Chuan


Players sceptical of ensuring transparency
Calls for better disclosure a positive step but it may be hard to implement
By Joyce Lim, The Straits Times, 7 May 2015

CALLS for more transparency in brochures marketing foreign property in Singapore could boost investor confidence but industry players doubt such steps could be implemented.

The key concerns centre on the calls for developers to reveal financial data and the difficulty of summing up investment risks in the limited space on a handout.

But the proposal by the Consumers Association of Singapore (CASE), that there should be more disclosure, seems to have been widely accepted.

CASE executive director Seah Seng Choon wants the Advertising Standards Authority of Singapore (ASAS) to make it mandatory for advertisers to publish their audited financial reports in their sales brochures.

Developers should also disclose the investment risks involved and substantiate their claims on the investment returns.

Mr Seah told The Straits Times yesterday: "They should submit the permits and approvals... for their projects to the authorities here to prove that (they) are genuine as some developers had gone ahead to sell without having their building plans approved."

But Mr Kelvin Fong, who markets British property here in his role as senior group district director of PropNex, does not think investment risks can be summed up in a few lines in a brochure.

Mrs Doris Tan, regional director of international residential properties services at Jones Lang LaSalle, said smaller developers would have problems disclosing their financial positions.

Mr Peter Thng, executive director of Reapfield Property Consultants, said it is more important for the authorities to ensure a "level playing field" for both local agencies and foreign developers in marketing overseas property.

He noted: "The existing legislation does not apply to foreign developers who market their own properties here. They have a free hand in their advertisements."

Mr Thng, whose firm markets only foreign property, said some overseas developers put up false ads or give misleading information by editing photos used in sales brochures.

One project advertised as being a stone's throw from the Sydney Opera House was, in fact, far away. "The photograph was edited to make the development look like it was close to the city centre," said Mr Thng.

ASAS on Monday said it was working with the Monetary Authority of Singapore and the Council for Estate Agencies to review the advertising code.

Last year, ASAS received nine complaints about property ads, up from six in 2013. CASE has received 13 complaints regarding foreign property purchases in the past two years, said Mr Seah.

Mr Chew Hwei Yeow, chief operating officer of PPB Group, which will launch Southern Marina in Iskandar this year, said: "Tougher guidelines will create better practice and is always good for the industry. But advertisements with guaranteed returns can be misleading."

Mr Fong said: "Buyers need to attend seminars to fully understand the risks involved. Also, some developers would have created a new firm (for) the project. It would be hard to disclose their financial position in those cases."

Instead, he proposes a checklist for properties in different countries. "The checklist should include the permits needed for developers to launch the project and information such as whether banks would disburse the funds if the project is not sold out."

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