The Ministry of National Development (MND) has announced revisions to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers, which will come into effect on March 6th. The changes include an extension of the ABSD remission timeline from six to 12 months for developers undertaking complex projects. This move aims to incentivize developers to take on urban transformation developments, optimize land use through intensification or integration, revitalize older estates, or adopt new construction technologies.
Projects that will benefit from this extension include en bloc redevelopments that will yield at least 700 units upon completion, with 1.5 times the number of homes of the existing development. Other eligible projects include those with complex technical or instructional requirements, such as those integrated with major public transport facilities. Additionally, projects approved under the Strategic Development Incentive (SDI) scheme or those aimed at achieving higher productivity targets through the adoption of new construction technologies, methodologies, or practices will also receive an extension.
The revised timeline will grant a six-month extension to projects falling under any of the four categories, while those that meet the criteria of more than one category will be granted a one-year extension. These changes will apply to all residential land acquired on or after March 6th.
Currently, licensed housing developers purchasing residential redevelopment sites are subject to a 5% ABSD upfront, which is non-remittable, and another 35% ABSD, which can be remitted when the units are completed and sold within five years. These revisions follow changes announced in February last year, which offered a lower clawback rate for residential developments with at least 90% of units sold.
PropNex Realty CEO Ismail Gafoor believes that these extensions will provide developers with more flexibility and help mitigate development risks to some extent. Developers will have more time to sell units, particularly for larger projects. Lee Sze Teck, senior director of data analytics at Huttons Asia, also believes that the changes will give a much-needed boost to the en bloc market, especially for bigger projects.
However, OrangeTee Group’s chief researcher and strategist Christine Sun points out that developers may still face challenges despite the deadline extension. The success of en bloc sales will depend on the willingness of buyers and sellers to negotiate prices. ERA’s managing director of capital markets and investment sales, Tay Liam Hiap, suggests that this could be an opportune time for older projects like Braddell View and Pine Grove, which have expansive land areas, to explore en bloc opportunities. These projects could yield around 2,000 new homes, which may require more time to sell. Tay adds that the extension may not be enough for developers to sell out their projects.
Overall, while the policy change may provide some relief for developers, it may not be enough to spark a revival in the en bloc market. Developers are expected to remain cautious due to the high cost of redevelopment, the influx of private housing supply, and potential policy risks.
Investing in a condo in Singapore entails considering the government’s property cooling measures. In order to maintain a stable real estate market, the Singaporean government has implemented various measures to discourage speculative buying. One of these measures is the Additional Buyer’s Stamp Duty (ABSD), which imposes higher taxes on foreign buyers and those purchasing multiple properties. Though such measures may affect the short-term profitability of condo investments, they ultimately contribute to the long-term stability of the market, making it a safer Singapore Condo investment environment.