Buyers and investors of brand new condominiums in Singapore should be on their toes as the developers of 10 new condominiums in Singapore are likely to slash the prices of their units.
The Additional Buyer Stamp Duty (ABSD) has always been a familiar term amongst home-buyers and property investors in Singapore. The rules were enforced in December 2011 as part of the government’s cooling measures for the property market. However, not many people are aware that the Additional Buyer Stamp Duty (ABSD) also applies to developers.
Residential property developers face the ABSD rule that requires them to complete their projects and sell all units within 5 years. If developers are unable to do so, they face ABSD charges that amounts to 15% of the site’s purchase price.
The following brand new condominiums are expected to hit the ABSD deadline in the coming months and the developers will be looking to sell them off before that happens:
Some developers will be willing to cut prices up to 10% in a bid to avoid the hefty fines amounting to 15% of the sale price. New buyers can be pretty confident that they will be getting their units at a much more attractive price than earlier buyers who got it much earlier.
Having said that, some of these new condominiums are labeled with a ‘luxury’ status and these developers may opt to absorb the ABSD themselves in order to maintain the status of their developments.
Under current rules, foreign developers will obtain a Qualifying Certificate that requires them to sell off all units within two years after the TOP date. Developers can choose to pay an Extension Fee to continue marketing and selling their units. The Extension Fee is dependent on the proportion of unsold units.
It is estimated that developers may pay extension charges amounting to $226million in 2016 and $1.3billion in 2017.
The cut in prices has already started, as popular launches such as Robin Residences and d’Leedon are starting to show signs of movement. At The Trilinq in Clementi, the median price was $1,359 psf in Q1 of 2016, down from $1,545 psf when first launched in the Q1 of 2013.
Investors and Potential Buyers should stay alert, you have the power to negotiate with these developers before their ABSD deadline.