‘Neutral’ call kept on property sector
Hong Leong Investment Bank Bhd (HLIB Research) says Sunway Bhd is likely to benefit from the lower stamp duty rate on unsold units in Singapore, announced during the country’s 2024 Budget statement last Friday.
Singapore announced a reduced tiered clawback rate for residential property developers’ additional buyer’s stamp duty (ABSD), effective from Feb 16.
The ABSD was introduced on Dec 8, 2011. Developers who failed to develop and sell all housing units within five years would be required to pay it.
HLIB Research said the measure was introduced to deter developers from hoarding land.
Those that acquired land on or after Dec 16, 2021, face a 40 per cent ABSD with an upfront 35 per cent remission of 10 per cent on the original acquisition price, with an additional five per cent interest per annum.
“The reduction in the rate is a timely and positive initiative by the Singaporean government, particularly given the existing cooling measures and the challenging elevated interest rate environment that has made it hard for developers to sell their entire projects,” said HLIB Research.
However, it said even for developers that sold 99 per cent of their units, they remain subjected to a 25 per cent ABSD.
Considering the high rate, HLIB Research said developers were expected to remain motivated to sell all units within the five-year timeframe.
In Singapore, Sunway manages two ongoing projects, Terra Hills and The Continuum, which were launched in February and April last year, respectively.
HLIB Research kept its “neutral” call on the sector and selected Sunway, Sime Darby Property Bhd, OSK Holdings Bhd and IOI Properties Group Bhd as its top picks.