Consider lower ABSD for foreigners if they buy Marina South.
The URA has rejected a sole bid of S$770.5 Million or S$984 Per Square Foot per Plot Ratio (psf/ppr), for the 99-year leasehold Marina Gardens Crescent Site in Marina South. This was because the bid price is too low.
Marina Gardens Crescent may have been given a cautious evaluation by developers because of uncertainty about housing demand.
Lack of nearby schools could affect demand for future residences in Marina South. Developers also may worry about a lacklustre demand from foreigners or investors, especially those who aren’t Singapore Permanent Residents.
Marina Gardens Crescent has been added to the H1 2024 Government Land Sales programme’s reserve list. This plot is suitable for commercial and residential development. Developers will be able to submit a bid for the sale, which can generate up to 775 new private homes. The price must meet the requirements of the H1 2024 Government Land Sales Programme.
While we are waiting to see whether the government gets an acceptable proposal for the Marina Gardens Crescent in the near future, efforts could be made to boost demand for that site.
To stimulate foreign purchasing interest, government officials could lower the additional buyer’s stamp duty rates (ABSD) on homes purchased by foreigners outside of Singapore. Marina South or Sentosa may not be popular areas for locals looking to own a home.
In 2023, foreigners outside of the SPR will purchase fewer private homes than they did in 2018.
URA data, dated February 14, shows that the number foreigners buying private homes who aren’t SPRs has fallen significantly. This can be attributed to the higher ABSD.
ABSD for non SPR foreigners is up from 10 percent since ABSD came into effect in December 2011. It was most recent raised last year from 30% to 60% with effect as of April 27,2023.
Some non-SPR foreigners pay no ABSD. Singapore citizens, permanent residents, and nationals from Iceland, Liechtenstein Norway, Switzerland, and United States enjoy the exact same stamp duty treatment that other countries.
If you are buying a home here, the ABSD is 60 percent for non-SPRs. This includes people from China, Indonesia and India.
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Locals should have their first homes favored under the housing policies.
Foreign buyers of private houses can also create market distortions, making it harder for locals in this country to reach their own home ownership goals.
The foreigners that do not have SPR status can still enjoy certain benefits when buying here.
Singapore wants to first attract global talent. The economy gains from attracting top talent. Non-SPR foreigners are less likely to be hindered in their efforts to buy homes and attract top global talent.
Buying a house here can also help talented non SPR foreigners get to know Singapore. Some of the foreigners who buy a home here may become SPRs and Singapore citizens.
Second, non SPR-resident foreigners are allowed to lease their houses here. A large number of rental homes are available for locals as well overseas workers or students.
Thirdly, non-SPR aliens who buy houses here contribute to taxes.
The property tax is payable by every homeowner. The BSD (Buyer’s Stamp Duty) is progressive. Non-owner-occupiers pay higher residential property tax than owners.
Budget 2024 was a good budget for many homeowners, housing developers and home buyers. Because there are legitimate reasons to lower ABSD rate for foreigners that do not have SPR status who buy homes in particular areas, it is possible the government will announce a similar change outside of budget 2024.
A lower ABSD rate for non SPR foreigners could lead to a surge in home sales by these foreigners. However, if ABSD rates are 30 per cent, non-SPR internationals may still be cautious about buying homes.
Singapore can demonstrate its international openness by offering lower ABSD to non-SPR foreigners purchasing homes in specific areas. It can also improve tax revenue. The development of areas such as Marina South can be accelerated by such a move.
Ultimately, the fact that non-SPRs represent close to 5% (excluding ECs) of all private house transactions should not cause any distortions in the local market.
Locals will be able achieve their dream of becoming private homeowners as long at the government works to increase the supply of homes.
