Sales of Singapore’s high-end properties have been sluggish for a while, and developers faced with a ticking clock on high charges for unsold units may take drastic measures to change that, but probably not price cuts. “Price is not the issue. The issue is there’s no demand,” Derrick Heng, a property analyst at Maybank-Kim Eng, said Tuesday.
It’s not just a matter of sitting on the unsold units while waiting for buyers to return. Developers in Singapore are running out of time: any units still unsold two years after a project’s completion face an “extension charge,” of 8 percent of the proportional land cost for the first year, rising to 16 percent in the second year and 24 percent in the third. It’s a measure aimed at preventing property hoarding by “foreign” developers in the land-starved city-state.
The only way to avoid the charges is if the developer is Singaporean or the company has only Singaporean shareholders and board members. “Penalties for unsold units under the qualification certificate (QC) ruling may persuade some developers to go down the de-listing path,” Heng said in a note late last month.