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 6. As part of the revisions, the ABSD remission timeline for developers undertaking complex projects will be extended from six to twelve months. This move aims to incentivize developers to take on urban transformation developments, maximize land use through intensification or integration, rejuvenate older estates, or adopt new construction technologies.
Under the new policy, the ABSD remission timeline for developers purchasing residential redevelopment sites will be extended from six to twelve months. This applies to projects that meet certain criteria, such as en bloc redevelopments yielding at least 700 units upon completion, or those with at least 1.5 times the number of homes of the existing development. Other projects that will qualify for the extension include those with complex technical or instructional requirements, such as those integrated with major public transport facilities.
Additionally, the policy will also apply to projects approved under the Strategic Development Incentive (SDI) scheme and those aiming to achieve higher productivity targets through the adoption of new construction technologies, methodologies, 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.
Currently, licensed housing developers purchasing residential redevelopment sites are subjected to an upfront 5% ABSD, which is non-remittable, and an additional 35% ABSD, which can be remitted when the developer completes and sells all units in the project within five years.
These revisions come on the heels of changes announced in February last year, which offered a lower clawback rate for residential developments with at least 90% of units sold. PropNex Realty CEO Ismail Gafoor says that “such extensions will give developers more flexibility and may help to mitigate development risks to some extent, as they have more time to sell units, particularly for mega projects.” Lee Sze Teck, senior director of data analytics at Huttons Asia, believes that the ABSD revisions will give a much-needed boost to the en bloc market, especially for bigger en bloc projects.
However, Christine Sun, chief researcher and strategist at OrangeTee Group, cautions that despite the proposed policy change, developers may still face challenges due to other factors, such as the willingness of buyers and sellers to negotiate prices. Tay Liam Hiap, managing director of capital markets and investment sales at ERA, sees this as an “opportune time” for older projects like Braddell View and Pine Grove, with large land areas, to explore en bloc opportunities. These projects could potentially yield around 2,000 new homes, which may take longer to sell. Tay adds that the current extension may not be enough for developers to sell out their projects.
Despite the positive outlook, Gafoor believes that the policy change may not spark a revival in the en bloc market, as developers are likely to remain cautious due to high redevelopment costs, upcoming supply of private housing, and potential policy risks.