Lower ABSD for foreign buyers in areas like Marina South

The URA recently rejected a bid of S$770.5million or S$984per square foot per plot rate (psfppr) for a 99-year leasehold Marina Gardens Crescent in Marina South due to the low bid price.

The Marina Gardens Crescent site may have been a target for developers who were cautious due to the uncertainty surrounding housing demand.

Locals may be less interested in future homes at Marina South if there are no local schools nearby. Developers might also fear that foreigners and investors who are not Singapore Permanent Residents (SPRs), or those who do not own homes, will be less interested in buying a home.

While we await to see if a government-acceptable offer will be forthcoming for the Marina Gardens Crescent property in the future, maybe efforts should also be made to increase the demand for this site.

Marina Gardens Crescent plot which is suitable for residential or commercial development has been placed on the reserve list under the H1 2024 Government Land Sales Program (GLS). Developers may apply to sell the land, which is expected to generate approximately 775 homes for private use, for a price that the government will accept.

To revive foreign buyer interest, the Government could lower Additional Buyer’s stamp duty (ABSD) for foreigners not registered in Singapore. Marina South and Sentosa are two areas where locals may have a harder time buying homes to live in.

The number of non-SPR foreigners purchasing private homes fell by approximately one-third between 2023 and the previous year.

URA data from February 14 shows that the number of foreigners who are not SPR and have bought private residences in the country has significantly decreased. This is due to the increased ABSD they face.

ABSD rates for foreigners who are not SPR citizens have risen dramatically since ABSD was implemented in December 2011. Most recently, it was raised from 30 to 60 percent, with effect on April 27, 2023.

Some non-SPR foreigners pay no ABSD. Singaporeans and permanent residents from Iceland, Liechtenstein (Norway), Switzerland, Switzerland, and the US are treated the same as Singaporeans in terms of stamp duty under the respective free trade agreements with these countries.

When buying a home in the United States, non-SPRs, such as Chinese, Indonesian and Indian nationals, will pay 60% ABSD.

Certain policies governing private housing should favor locals purchasing their first home.

The excessive purchase of private properties by foreigners can cause a market distortion and make it more difficult for the locals to realize their dream of owning a private residence.

There are still benefits for foreigners who don’t hold SPR visas to buy a home here.

Singapore wants to attract global talent. By attracting top talent, the economy benefits. It is easier to attract top talent from around the world to come and live, work, and play in Singapore when foreigners who are not SPRs do not have to face any obstacles.

The purchase of a property here will also allow talented foreigners, who aren’t SPRs, to get familiarized with Singapore. Some of these people may later deepen Singapore ties, and even become Singapore citizens or SPRs.

Second, non-SPR residents may rent their homes in the country. There is a large supply of private rental houses for foreigners working or studying in the country as well locals who want to rent a house. This gives tenants a choice and allows them to get rented at favourable rates.

Third, the foreigners who purchase homes in this country but are not SPRs contribute to tax revenues.

Read more on : The Continuum

Budget 2024 had some good news for homeowners, home buyers, and housing developers. Since there are valid reasons for lowering ABSD rates on non-SPR foreigners purchasing homes in some areas, the government may announce such a change after Budget 2024.

The risk of lowering ABSD rates for foreigners that aren’t SPR in some areas is that these areas will become hotspots where foreigners buy homes. If the ABSD rate was 30 percent, non-SPR foreigners would be able to buy homes in a more measured manner.

Singapore’s willingness to welcome foreigners can be shown by lower ABSD rates. Many countries are turning inwards. Tax revenue can be increased. A similar move could also speed up development in places like Marina South.

Having non SPR foreigners make up close to 5% of the total number of private home transactions in Singapore, excluding ECs is unlikely to distort our private homes market.

As long as the government is able to provide an adequate number of private homes, and as long the economy continues to grow, locals can achieve their private home ownership aspirations.

 


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