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.
Close to 75 percent of all private homes launched in the first quarter of 2013 came from six popular 99-year leasehold condominium projects in the Outside Central Region (OCR) or 67.9 percent of all units sold, said Colliers International.
They include the 630-unit Q Bay Residences which sold 463 of the 520 units released in Q1 at prices ranging from S$823 to S$1,277 psf, and the 582-unit Urban Vista where 348 units were sold out of the 420 launched with prices ranging between S$1,193 and $1,692 psf.
The 912-unit D’Nest sold 699 of the 800 units launched at prices ranging from S$737 to S$1,299 psf, while Hillion Residences – a 546-unit mixed development in Bukit Panjang sold 191 units out of the 250 released at prices from S$1,225 to S$1,698 psf.
The 755-unit Trilinq sold 106 out of the 200 units released in March at prices that ranged from S$1,193 to S$1,843 psf, while the 810-unit La Fiesta sold 476 out of the 500 units launched at prices between S$956 and S$1,440 psf.
Factors which contributed to the success of these projects included location, competitive pricing and proximity to public transportation networks like MRT stations, noted the consultancy.
Sales were also bolstered by incentives such as rebates, early-bird prices and developers absorbing part of the additional buyer’s stamp duty (ABSD).
Moving forward, demand for private homes in the long term remains steady despite the slew of cooling measures implemented by the government in Q1 2013. This bullish outlook is supported by the new high-speed rail link between Singapore and KL, in addition to the upcoming Cross Island Line (CRL) and Jurong Region Line (JRL) by 2030.
Source : PropGuru – 25 Apr 2013