En bloc cycle may start in 2021: Huttons
By Valerie Kor
/ EdgeProp Singapore |
SINGAPORE (EDGEPROP) - Developers may start to buy land and kickstart a new en bloc cycle in 2021, as most developers would have sold out their units, according to a Huttons’ topical paper in August. Several projects will meet their five-year Additional Buyer’s Stamp Duty (ABSD) timeline in 2021, including Grandeur Park Residences, Seaside Residences, Martin Modern and Margaret Ville.
The paper points to the changing behaviours of developers as a result of control measures introduced in 2011, including ABSD, Seller’s Stamp Duty (SSD) and the Loan-to-Value (LTV) ratio.
ABSD is applied to the purchase price of the land. While housing developers may apply for upfront remission of the ABSD, the developer has to pay the full ABSD sum, including interest should the residential development fail to fully sell all units within five years.
The report states, “This is onerous on the housing developer as failure to sell the last unit means the entire profits from the project can potentially be wiped out.” Therefore, the stringent ABSD rules have caused developers to sell their existing projects before buying new land.
Previously, when developers were only subject to the less punitive Qualifying Certificate (QC) rules, which gave them up to seven years to sell out their projects, developers continued to buy land. During these periods, the uncompleted unsold stock in the market averaged at about 37,000 units.
Since the ABSD was implemented, Huttons observes that although uncompleted and unsold stock dwindled over the next four years, developers did not enter the en bloc market to acquire more land. The next en bloc cycle only started from 2016 to 2018, five years after 2011. The uncompleted unsold stock was around 20,000 units.
Currently, the government has given a six-month extension to the ABSD timeline subject to certain conditions, thus certain developers would have more time to sell their units. According to published data from the Urban Redevelopment Authority (URA), there are 11 unsold units that will meet the ABSD timeline this year. Next year, the figure is 420.
As sales momentum picks up in Phase 2 reopening, Huttons believes that developers will not face problems selling out their units. It points to a successful bulk sale of 16 units at 38 Jervois in June as an example, which helped the developer beat the August ABSD timeline.
Check out the latest listings near Grandeur Park Residences, Seaside Residences, Martin Modern and Margaret Ville
For price trends, recent transactions, other project info, check out these projects' research page: Grandeur Park Residences, Seaside Residences, Martin Modern and Margaret Ville.
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