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ABSD could shrink developers’ profits by 50%

Posted on 11 Oct 2014 | Comments Off

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.

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Posted in Cooling Measures, Developers

Tagged ABSD, Additional Buyer Stamp Duty, Residential Property Act

Just one bungalow sold in Sentosa Cove during H1 2014

Posted on 8 Sep 2014 | Comments Off

A $17 million bungalow on Treasure Island in Sentosa Cove has the distinction of being the only bungalow sold in the posh enclave in H1 2014, CBRE said.

This translates to a psf price of $1,506 on a land area of 11,281 sq ft. The same property last changed hands back in 2010 for $17.8 million, noted the consultancy.

Meanwhile, a total of 18 such homes on the resort island were sold in 2013. Two reasons for the slumping sales could be the higher ABSD rate of 15 percent imposed on foreign buyers and the uncertainty among this group of obtaining approval to buy landed property from the Land Dealings Approval Unit (LDAU), revealed media reports.

Despite the slowdown recorded in H1, CBRE reckons sales will pick up in H2 2014.

For instance, the developer of Pearl Island is ramping up efforts to sell its remaining 12 bungalows. Priced between $14 million and $25 million, they were completed two years ago.

“Similar to the GCB (good class bungalow) market, there are only 317 bungalows in Sentosa Cove and the resort-like waterfront living is not replicated elsewhere in Singapore. There will be interest among HNWIs (high-net-worth individuals) to own a trophy home here,” CBRE added.