Developers Given Extension Absd Remission Timelines Large En Bloc Sites And Complex Projects
The Ministry of National Development (MND) has announced updates to the Additional Buyer’s Stamp Duty (ABSD) regulations for licensed housing developers, effective March 6. As part of these updates, the ABSD remission timeline for developers undertaking complex projects has been extended from six to 12 months. This measure aims to encourage developers to undertake urban transformation developments, optimize land use through intensification or integration, rejuvenate older estates, or adopt new construction technologies.
The extension will apply to projects such as en bloc redevelopments that will yield at least 700 units upon completion, and if the number of homes in the new development is at least 1.5 times the number of homes in the existing development. Other projects that will benefit from this extension include those with complex technical or instructional requirements, such as projects integrated with major public transport facilities.
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The four categories that qualify for the extension are projects approved under the Strategic Development Incentive (SDI) scheme, residential developments that achieved higher productivity targets through the adoption of new construction technologies, methodologies or practices, and projects that fall under more than one category. Projects that meet any of these criteria will receive a six-month extension, while projects that qualify for 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.
Currently, licensed housing developers purchasing residential redevelopment sites are subjected to 5% ABSD upfront, which is non-remittable, and another 35% ABSD, which can be remitted if the developer sells all the units within the five-year timeframe. Last year, the government also announced changes that offered a lower clawback rate for residential developments with at least 90% of units sold.
PropNex Realty CEO Ismail Gafoor believes that these extensions will give developers more flexibility and may help mitigate development risks as they have more time to sell units, particularly for mega projects. Huttons Asia senior director of data analytics, Lee Sze Teck, expects the ABSD revisions to boost the en bloc market, especially for larger en bloc projects. However, Christine Sun, chief researcher and strategist at OrangeTee Group, adds that developers may still face challenges despite the deadline extension as there are other considerations, such as the willingness of buyers and sellers to negotiate prices.
ERA managing director of capital markets and investment sales, Tay Liam Hiap, sees this as an opportune time for older projects like Braddell View and Pine Grove, which have expansive land areas, to explore en bloc opportunities. These projects may yield about 2,000 new homes, which could take more time to sell. However, Gafoor believes that this policy change may not trigger a revival in the en bloc market, and developers are still likely to be cautious due to the high cost of redevelopment, upcoming private housing supply, and potential policy risks.
