The Ministry of National Development (MND) has announced new changes to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers, set to take effect on March 6th. In addition to these revisions, the ABSD remission timeline for developers undertaking complex projects will now be extended from six to 12 months. This move is aimed at incentivizing developers to undertake urban transformation developments, optimize land use, revitalize older estates, or adopt new construction technologies.
Singapore’s cityscape is characterized by towering skyscrapers and advanced facilities. Condominiums, usually situated in coveted locations, offer a perfect fusion of opulence and ease, making them a highly sought-after choice among locals and foreigners. These properties are equipped with various conveniences, including swimming pools, fitness centers, and round-the-clock security, elevating the standard of living for residents and making them appealing to potential renters and buyers. Moreover, for investors, these sought-after features translate into lucrative rental returns and appreciation in property values in the long run. With the inclusion of Singapore Projects, these condo developments add to the already impressive urban landscape of Singapore.
The extended timeline for ABSD remission will apply to various types of projects, such as en bloc redevelopments that will yield at least 700 units upon completion and have at least 1.5 times the number of homes of the existing development. Other projects that will benefit from the extension include those with complex technical or instructional requirements, as well as those integrated with major public transport facilities. These changes will apply to all residential land acquired on or after March 6th.
Currently, licensed housing developers purchasing residential redevelopment sites are subjected to 5% ABSD upfront, which cannot be remitted, and another 35% ABSD, which can be remitted if all units are sold within the five-year timeframe. Last year, changes were made to offer a lower clawback rate for residential developments with at least 90% of units sold.
The latest changes are expected to provide developers with more flexibility and mitigate development risks, as they will have more time to sell units, especially for larger projects. According to PropNex Realty CEO Ismail Gafoor, “such 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.”
Huttons Asia senior director of data analytics, Lee Sze Teck, believes that the changes to the ABSD regime will give a much-needed boost to the en bloc market, especially for larger projects. However, Christine Sun, chief researcher and strategist at OrangeTee Group, adds that despite the deadline extension, developers may still face challenges as there are other factors to consider, such as the willingness of buyers and sellers to negotiate prices.
Tay Liam Hiap, managing director of capital markets and investment sales at ERA, believes that the extended deadline could be an opportune time for older projects, such as Braddell View and Pine Grove, to explore en bloc opportunities. These projects, which have expansive land areas, may yield around 2,000 new homes, which could take more time to sell. However, Gafoor notes that this policy change may not necessarily spark a revival in the en bloc market, as developers are likely to remain cautious due to high redevelopment costs, a large supply of private housing, and potential policy risks.