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Property News06 Feb 2018

Developers paid S$380m in ABSD, QC extension charges

DEVELOPERS have paid a total of S$380 million in fees and charges to the government for not being able to sell all residential units in their projects within stipulated deadlines.

Singapore condo

As at end-2017, they have coughed up S$200 million in additional buyer's stamp duty (ABSD) fees and S$180 million in qualifying certificate (QC) extension charges since the regimes were introduced.

These figures were provided by the Ministry of National Development (MND) in response to queries from Gan Thiam Poh, a Member of Parliament for Ang Mo Kio GRC.

"Around 80 developments (with a total of about 750 unsold units) could be subjected to these fees and charges in 2018 if either or both disposal conditions are not met."

While there were no comparative numbers given, stacking those figures against estimates by the Real Estate Developers' Association of Singapore (Redas) a year ago suggests that pressures on developers' unsold inventory have alleviated.

As at February last year, some 730 units remained unsold in developments affected by extension charges under the QC conditions and another 3,500 units in nearly 40 developments would be impacted by the ABSD remission claw-back in 2017 and 2018.

Under the ABSD rules that kicked in since late 2011, developers have to build and sell their units within five years from their land purchase or incur ABSD on land cost with interest.

The QC regime, last amended in 2011, affects developers with even a single non-Singaporean shareholder and/or director. It requires developers to complete their projects within five years of acquiring the site, and to sell all the units within two years of completion to avoid extension charges for the unsold units.

Consultants noted that ABSD and QCs are of lesser concern to developers now, thanks to the recovery in residential transactions.

"With the continued optimism in the residential market, new project launches with at least 100 units last year booked 40 per cent sales in the first month on average, compared to only 28 per cent in 2015," said Cushman & Wakefield research director Christine Li.

"The brisk sales have encouraged developers to table audacious bids for land sites over the last 12 months, thinking that the risk of being hit by either ABSD or QC extension charges has greatly diminished. New launches such as Parc Riviera and Grandeur Park Residences, are 97 per cent and 84 per cent sold after being on the market for merely 16 and 10 months respectively."

Savills Singapore research head Alan Cheong noted that this year, "it will be a question how fast prices will increase and whether the market can take it".

Projects that may incur ABSD if they do not sell out by this year include Highline Residences by Keppel Land, where there were 50 unsold units as at end-2017; Sophia Hills by Hoi Hup Realty and Sunway Developments where there were 24 unsold units; and Kingsford Waterbay where 190 units remained unsold.

Mr Gan also asked on Monday if the government planned to increase the supply of executive condominiums (ECs) in the next five years on the confirmed list of the government land sales (GLS) programme.

The stock of unsold EC units at 983 units as at end-2017 was the lowest level since Q3 2010, with consultants flagging tight supply as there is only one EC site on the confirmed list and two on the reserve list of the GLS programme. These three sites could yield about 1,700 units.

In response, MND said that the government takes into consideration many factors in planning for EC supply, such as the existing unsold EC stock, take-up rate of new EC units, and prevailing market sentiments.

"These factors fluctuate from year to year. Hence, the government monitors the EC market closely and calibrates the supply of ECs accordingly," it added.

MND also gave updates on private home ownership for another question from Mr Gan. About 381,000 Singapore citizens, permanent residents, and foreigners own one private residential property here.

About 59,000 own two private homes; 20,000 own three to 10 private homes; and fewer than 200 own more than 10 private residential properties. Of these private residential property owners, 15 per cent also own a HDB flat.



Source: The Business Times
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