Foreigners who buy in Marina South may pay for a lower ABSD

The URA rejected a single bid of S$770.5M or S$984/sqft/plot ratio (psf/ppr) at Marina South for a 99 year leasehold site, because the price was too low.

Marina Gardens Crescent could have been overlooked by developers due to uncertainty over the housing market in the Marina South region.

Lack of local schools around the area may hinder demand for future homes within Marina South. Developers could also worry that foreigners (who are not Singapore permanent resident (SPR) or investors) may be less enthusiastic about buying homes.

Read more on : Watten House

Marina Gardens Crescent is now listed on the GLS (Government Land Sales) H1 2024 Reserve List. The plot can be used to develop residential and/or commercial properties. Developers who are willing to pay a minimum price for the site that could produce 775 private homes can apply to buy the plot.

To rekindle foreign buyers’ interest, Singapore could reduce the rates of Additional Buyers Stamp Duty for non-SPR Foreigners purchasing homes in certain areas. Marina South, Sentosa or parts of Downtown Core may be areas less attractive to locals who are looking to purchase homes for their own occupation.

ABSD has been introduced in December 2011 and the ABSD rate is now 60% for non-SPRs. Last year it was increased from 30 percent to 60 percent with effect April 27, 2020.

Foreigners from outside the SPR who purchased private houses in 2023 fell by around a third when compared with the previous year.

While we wait for a future offer from the government for the Marina Gardens Crescent Site, perhaps it is time to work on increasing demand.

URA data from Feb 14 indicates that the number lodged by foreigners non-SPR for private homes in this country has declined significantly. This is blamed on the rise of ABSD which non-SPR Foreigners buyers are facing.

Some non-SPR foreigners pay no ABSD. Singapore citizens and permanent residents who are nationals or permanent residents of Iceland Liechtenstein Norway Switzerland and the US can enjoy the same stamp-duty treatment as Singaporeans under the respective free trading agreements with these nations.

However, those who are not SPRs and come from countries like China, Indonesia or India will have to pay 60 percent ABSD if they buy a house here.

In fact, the policies that govern private housing should give preference to locals who are buying their first homes.

Excessive foreign purchases of private homes can also cause market distortions and make it hard for locals achieve their home ownership dreams.

Nevertheless, foreigners from outside the SPR can benefit by buying property here.

Singapore aims to attract talent from around the world. Attracting the best talent is beneficial to the economy. The economy benefits when top global talent comes to the country.

In addition, purchasing a home can help talented foreigners familiarize themselves with Singapore. Some of them may then decide to deepen Singapore’s ties by becoming SPRs or Singapore citizens.

Second, non SPR foreigners can lease their homes here. Rents are competitive and tenants have a variety of options.

Third, non SPR foreigners that buy here homes contribute to tax revenue.

Homeowners are required to pay property taxes as well as transaction taxes when purchasing a new home. The BSD rates are graduated. Residential property taxes are also higher for non owners than for owners.

The Budget 2024 included some positive news for home owners, buyers and developers. If there are reasons to lower ABSD for foreigners not from SPR buying homes in specific areas, perhaps the government can announce this change without Budget 2024.

By lowering ABSD in selected areas for non-SPR nationals, you may be putting these areas at risk for becoming hotspots for foreign home buyers. The ABSD could allow non-SPR homebuyers to purchase homes at a slower pace.

Singapore can show that it is open to foreigners by offering lower ABSD for non-SPRs who buy homes in certain areas. This will help demonstrate Singapore’s internationalism at a time where many countries are moving inwards. This could also increase the tax revenue. It can also increase the speed of development for areas like Marina South.

Having non SPRs make up less than 5% of total home sales in the country, excluding ECs and ECs, shouldn’t have a significant impact on the market.

While the locals’ private home-ownership dreams can be achieved as long a the government ensures an adequate supply and the economy is growing, they will also continue to have the ability to do so as long as there are enough private homes available.




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