Is there a trend of property developers offering discounts?

In 2016, there was much commotion over the imminent deadlines that developers had need to face over the remission of their Additional Buyers’ Stamp Duty. It is known that these property developers need not have to pay the Additional Buyers’ Stamp Duty, on the land they purchased, if they can complete and sell all of the individual units within 60-months from the date of acquisition. Failing to do so will result them to incur the Additional Buyers’ Stamp Duty, even if they are just left with one single unit unsold. The Additional Buyers’ Stamp Duty also differs – 10% if they had purchased the land between 8 December 2011 and 11 January 2013 and 15% if they purchased the land on or after 12 January 2013. A 5% interest rate per annum will also be levied.

Many of the home buyers in the market believe that because of reasons like the Additional Buyers’ Stamp Duty, the developers will introduce incentives for them to sell their units especially those with high numbers of unsold units and are nearing the 60-month deadline. As funny as it may seem, usually projects with a small number of unsold units have the biggest incentive to offer attractive discounts. The discount will help speed up sales. At the same time, there is sufficient time for the developer to sell off all its units.

Distressed sale? Unlikely.

Let us take The Santorini at Tampines for example. The new condominium at Tampines Ave 10 has had naysayers backing it as the first property development to incur the expensive 10% Additional Buyers’ Stamp Duty given its high amount of unsold units as at March 2016. Recently, the market speculated that the developer has slashed prices to move sales and avoid the ABSD charges.

In most cases, developers usually will offer discounts to minimise the numer of the units that they have to purchase through another investment as a safeguard, in case they are unable to clear off the unsold inventory. That also doesn’t mean that these discounts offered will be substantial or attractive in the eyes of a home buyer – it is also largely due to the the holding ability of the developer with factors like the cost of the land and also competition.

On that basis, we think that new property developments with a small number of unsold units are most likely to be very eager to offer discounts or price cut. This is because these incentives can enable them to speed up the sales giving them more than enough time to clear off the remaining stocks – All theses because they already have profited from the sales earlier in the launch and they can save the trouble of going through an investment company to buy their remaining stock.

12 thoughts on “Is there a trend of property developers offering discounts?”

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