The Ministry of National Development (MND) has announced revisions to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed property developers, which will take effect on March 6th. These changes aim to encourage developers to undertake urban transformation projects, optimize land use, rejuvenate older estates, and use new construction technologies.
The ABSD remission timeline for developers undertaking complex projects will also be extended from six to 12 months. This is in line with the government’s efforts to support the development of complex projects that may take longer to complete.
When it comes to investing in property in Singapore, it is essential for foreign investors to be aware of the regulations and limitations that come with it. Unlike landed properties, which have more stringent ownership regulations, foreigners are generally allowed to purchase condos with relatively fewer restrictions. However, it’s worth noting that foreign buyers are subject to the Additional Buyer’s Stamp Duty (ABSD), currently set at 20% for their first property purchase. Despite this added expense, the Singapore real estate market remains an attractive option for foreign investment due to its stability and potential for growth. Those looking to invest in properties in Singapore can consider options such as Singapore Condo.
Under the new rules, developers undertaking projects with at least 700 units upon completion and with 1.5 times the number of homes of the existing development will be granted a six-month extension. Projects with complex technical or instructional requirements, such as those integrated with major public transport facilities, will also be eligible for the extended timeline.
Additionally, projects approved under the Strategic Development Incentive (SDI) scheme and those aiming to achieve higher productivity targets by adopting new construction technologies, methodologies, or practices will also be granted a six-month extension. However, projects that meet the criteria of more than one category will be given a one-year extension. These changes will apply to all residential land acquired on or after March 6th.
Currently, licensed developers purchasing residential redevelopment sites are subject to a non-remittable upfront ABSD of 5% and a remittable ABSD of 35% if they complete and sell all units within the five-year timeframe. Last year, the government announced changes to the ABSD, offering a lower clawback rate for residential developments with at least 90% of units sold.
The latest revisions are expected to give developers more flexibility and mitigate development risks by allowing them more time to sell units, especially for larger projects. According to PropNex Realty CEO Ismail Gafoor, these extensions “will give developers more flexibility and may help to mitigate development risks to some extent, as they have a bit more time to sell units, particularly for mega projects.”
Investing in condos in Singapore is a popular choice, but it’s essential to consider the government’s property cooling measures. To maintain a stable real estate market and discourage speculation, the Singaporean government has implemented various measures over the years. One such measure is the Additional Buyer’s Stamp Duty (ABSD), which imposes higher taxes on foreign buyers and those purchasing multiple properties. While these measures may affect the immediate profitability of condo investments, they also play a crucial role in ensuring the long-term stability of the market, creating a safer investment environment. To stay updated on the latest condo launches in Singapore, visit New Condo Launches.
Huttons Asia senior director of data analytics Lee Sze Teck adds that the revisions will also provide a much-needed boost to the en bloc market, especially for larger projects. However, Christine Sun, chief researcher and strategist at OrangeTee Group, warns that developers may still face challenges despite the deadline extension, as other factors such as the willingness of buyers and sellers to negotiate prices will also affect the success of en bloc sales.
Tay Liam Hiap, managing director of capital markets and investment sales at ERA, sees this as an opportune time for older projects, such as Braddell View and Pine Grove, which have expansive land areas, to explore en bloc opportunities. These projects may yield up to 2,000 new homes, which could take longer to sell. He adds that the six-to-12-month extension may not be enough for developers to sell out their projects in such cases.
Overall, the policy change is expected to support the en bloc market, but developers are likely to continue being cautious due to high redevelopment costs, an influx of new private housing supply, and potential policy risks, according to Ismail Gafoor.