Special Measures To Lift Property Sector

Source : The Straits Times, Jan 23, 2009

THE ailing property sector has received a special Budget boost, with a host of measures to help developers wait out the slump in demand.

Property tax will be deferred for two years for land approved for development. This means developers sitting on their land bank will not have to pay this tax - which can amount to millions of dollars - for the time being.

Rules have also been relaxed for developers who bought government land sites and foreign developers who own private residential land here.

Normally, they have to develop the land within six years, and they cannot resell the land without developing it.

But these developers have been given a one-year extension of this period so that they have more flexibility in building and selling their developments according to market conditions.

On top of that, those who have decided they want out of the development can now resell the land or dispose of their interest in it before Jan 21 next year.

Foreign developers have also been given more leeway. Currently, they are required to sell all the units in their project within two years of completion and are not allowed to rent out unsold units.

They have now been given two more years to dispose of the units and they can also rent out unsold apartments for up to four years.

All property owners and firms will also benefit from the Inland Revenue Authority of Singapore's bringing forward of its assessment on property taxes this year.

Property values rose last year, pushing up tax bills for their owners, but the market has since turned and an updated assessment would yield some savings.

Most developers and tax experts applauded the Budget steps.

'The measures will provide welcome relief and help to ease funding for the industry, and provide developers with flexibility in scheduling their developments,' said the Real Estate Developers' Association of Singapore.

Hong Leong Group, which has property investments through its companies City Developments and Hong Leong Holdings, said the moves 'are a huge confidence boost to the economy and property market and we welcome it'.

Deferring tax on land for development 'will help reduce business costs and help the company spread costs over a period of time', while the other measures 'will provide more flexibility for developers and will ease pressure on the markets', it said.

Foreign developers also cheered the measures specifically directed at them.

'I am very pleased by the pro-active measures taken by the Singapore Government to support foreign property developers,' said Malaysian tycoon Francis Yeoh, who is managing director of YTL Corporation.

'I find the measures realistic, and I am confident that they will give the property market in Singapore a much-needed boost.'

YTL owns two plots in Sentosa Cove as well as Westwood Apartments in Orchard Boulevard.

But some industry watchers thought the Government could have gone further.

In the 1998 Budget following the Asian financial crisis, the Government waived, rather than deferred, property tax for land under development for five years.

'The deferment of property tax will help to ease developers' holding costs, but is viewed as less desirable compared to previous downturn Budgets where property tax exemptions were handed out,' said Ms Tay Huey Ying, director for research and advisory at property consultancy Colliers International.