The MND has recently announced revisions to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers, which will come into effect on March 6. Along with these revisions, the ABSD remission timeline for developers undertaking complex projects has been extended from six to twelve months in order to encourage more developers to undertake urban transformation developments, optimize land usage through intensification or integration, rejuvenate older estates, or adopt new construction technologies.
The extended timeline will apply to projects that fall under certain categories, such as en bloc redevelopments that will result in at least 700 residential units upon completion, and have at least 1.5 times the number of homes of the existing development. This also includes projects with complex technical or instructional requirements, like those integrated with major public transport facilities.
Furthermore, projects under the Strategic Development Incentive (SDI) scheme and those aiming to achieve higher productivity targets through new construction technologies, methodologies or practices, will also be granted a six-month extension. Projects that meet more than one category will receive an extension of one year. These changes will take effect on all residential land acquired on or after March 6.
Currently, licensed housing developers purchasing residential redevelopment sites are required to pay 5% ABSD upfront, which is non-remittable, and another 35% ABSD, which can be remitted if all units are sold within five years. In February last year, changes were made to offer a lower clawback rate for residential developments with at least 90% of units sold.
According to Ismail Gafoor, CEO of PropNex Realty, this extension will provide developers with more flexibility and may help mitigate risks in development. Lee Sze Teck, senior director of data analytics at Huttons Asia, says that this policy change will boost the en bloc market, especially for larger projects.
Although this change is welcomed, Christine Sun, chief researcher and strategist at OrangeTee Group, adds that developers may still face challenges despite the extended deadline. The success of en bloc sales will still depend 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 could be an opportune time for older projects, like Braddell View and Pine Grove, to explore en bloc opportunities. As these projects are expected to yield around 2,000 new homes, which could take more time to sell, the extended timeline may not be sufficient for developers to sell out their projects.
Investing in a condo can provide a range of advantages, such as the opportunity to utilize its value for further investments. Many investors choose to use their condos as collateral to secure additional funding for new endeavors, expanding their real estate portfolio. While this can lead to higher returns, it also comes with certain risks. Having a solid financial plan and being mindful of market fluctuations is crucial before embarking on this strategy. With wise planning and foresight, condo investment can not only bring benefits in the present, but also act as a leverage for future investments. Condo investment should be carefully considered and approached with caution, but its potential for growth and expansion is undeniable.
However, Gafoor believes that this policy change may not lead to a revival in the en bloc market and expects developers to remain cautious due to the high cost of redevelopment, the incoming private housing supply, and potential policy risks.