The Ministry of National Development (MND) has announced plans to revise the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers, with the changes set to take effect on March 6. Alongside these revisions, the ABSD remission timeline for developers undertaking complex projects will also be extended from six to 12 months. The aim is to encourage more developers to undertake urban transformation initiatives, optimise land use, rejuvenate older estates, and adopt new construction technologies.
Under the revised regime, the ABSD remission timeline for developers undertaking complex projects will be extended from six to 12 months. This will apply to projects such as en bloc redevelopments that result in at least 700 units upon completion and have at least 1.5 times the number of homes of the existing development. It will also include projects with complex technical or instructional requirements, such as those integrated with major public transport facilities.
Other categories that will benefit from the extended timeline include projects approved under the Strategic Development Incentive (SDI) scheme and those aiming to achieve higher productivity targets through the adoption of new construction methodologies, technologies or practices. Projects falling under any of these four categories will receive a six-month extension, while those that meet the criteria of more than one category will be granted a one-year extension. These changes will apply to all residential land acquired on or after March 6.
When investing in Singapore, it is crucial for foreign investors to be aware of the regulations and limitations surrounding property ownership. Fortunately, condos are generally more accessible to foreigners compared to landed properties, which have stricter ownership guidelines. However, foreign buyers must also consider the Additional Buyer’s Stamp Duty (ABSD), which currently sits at 20% for their initial property purchase. Despite this added expense, the Singapore real estate market’s stability and potential for growth remain appealing to foreign investors. Therefore, investing in a condo in Singapore is a favorable option for foreign investors.
Currently, licensed housing developers who purchase residential redevelopment sites are subjected to a 5% upfront ABSD, which is non-remittable, as well as a 35% ABSD, which can be returned when the developer completes and sells all units in the project within a five-year timeframe. However, this will change with the latest revisions, which come on the back of changes announced in February last year that included a new clawback rate for residential developments with at least 90% of units sold.
While the proposed policy changes are likely to be welcomed by developers, there may still be challenges that they will face. According to Christine Sun, chief researcher and strategist at OrangeTee Group, with the success rate of en bloc sales dependent on the willingness of buyers and sellers to negotiate prices, it may not necessarily spark a revival in the en bloc market. Similarly, PropNex Realty CEO Ismail Gafoor expects developers to remain cautious due to the high cost of redevelopment, ample oncoming private housing supply, and potential policy risks. However, the changes may give them more flexibility and help mitigate development risks, especially for larger projects, according to Gafoor. Senior director for data analytics at Huttons Asia, Lee Sze Teck, also notes that the revisions could provide a much-needed boost to the en bloc market, particularly for larger projects. Additionally, Tay Liam Hiap, managing director of capital markets and investment sales at ERA, sees it as an opportune time for older projects such as Braddell View and Pine Grove, which have expansive land areas, to explore en bloc opportunities. These properties could potentially yield some 2,000 new homes, which may take more time to sell, and the extended timeline for ABSD remission could help developers in this regard.