Developers Given Extension Absd Remission Timelines Large En Bloc Sites And Complex Projects

The Ministry of National Development (MND) has announced changes to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers, which are set to take effect on March 6.

Under the new revisions, the ABSD remission timeline for developers undertaking complex projects will be extended from six months to 12 months. This is in line with the government’s efforts to encourage developers to undertake urban transformation developments, optimize land use through intensification or integration, rejuvenate older estates, or adopt new construction technologies.

Projects that will benefit from this extension include en bloc redevelopments that yield a minimum of 700 units upon completion, and have at least 1.5 times the number of units of the existing development. Other eligible projects include those with complex technical or instructional requirements, such as those integrated with major public transport facilities.

Furthermore, projects that fall under any of the four categories mentioned above 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 that is acquired on or after March 6.

Currently, licensed housing developers purchasing residential redevelopment sites are subject to an upfront 5% ABSD, which cannot be remitted, and an additional 35% ABSD, which can be remitted if the developer sells all the units in the project within five years.

These latest revisions come after changes were announced in February last year, which 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.”

Huttons Asia’s Senior Director of Data Analytics Lee Sze Teck also believes that the ABSD changes will give a much-needed boost to the en bloc market, particularly for larger projects.

However, OrangeTee Group’s Chief Researcher and Strategist Christine Sun notes that developers may still face challenges even with the extended deadline, as the success of en bloc sales ultimately depends 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 this could be an opportune time for older projects like Braddell View and Pine Grove, which have extensive land areas, to explore en bloc opportunities. These projects may yield around 2,000 new homes, which may take more time to sell.

However, Gafoor cautions that the policy change may not lead to a revival in the en bloc market and expects developers to remain cautious due to high redevelopment costs, an impending supply of private housing, and potential policy risks.