SINGAPORE — As developers urged the Government to review certain property cooling measures, Finance Minister Heng Swee Keat said on Tuesday (Feb 19) that “bitter medicine” for the sector is unavoidable at times.
Speaking at the Chinese New Year lunch of the Real Estate Developers’ Association of Singapore (Redas), Mr Heng did not directly respond to the association's president Chia Ngiang Hong’s call for “room for the private sector to respond to market conditions”.
Mr Chia had asked the Government to review measures such as the Additional Buyers’ Stamp Duty (ABSD) rates, which were raised last July to 30 per cent (from 15 per cent) for housing developers — 25 per cent of which is remissible if they sell all their units within five years.
The announcement caught developers by surprise and dampened property transactions and collective sales.
Redas — established in 1959 — is akin to the Merdeka Generation, said Mr Heng, referring to the term coined by the Government for Singaporeans born in the 1950s.
“Prime Minister Lee Hsien Loong has characterised the Merdeka Generation as one that faced problems resolutely, worked with the Government and, when necessary, accepted the bitter medicine that make us strong again,” he said.
“And I think this also applies to the real estate sector in that, from time to time, there will be bitter medicine but we face the problem resolutely.”
The real estate sector should innovate and rethink the use of space, like what companies and providers of work spaces are doing in China and the United States, said Mr Heng.
Bloomberg’s headquarters in New York, for example, features a level where employees can go for breakfast or tea, he said. The media company found it to be one of the best uses of the space because it “allowed people from different parts of the organisation to interact, to spin off ideas, rather than just do it on email”, said Mr Heng.
In his speech, Mr Chia said that the Government and stakeholders should have “open communication and constructive and meaningful feedback” to allow for a more robust policy-making process.
The need for developers to sell their units within five years to avoid hefty ABSD rates has also pushed “all developers to exhaust their inventory at around the same time”, he said.
This could partly account for the land price escalation in 2017 and 2018 because “everyone basically ran out of inventory at the same time”, he added.
Mr Chia asked for a more flexible timeframe for developers to sell out their projects to avoid “the bundling of project development cycle”, which resulted in developers rushing to replenish their land bank at roughly the same time.
“If the land ABSD is not reviewed, we can expect a repeat of the 2017-2018 ‘land grab’ situation in four to five years’ time. When the price of the raw material goes up, we can expect the price of the end product to increase as well,” he said.