The property fever may not have cooled down yet, but one real estate developer in the country is offering an incentive, which has not been seen in over a year, to boost sales and attract buyers.
The stamp duty absorption, which is usually used by wary developers during a market downturn, is now being offered as an incentive at the 360-unit Concourse Skyline on Beach Road.
The deal, which helps flat buyers to save around three percent of the price, has been used extensively during market slumps.
However, since 2008, it has not been used except on a one-off case-by-case basis, according to industry experts.
They said that Hong Fok Land, the developer that advertised the offer may be attempting to amend the impacts of the anti-speculative market-cooling measures revealed recently by the government.
However, some suggested that such move may simply be an attempt to offset the project’s slow sales.
The offer at Concourse Skyline applies to selected units until 17 April 2010. The developer said that the promotion was timed to coincide with the scheduled opening of the Circle Line’s city leg that same day. According to a spokesperson, it draws attention to the convenience and accessibility of the development.
This stamp duty absorption is the same with the interest absorption scheme, which the government abolished in September last year, as part of market-cooling measures.
Buyers had to take out a bank loan at the time of purchase under the interest absorption scheme, but the developer absorbed interest payments until the completion of the project.
Several property consultants were not aware of any similar offers, and said that buyers should not expect for more to be offered.
Most consultants said that this is an unusual case, and that it is unlikely that other developers will follow suit as the market is still hot, with sales and prices continuously rising.
However, some property experts said that this move could be aimed to improve poor sales at Skyline.
They said Hong Fok was “too optimistic about its pricing”, which ranged from $1,500 psf to $1,800 psf, when it was initially introduced in September 2008.
It was the same month that the US investment bank Lehman Brothers collapsed, triggering the global fiscal turmoil.
Although there were 68 units sold during the first month after the launch, sales have tapered off about eight per month over the last 16 months.
According to the website of the Urban Redevelopment Authority, a total of 170 units had been sold as of January this year.
Absorbing the stamp duty was a way of the developer to entice homebuyers, said Ms. Tay Huey Ying, research and advisory director of Colliers International.
Previously, developers had rolled out several tactics like renovation allowances and vouchers for electrical appliances in an attempt to boost faltering sales.
“These measures (by the Government) are expected to shave off about 1,000 homes sold yearly…So offering absorption of stamp duty might be a way for developers to increase sales,” said Nicholas Mak, a real estate lecturer from Ngee Ann Polytechnic.
According to Colin Tan, research and consultancy director at Chesterton Suntec International, absorbing stamp duty would lessen a buyer’s costs without reducing the valuation prices, which is a main market indicator cited by developers.
Mr. Steven Tan, executive director of OrangeTee’s residential division, said the “uncommon move” might be to encourage homebuyers to revisit the showflat, as newer launches have served as stiff competition.
Ms. Tay from Colliers added that the absorption scheme would cushion the expense of those who might consider selling the property within a year of purchase.