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8 projects may be nearing sales deadline
Most developers have under a year to sell unless they buy more time
The Straits Times - November 19, 2012
By: Esther Teo, Property Reporter
AT LEAST eight private housing projects, mostly in prime areas, are likely running out of time to sell their units within two years of completion, as stipulated by the authorities.
High-end developments such as The Marq on Paterson Hill and Hilltops in Cairnhill Circle, for instance, have been completed for at least a year but still have hundreds of new units sitting unsold.
If they are not sold within the next 12 months or less, developers may have to fork out extension charges to buy themselves more time after the two-year deadline.
Developers pay 8 per cent, 16 per cent and 24 per cent of the property purchase price for the first, second and third extra years, respectively. The amount is pro-rated based on the proportion of unsold units.
SC Global's 241-unit Hilltops, for example, was completed in the second quarter of last year and has till about June next year to sell its 196 apartments still unsold as at the end of September.
Its other luxury project, the 66-unit The Marq on Paterson Hill, completed in the first quarter of last year, has till about March next year to find buyers for its 33 unsold units.
Wheelock Properties' Scotts Square in Scotts Road also has 72 units unsold. It was completed in the third quarter of last year and also has less than a year to move its remaining units.
Other projects facing a similar predicament, with at least 10 units still unsold, include 88-unit Martin No. 38 with 21 units left and Residences at Emerald Hill with all its 33 units unsold.
SC Global and Wheelock Properties declined to comment about whether they had obtained or are planning to get an extension.
The high-end market has been languishing with slow sales and prices that are still below their peak. The additional buyer's stamp duty of up to 10 per cent introduced last year also whittled down foreign home demand, further hurting sales.
Under the Residential Property Act, housing developers whose shareholders and directors are not all Singaporeans have to get a Qualifying Certificate (QC) to buy residential property for development. This is imposed to control foreign ownership of land here.
This gives developers up to five years to build the project and requires them to sell all the units within two years of obtaining the temporary occupation permit (TOP). They are not allowed to rent out unsold units.
To ensure compliance, a developer has to put up a banker's guarantee for 10 per cent of the purchase price of the property, which may be forfeited if it fails to fulfil the QC's conditions.
Since January last year, a developer has been given the option to pay an "extension charge" if it cannot meet the five years' deadline from the issue of the QC to complete its project.
It might also be liable for a pro-rated extension charge, based on the proportion of unsold units it still holds, if it cannot meet the two-year deadline to sell all its units after the project is completed.
Some developers are understood to have sought extensions to the two-year window. However, since the implementation of the extension charge scheme last year, six developers have paid charges, the Ministry of Law said.
The Real Estate Developers' Association of Singapore has also submitted a proposal this year to extend this two-year period. The Law Ministry said that it is "looking into the feedback".
Experts say that while indirect discounts such as rental guarantees or stamp duty absorption might be offered by some projects as the deadline nears, large cuts in prices are unlikely.
Mr Lee Liat Yeang, a partner at Rodyk & Davidson's Real Estate Practice Group, noted that developers are likely to opt to pay the extension charges instead.
"A majority of developers bought the land at lower historical prices and so paying the extension charge will not erode their profit margins significantly," he said.
"This option is preferred as cutting prices would not only affect their reputation but also face objections from earlier buyers."