If you are a foreigner buying a home in Marina South, consider lowering the ABSD.
While we are waiting to see whether the government gets an acceptable proposal for the Marina Gardens Crescent Site in the future it is possible to improve the demand for the location.
To revive foreign purchasing interest, Singapore could reduce the rates of Additional Buyers Stamp Duty for non-SPR Foreigners buying homes in selected areas. Marina South or Sentosa may be less desirable for locals looking to own a home.
Could ABSD be halved for foreigners purchasing homes in these locations who are not SPR residents?
Singapore can demonstrate its international openness by lowering ABSD fees for non SPR foreigners purchasing homes in specific areas. The tax revenue collected can also increase. The development of areas such Marina South can be accelerated by such a move.
ECs excluded, the fact that non-SPRs represent close to 5% (or less) of all home transactions should not cause any distortions in the local market.
Locals can still realize their dream of becoming private homeowners as long as they are able, with the help of the government, to maintain an adequate housing supply.
Foreigners purchasing homes
The purchase of private residences by non-SPR-nationals fell by a third in 2023 when compared to the previous year.
According to data from URA Realis gathered on February 14th, 2023 will see 623 non-SPR foreigners lodge caveats on private homes (excluding Executive Condominiums or ECs). That compares to 934 for 2022 and 1,120 for 2021. 745 are in 2020. 1,005 are in 2019, 1,225 were in 2018,
Non-SPR Foreigners lodged 146 caveats during H2 of 2023, down from the previous six months’ 477. Non-SPR Foreigners’ share of private home caveats (excluding ECs), lodged in H2-2023, dropped to 1.5% from 4.9 % in H1-2023, 4.3 % in 2022, and 5.5 % in 2019.
Non-SPR buyers are facing a steep rise in ABSD.
ABSD for foreigners outside of SPR has gone up from 10 percent to 60 percent since ABSD came into effect in December 2011. It was most recent raised last year from 30 percent to 60 percent with effect 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.
Singaporeans don’t pay ABSD on first-time home purchases, but they do on subsequent ones.
Non-SPRs (non-Statutized permanent residents) from China, Indonesia, India and other countries pay 60 percent ABSD when purchasing homes here.
Certain policies on the housing market should encourage locals to buy their first house.
Foreign buyers of private houses can also cause market distortions and make it hard for locals, who may want to buy their own home, to do so.
Benefits for foreigners buying property
Even so, buying property in this country is a good investment for non-SPR citizens.
Singapore wants to attract top talent from all over the world. Attracting the best talent is beneficial to the economy. Non-SPR foreigners who want to buy homes in the US do not have to face any obstacles. This helps attract international talent.
Non-SPR foreigners can spread the Singapore message in their own countries and to their networks.
The purchase of an apartment here is also a great way for talented non-SPRs to learn more about Singapore. Some of the foreigners who buy a home here may become SPRs and Singapore citizens.
Second, non SPR foreigners can lease their homes here. A large number of rental homes are available for locals as well overseas workers or students.
Thirdly, foreigners not in the SPR 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 taxes than owners.
If non-SPR buyers of 100 homes pay ABSD and BSD, and each home costs S$3,000,000, the total amount collected from BSD, ABSD and BSD is about S$102,000,000. ABSD 30 percent.
The Urban Redevelopment Authority has rejected a single bid for the Marina South Crescent site of 99-year leasehold Marina Gardens Crescent worth S$770.5m or S$984 sqft/pr (psf/ppr), claiming that the bid price is too low.
Marina Gardens Crescent may have been rejected by developers because of their uncertainty about housing demand.
The lack of local schooling in the vicinity could hinder local demand for future residences in Marina South. Developers also may worry about a lacklustre demand from investors or foreigners who aren’t Singapore Permanent Residents.
Marina Gardens Crescent has been added to the H1 2024 Government Land Sales program’s Reserve List. This plot is suitable for residential and/or commercial development. Developers will be able to submit a bid for the site, which can generate up to 775 private residences, and a minimum amount that the government accepts.
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 not from SPR buying homes, the government might announce a reduction outside of Budget 2020.
A lower ABSD rate for non SPR foreigners could lead to a surge in home sales by the foreigners. However, if ABSD rates are 30 per cent, non-SPR non-residents may still be cautious about buying homes.
