Real estate developers in Singapore are cutting unit prices by 15 percent in order to sell unsold homes and avoid steep government fines.
According to a media report, CLSA revealed property firms could offer larger discounts as they struggle to move unsold units amidst a looming deadline for failure to do so means paying the applicable stamp duties and extension fees.
Under the Residential Property Act, developers are required to pay an Additional Buyer Stamp Duty (ABSD) of 10 percent for land bought after December 2011 and 15 percent for land acquired after January 2013.
But the government will waive the fee if they agree to build, complete and then sell all their units within a stipulated period, namely four years for executive condominiums (ECs) and five years for private residential properties.
Failing to meet this condition means developers must pay the full ABSD plus interest, and this could diminish profits by up to 50 percent for some high-end developers, said CLSA.
“Given the build-up of inventory among developers and the requirement to pay an extension premium for Qualifying Certificates (QCs), developers may adjust pricing for existing launches in order to move inventory,” it added.