Pressure mounts over unsold units

Gramercy Park, which is almost complete, on Jan 30, 2016.
Gramercy Park, which is almost complete, on Jan 30, 2016. ST PHOTO: MARK CHEONG

Developers already struggling in a weak market face more pressure with 700 unsold homes at 13 projects set to be hit by fees of nearly $100 million, the Real Estate Developers' Association of Singapore said yesterday. It did not give details of the specific projects.

The fees relate to a Residential Property Act rule for developers, whose shareholders and directors are not all Singaporeans, to get a qualifying certificate when buying private residential land for development. A developer has five years to finish building and two more years to sell all the units. It is also not allowed to rent out unsold units. If the units are not sold within the two-year period, the developer has to pay pro-rated extension charges.

The extension fee goes from 8 per cent of the purchase price of the residential property for the first year, to 16 per cent for the second year, and 24 per cent for the third.

Developers unwilling to fork out the hefty sum have looked to creative ways to get off the hook. For example, SC Global has cancelled qualifying certificates issued to its developments after delisting from the stock market, saving millions.

Others are looking at bulk sales to clear unsold units. For instance, City Developments (CDL) is said to have been marketing one of two towers at the as-yet-unlaunched Gramercy Park, while OUE is looking to offload one of two towers at Twin Peaks.

CDL said it has until the middle of 2018 to sell all the units before incurring qualifying certificate extension charges.

A version of this article appeared in the print edition of The Straits Times on February 19, 2016, with the headline 'Pressure mounts over unsold units'. Print Edition | Subscribe