Developers Given Extension Absd Remission Timelines Large En Bloc Sites And Complex Projects
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The Ministry of National Development (MND) has announced revisions to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers, which will take effect on March 6th. This move aims to encourage developers to undertake urban transformation developments, optimise land use through intensification or integration, rejuvenate older estates or adopt new construction technologies. In addition to the revisions, the ABSD remission timeline for developers undertaking complex projects has been extended from six to 12 months.
Developers undertaking complex 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, will benefit from the extended timeline. Other projects eligible for the extension include those with complex technical or instructional requirements, such as projects integrated with major public transport facilities. Also included are projects approved under the Strategic Development Incentive (SDI) scheme and projects aiming to achieve higher productivity targets through the adoption of new construction technologies, methodologies, or practices.
Projects that fall under any of these four categories will be granted a six-month extension, while projects that meet the criteria of more than one category will receive a one-year extension. The policy changes are expected to apply to all residential land acquired on or after March 6th.
Currently, licensed housing developers purchasing residential redevelopment sites are subject to a 5% ABSD upfront, which is non-remittable, and another 35% ABSD, which is remittable when the developer completes and sells all the units in the project within the five-year timeframe. Last February, changes were announced that offered a lower clawback rate for residential developments with at least 90% of units sold.
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.” However, he does not expect the policy change to spark a revival in the en bloc market, as developers may continue to be cautious due to the high cost of redevelopment, ample oncoming private housing supply, and potential policy risk.
OrangeTee Group’s chief researcher and strategist Christine Sun adds that developers may still face challenges despite the deadline extension, as success in en bloc sales will depend on the willingness of buyers and sellers to negotiate prices. Meanwhile, ERA’s managing director of capital markets and investment sales, Tay Liam Hiap, believes that it could be “an opportune time” for older projects, such as Braddell View and Pine Grove, which have expansive land areas, to explore en bloc opportunities as they may take more time to sell the 2,000 new homes.