SINGAPORE (April 1): SingHaiyi Group is selling its Corporate Residence subsidiary for $16.4 million in a bid to avoid penalties for unsold homes.

Corporate Residence is the developer behind City Suites, a freehold 56-unit residential project at Balestier Road.

Sales for the project have been slow, according to SingHaiyi, with only 10% of the units taken up since it was launched in May 2013.

"In view of the possible levy as a result of the Qualifying Certificate (QC) on unsold units, it is in the interest of the company to sell Corporate Residence," the company said in a statement today.

Under the QC ruling, developers with foreign shareholders and directors have to complete construction within five years from the time they bought land and sell all units in another two years. This affects all listed developers since some of their shares may be owned by foreigners

The buyer is ACG Construction, City Suites' main contractor.

SingHaiyi said the disposal is not expected to have any material impact on its earnings for the year ended March 31, 2015.

SingHaiyi shares rose 2% to 15.2 cents yesterday.