Dual key or not dual key: That is the property investor's question

Housing market gets distorted in favor of dual-key flats.

Singaporeans have found a way to sneak around the infamous additoinal buyer's stamp duty by getting two apartments for the price and tax of one. This concept, called dual-key aparment, has become popular among buyers who can get an apartment with 2 residences for the stamp duty of one unit, thereby avoiding the additional 15% of a second proeprty.

According to research done by Knight Frank,an amazing 1 in 13 units launched in 2013 was a dual-key unit, up from just 3.5% in 2011
and this is almost entirely due to the tax factor. This is an interesting distoriton of Singapore's property market in jsut a short amount of time and could have long-term lingering impacts with potentially seriuos consquences.

Dual-key apartments were originally designed so that family units could stay together and enoy some privacy. but with this new super-investor class of residence, the original purpose is being perverted.

Now, the family is being forced to share spaces with other people.

"With a total of 330 newly-launched dual-key unts in 2011, the number has risen by approximately 1.5 times to 840 units in 2013. This increase is mostly contributed by large-scale private residental developments, as the EC sector experiences a gradual decline in the number of newly-launched dual-key units," Knight Frank said in its research.

Here's more from Knight Frank:

Developers of private non-landed projects are recognizing the potential of the dual-key segment and are capitalizing on buyeres' preference for such living concept.

In particular, many investors have taken interest in dual-key concept since the introduction of the 7% ABSD on second-time local homebuyers in January 2013, as dual-key units allow the 'dual possibility' of living in your own home, while collecting rental income from the leasing of the other sub-unit.

As buyers are effectively buying only one unit, ABSD is avoided for the first-time local homebuyers.