When Nikki Hunt first visited Hakuba in the Japanese Alps, she fell in love with the place immediately. The founder and principal of interior-design firm Design Intervention liked this area within the Nagano prefecture so much, she purchased a house there.
“We bought a tired old pension which had been a 13-bedroom small hotel, and restructured it to form a five-bedroom chalet,” says Hunt, a UK native based in Singapore. After successfully renting out the chalet when the family was not there, they bought an apartment, too.
For many well-heeled homeowners, buying a leisure property makes for an appealing investment or lifestyle asset. These second (or third) homes are often used as vacation retreats, for entertaining purposes, or as business-trip residences. Such acquisitions are all the more tempting when market conditions are favourable.
“The current strength of the Singapore dollar and a buoyant economy have made it very attractive for Singaporeans to invest in a second property overseas,” says Leong Boon Hoe, managing director of CBRE Realty Associates. Yet, whether you’re buying it for fun and leisure or for investment gains, there are major considerations to weigh before making the leap.
Closer to home, buyers looking at the Singapore property market will need to consider such practicalities like housing rules, property taxes and home loans.
Other financial responsibilities such as stamp duties vary for the second-home buyer.
DTZ Debenham Tie Leung (SEA)’s regional head of research, Lee Lay Keng, says: “Investors looking to buy a second private residential property will have to pay Additional Buyer’s Stamp Duty of 7 per cent for Singapore citizens, 10 per cent for Singapore PRs or 15 per cent for foreigners. If they choose to sell the property within four years of the purchase, they will also have to pay Seller’s Stamp Duty of 4 to 16 per cent, depending on when they sell the property.”
Having multiple properties can affect your tax rates too. “With effect from Jan 1, 2014, there was a change in property tax rates. For non-owner-occupied residential properties, property tax rates will range between 10 and 19 per cent, depending on the annual value of the properties. The tax rates will be raised further to 10 to 20 per cent, with effect from Jan 1, 2015.
“This compares against the previously flat tax rate of 10 per cent. Vacancy refund claims are also no longer available for properties with vacant periods, starting from Jan 1 this year. Owners of vacant properties will now have to pay the new prevailing property tax rates,” says Lee.
Gerald Tay, a professional real-estate investor who runs Crei Academy and has 13 years of experience, classifies leisure homes to be “very high-risk real-estate investments”. He warns against putting money in over-built locations. An overseas property can also be an “alien territory”, with too many uncertainties for most buyers. “How much does the investor understand about the location, politics, economy, history, tax implications, and current market and housing rules?” he questions.
Tay’s advice to the overseas leisure-apartment investor? “Find a credible and trustworthy local partner in that country and do it together. The local partner must be someone who has done such investments many times, and is therefore very familiar with the ‘terrain’, ‘weather’, rules, business landscape, etc,” he says.
On what makes a good leisure-apartment investment, Leong says: “Look for a growth area with amenities and infrastructure, or with government plans to develop the area in the future. Take into account the management of property and quality of maintenance.” And to make your leisure apartment work harder for you, consider property with an active rental market, he says.
Hunt rents out her Hakuba apartment when she and her family are not using it. A local property- management company, which she describes as “very efficient and reliable with quite reasonable management fees”, manages the rental for her.
“This gives us peace of mind,” says Hunt. “Besides, Japan is a safe nation, with a strong, well-organised legal system, so we are confident about the property contract we have purchased. The Japanese people here are lovely, kind, honest and reliable, and the properties have all been well maintained and any problems easily solved.
“We use our place quite a lot and are always there during the peak holiday seasons. So our rental yield is not so attractive but we make enough to cover all the costs and make a small profit.” Her friends, though, who bought similar apartments nearby, see a rental yield of about 5.5 per cent. “These apartments rent very well and, 02 during the winter ski season, there is barely a night when they are empty,” she reveals.
Besides the rental yield, Hunt and her husband believe the area has great potential for capital gain. “Japan has suffered from a huge recession in the property market over the last 20 years but prices have begun stabilising over the past two years. There is quite a bit of building activity going on in the area and a pickup in interest from foreign buyers. But values are still very cheap (though off their lows), both compared to those of international ski resorts as well as compared with Niseko in the north of Japan. We are quite optimistic that we will see price appreciation,” she says.
“But of course the reason we have bought in the area is simply that we love going there,” she says.
HOME AND RECREATION
When designing your second dwelling, consider its purpose, as these homeowners did.
Reflections at Keppel Bay
This swish penthouse in Reflections at Keppel Bay has played host to several fine dinner parties and housed overnight guests. The homeowners, a couple in their 40s, use this property often for entertaining overseas visitors, and it’s suitably designed to impress.
The wife, a businesswoman, had some specifics in mind when she contacted Karen Tan of Karen Gan Design.
“She wanted the house to look spacious and elegant, with more areas for entertaining,” says Tan.
Walls were knocked down, and the brand new apartment reconfigured to suit these needs. For instance, the open-concept dry kitchen, boasting a handsome travertine-marble island counter, segues into the dining and formal living rooms – allowing for a flow in mingling space (and conversation).
The formal living room appears all the more stunning with a mirrored ceiling that reflects the surrounding views of water and floating yachts, while visually stretching the height of the apartment. The wife also felt that the master bedroom on the upper floor was “too small”.
One other bedroom and its adjoining bath were annexed to it to create a deluxe sanctuary, complete with a walk-in closet and a luxuriously spacious bathroom. The apartment is certainly a treat for the guests who stay over and, for the couple, an appealing investment for entertaining purposes.
Pacific Place Apartment
The Pacific Place Apartment, touted to be one of the most luxurious residences in Jakarta, is a home away from home for Indonesia-based businessman Brian Chen.
The owner wanted “something culturally aligned with the country he’s in, yet futuristic”, says designer Isbandi of his client’s brief. The Lampung textile pieces are a cultural nod to the country, while blue LED lights, the Enomatic wine system and a complete smart home system account for the “futuristic” element. A simple tap on the iPad controls almost everything in the house – the curtains go up, the Disklavier piano starts to play, the air- conditioning is turned on, and the lights are dimmed.
No expense was spared in the designer furnishings either, such as the Ligne Roset coffee table and armchair, Rolf Benz sofa and dining seats, and Artemide lamps. The result is a 06 modern home that is functional yet warm, and boasting all the 21st-century comforts desired by the owner.
The Hakuba apartment in the ski Alps of Japan was designed by Nikki Hunt of Design Intervention as a bolthole for her family. When not in use, she rents it out to holidaymakers looking for a luxurious, chic retreat in the mountains. The apartment combines Alpine luxe with the essence of Japan.
“I wanted the interiors to be imbued with a contemporary Japanese aesthetic, so the guests would feel they were
in Japan but have all the luxury and comforts that the international traveller expects,” says Hunt. This explains the oriental elements such as wood panelling, pillars and beams, and Japanese-style ofuro (bathtub) in the bathrooms.
Modern indulgences such as large, plush bedrooms and lavish furnishings complete this perfect hideaway in the Japanese Alps.