Your search results

I Wouldn’t Rely Too Heavily On Discounts Related To ABSD This Year

Posted by Jayson Ang on February 28, 2025

| 0

TLDR

The ABSD discount arises when developers approach their five-year deadline to sell 90% of units, facing a 40% penalty on land price for unsold units. Although 44 projects from 2021-2023 were extended, reasons remain vague, raising transparency concerns. Critics argue this favors wealthy buyers who can wait for discounts on high-priced units. Developers rarely offer individual unit discounts, even under ABSD penalties. For buyers, sellers, or investors, strategic advice and market insights are crucial due to varying personal circumstances.

If you’re unfamiliar with it, an ABSD discount occurs when a developer is nearing their five-year deadline to complete and sell 90 percent of their units. Failing to achieve this within the specified timeframe results in a significant penalty based on the unsold units (currently, developers face an ABSD of 40 percent on the land price, with 35 percent being refundable if they meet the deadline).

As developers approach this deadline with only a few units remaining, buyers begin to take notice, hoping for potential fire sales. However, for those seeking opportunities this year, I would advise against getting your hopes up.

A total of 44 projects that had deadlines between 2021 and 2023 received extensions on a case-by-case basis. This has sparked numerous questions among stakeholders: why were some projects granted extensions while others were not?

A solid justification for maintaining opacity

The typical replies to inquiries about the extensions have been phrases like “due to extenuating circumstances” or “site-specific delays,” which don’t really provide any clarity. Furthermore, it’s quite challenging to locate the names of the 44 projects involved, as well as any announcements indicating that they were initially requesting extensions.

Many have argued that maintaining this lack of transparency is unjust, citing reasons such as “buyers deserve to know” and the need for a fair system. However, I suspect that the information regarding this issue—much like the rationale behind why certain individuals are permitted to sell their flats before the Minimum Occupation Period (MOP)—is intentionally kept obscure.

Addressing situations on a case-by-case basis is delicate: once an extension or reprieve is granted for one individual circumstance, many others are likely to come forward claiming their situations are similar.

For instance, if one developer receives an extension due to a subcontractor going bankrupt, it’s probable that several others will knock on the door, asserting that they too have had subcontractor issues and thus require a six-month extension. Consequently, government agencies may find themselves overwhelmed trying to justify the differences between various cases.

Therefore, it’s essential for the real estate sector to maintain a level of discretion; we shouldn’t expect too much detail regarding why a developer was granted an extension.

That said, there is an intrinsic unfairness concerning discounts related to ABSD.

If you’re looking for another illustration of how the wealthy continue to accumulate wealth, the discounts related to ABSD serve as a prime example. It’s quite uncommon for the typical Singaporean to take advantage of these discounts, while the affluent can secure substantial savings.

To begin with, the remaining units usually consist of high-priced options, such as penthouses or premium stack units, which often stagnate on the market due to their price tags exceeding $5 million. This price range is simply beyond the reach of the average buyer, even with a discount in play—allowing the wealthiest purchasers to bide their time for reductions of 10, 15, or even 20 percent, while most buyers lack the financial means to capitalize on such opportunities.

Additionally, developers are generally reluctant to offer discounts on individual units. If there are just seven units left, what advantage is there in discounting them when the developer might only sell four or five but still face an ABSD penalty?

Should You Buy, Sell or Wait?

If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?

It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.

I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.

I can help you by:

Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.

You May Also Like …

All Blog Posts Buying Tips

3 Trends For New Launch Properties In 2023

Jayson Ang – March 20, 2023 –

TLDR When considering buying or selling a property in Singapore, it's crucial to understand the market dynamics and key metrics....

All Buying Tips

How Much You Need to Earn to Afford a Condo 2023

Jayson Ang – October 30, 2023 –

TLDR When considering investing in a private property in Singapore, it's important to understand your borrowing capacity. Financial experts recommend...

All Opinion

What Is The Cost Of Constructing A Landed Property In Singapore?

Jayson Ang – February 24, 2025 –

TLDR Building a landed property in Singapore can be a costly endeavor, with prices ranging from $300 to $500 per...

All Opinion

Why Can’t We Buy Low, Sell High?

Jayson Ang – February 11, 2024 –

Madam Tan voiced that approximately two years ago, when her apartment hit its minimum occupation period, she and her spouse...

Mandarin Top 5

The 5 Most Popular Types of Properties to Buy in Singapore

Jayson Ang – May 19, 2023 –

The 5 Most Popular Types of Properties to Buy in Singapore 1. Condominiums: Condos are popular among buyers because they...

All Buying Tips

5 Exciting Trends Shaping Singapore’s Property Market for Future Buyers After 2024

Jayson Ang – July 5, 2024 –

TLDR When it comes to the evolving landscape of property development in Singapore, developers are facing new challenges and opportunities....

All Blog Posts Buying Tips

An Essential Guide to Buying a Home in Singapore 2023

Jayson Ang – January 17, 2023 –

TLDR When navigating the complexities of purchasing a property in Singapore, ensure you meet eligibility criteria, consider affordability factors, and...

All Blog Posts Buying Tips

5 Disastrous Property Transaction Nightmares (and How to Avoid Them)!

Jayson Ang – April 20, 2023 –

TLDR When attempting to sell your property, various worst-case scenarios can hinder the sale process significantly. These scenarios include buyers...

All Buying Tips Opinion

HDB Owners Missing Out on the “Ultimate Upgrade” to Landed Living

Jayson Ang – October 3, 2024 –

TLDR Over the past two decades in Singapore, the trend of HDB residents upgrading to landed properties has fluctuated. While...

All Blog Posts Buying Tips

Step-By-Step Guide To Buy Resale HDB (Updated March 2023)

Jayson Ang – July 13, 2023 –

TLDR The process of purchasing a resale HDB flat involves steps such as checking eligibility, calculating affordability, registering intent to...

Mandarin Top 5

Top 5 Historical Landmarks in Singapore

Jayson Ang – April 24, 2024 –

Singapore, a bustling cosmopolitan city-state, is known for its rich history and diverse cultural heritage. This small yet vibrant nation...

All Blog Posts Buying Tips

Will Your HDB Flat Provide For Your Retirement?

Jayson Ang – July 11, 2023 –

TLDR Singapore's property market presents challenges with high prices, particularly in private housing, while public housing remains relatively more affordable....