The latest news from Singapore is that property developers may face hefty extension charges on unsold units that add up to $90 million in their condominium projects ranging from April to December 2015. This may follow with an S$238 million by 2016 if the Singapore’s property market does not perk up.
It is expected that developers will have to pay in the worst-case state of affairs a staggering S$328 million if they should be unsuccessful to sell units by the end of 2016 – according to estimates by property advisory firm C&W (Cushman and Wakefield).
Cushman and Wakefield advised that at the conclusion of the first period, developers have remunerated an estimated value of about S$119 million in extension costs for condominiums completed from 2010 onwards unsold. The condominiums completed before that resulted as fully sold in the property market boom.
This huge soar in figures from one year to the next is directly connected to more projects completed in 2014 when compared to 2013. It is required that “foreign” developers need to trade their units within the two year completion rate, and more incurring charges will be expected in 2016, when compared to 2015.
Cushman & Wakefield’s research director Christine Li believes that there are modest expectations of developments moving by themselves, concluding from how some developments have not traded units at all in the recent two years.
She has mentioned that developers on the other hand who have been proactive in marketing either bulk or individual unit’s purchases of whole developments have achieved better results. Ms Li deems that developers should think about volume sales or re-launch projects, as there is still significance in the high-end part from both trade and institutional investors.
Mr. Leung from KPMG said there is need of evaluating overheads, such as whether QC charges in their primary year will surpass stamp duties paid, while considering that if the units stay unsold the QC rates will double. There will be no way of knowing if the property market is going to fare well at the time.
He also advised that the charging of their ownership to Singaporean and delisting developers’ methods to flee QC rates defeats the policy’s unique purpose, which was set up to contribute to the housing supply and rectify prices.