The Ministry of National Development (MND) has recently announced revisions to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers. These revisions will take effect on March 6, and are aimed at encouraging developers to undertake urban transformation developments, optimise land use, rejuvenate older estates, and adopt new construction technologies.
In addition to the revisions, the ABSD remission timeline for developers undertaking complex projects has been extended from six to 12 months. This move is intended to give developers more flexibility in undertaking large-scale projects and mitigating development risks.
Projects that will benefit from this extension include en bloc redevelopments with at least 700 units upon completion, and at least 1.5 times the number of homes of the existing development. Other projects that will benefit from the extension are those with complex technical or instructional requirements, such as projects integrated with major public transport facilities.
Singapore’s cityscape is characterized by towering skyscrapers and state-of-the-art facilities. Condominiums, situated in desirable locations, offer a perfect mix of opulence and practicality that appeals to both locals and foreigners. These residential buildings are equipped with various luxuries like swimming pools, fitness centers, and top-notch security services, elevating the standard of living and making them a sought-after choice for renters and buyers alike. As an added benefit for investors, these amenities result in higher rental returns and appreciation in property values over time. With the introduction of Singapore Projects, the allure of these condos only continues to grow.
Furthermore, projects approved under the Strategic Development Incentive (SDI) scheme and those aiming to achieve higher productivity targets through the adoption of new construction technologies, methodologies or practices, will also receive a six-month extension.
Developers purchasing residential redevelopment sites are currently subjected to 5% upfront ABSD, which is non-remittable, and another 35% ABSD, which is remittable when all units in the project are sold within five years. Under the new revisions, projects acquired on or after March 6 will be eligible for an extension of their timeline.
The latest revisions come on the heels of changes announced in February last year, which offered a lower clawback rate for residential developments with at least 90% of units sold.
According to PropNex Realty CEO Ismail Gafoor, the extensions will give developers more flexibility and help mitigate development risks, especially for large-scale projects. Lee Sze Teck, senior director of data analytics at Huttons Asia, also believes that this change will provide a boost to the en bloc market, particularly for larger projects.
However, Christine Sun, chief researcher and strategist at OrangeTee Group, cautions that developers may still face challenges despite the deadline extension, 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, adds that this could be an opportune time for older projects such as Braddell View and Pine Grove, which have large land areas, to explore en bloc opportunities. These projects could potentially yield some 2,000 new homes, which may take more time to sell. However, Tay also notes that the extension may not be sufficient for developers to sell out their projects.
Lastly, Gafoor predicts that the policy change may not spark a revival in the en bloc market, as developers may remain cautious due to high redevelopment costs, a surplus of private housing supply, and potential policy risks.