The Ministry of National Development (MND) has recently announced revisions to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers. These changes, which will take effect on March 6, aim to encourage developers to undertake urban transformation developments, optimise land use, rejuvenate older estates, and adopt new construction technologies.
One of the key revisions is the extension of the ABSD remission timeline for developers undertaking complex projects from six to 12 months. This is meant to incentivize developers to take on more challenging projects, such as en bloc redevelopments yielding at least 700 units and having 1.5 times the number of homes compared to the existing development. Other projects that will benefit from the extension include those with complex technical or instructional requirements, such as projects integrated with major public transport facilities.
Additionally, projects approved under the Strategic Development Incentive (SDI) scheme and projects that aim to achieve higher productivity through the adoption of new construction technologies, methodologies, or practices will also receive an extension of six months. For projects that meet the criteria of more than one category, the extension will be for one year. These changes will apply to all residential land acquired on or after March 6.
Currently, licensed housing developers purchasing residential redevelopment sites are subjected to 5% ABSD upfront, which is non-remittable, and another 35% ABSD, which can be remitted upon completing and selling all units in the project within five years. Last year, the government had already made changes to offer a lower clawback rate for residential developments with at least 90% of units sold.
Experts have noted that these revisions will give developers more flexibility and help mitigate development risks to some extent. PropNex Realty CEO Ismail Gafoor believes that the extension will be beneficial for mega projects as it gives developers more time to sell units. Lee Sze Teck, senior director of data analytics at Huttons Asia, believes that the changes will also boost the en bloc market, especially for bigger projects.
However, despite the deadline extension, Christine Sun, chief researcher and strategist at OrangeTee Group, points out that developers may still face challenges as the success of en bloc sales depends on the willingness of buyers and sellers to negotiate prices. Tay Liam Hiap, managing director of capital markets and investment sales at ERA, believes that this policy change could be an opportune time for older projects like Braddell View and Pine Grove to explore en bloc opportunities, as they may yield around 2,000 new homes and take longer to sell.
Singapore has become a sought-after location for foreign investors due to its stable real estate market with promising growth potential. However, it is essential for foreign buyers to familiarize themselves with the regulations and restrictions governing property ownership in the country. Compared to landed properties, condos are more accessible to foreign buyers as there are fewer ownership restrictions. However, they are still subject to the Additional Buyer’s Stamp Duty (ABSD), currently at 20% for first-time property purchases. Despite this extra cost, the allure of the Singapore real estate market continues to draw foreign investment. Thus, many investors are turning towards Singapore Condos as a profitable investment option.
Overall, while the policy change may not spark a revival in the en bloc market, experts expect developers to remain cautious due to high costs of redevelopment, ample oncoming private housing supply, and potential policy risk.