SINGAPORE - The Real Estate Developers' Association of Singapore (Redas) on Tuesday (Feb 19) called for a review of the July 6 cooling measures, warning the higher stamp duties on developers could lead to "a repeat of the 2017-2018 'land grab' situation in four to five years' time".
Under the rules which went into effect overnight on July 6 last year, property developers have to pay a 25 per cent additional buyer's stamp duty (ABSD) on land they acquire based on the land cost, up from the previous 15 per cent. Although this is remissible when the developer manages to completely sell all the units in the development within five years, developers were also hit with a new additional 5 per cent ABSD tax which is not remissible.
The land ABSD stands at a total of 30 per cent and limits the timeframe for all residential sites, regardless of size, to be sold out within five years, said Redas president Chia Ngiang Hong at the group's Spring Festival lunch.
This policy has pushed all developers to exhaust their inventory at around the same time, and could partly account for the land price escalation in 2017 and 2018 because everyone ran out of inventory at the same time, he said.
Mr Chia called for a review of the measure, saying "if land ABSD is not reviewed, we can expect a repeat of the 2017-2018 'land grab' situation in four to five years' time".
Excessive landbanking should be discouraged but some flexibility in terms of the timeframe to sell out projects can prevent a situation where developers rush to replenish their landbank at the same time, causing unhealthy competition, he said.
When the price of raw material goes up, we can expect the price of the end product to increase as well," Mr Chia added.
He said that it may be timely to review and tweak other existing policies and measures to help Singaporeans, particularly first-time buyers, by re-evaluating the loan-to-value limit for their first property purchase.
"The Government can also make it easier for HDB upgraders to own private homes by reviewing the timing of upfront payment of ABSD so as to ease their cash flow planning, Mr Chia said.
The Redas chief said the hospitality sector is expected to continue to perform well, buoyed by rising tourist arrivals, the imminent completion of Jewel Changi airport and increased capacity of Terminal 1. Hotel revenues are expected to rise further this year but a recent report cautioned that there could be some headwinds in tourist arrivals due to geopolitical uncertainty and trade tensions, Mr Chia added.
"As developers, we take on tremendous business risks buying land with a certain expectation... of the market going forward. However, more often than not, market conditions change significantly even before the project is launched for sale or the building is completed," he said.