Kwek Leng Beng predicts Govt will lift ABSD this year

The Additional Buyer’s Stamp Duty (ABSD) may be abolished this year given the supply of homes that are coming into the market amid the increasingly challenging global economic climate, Mr Kwek Leng Beng, executive chairman of City Developments (CDL) predicted yesterday.

He added, without going into specifics, that mid and low-end private housing could see further price declines this year, while the luxury segment will likely remain subdued.

“Developers hope that the Government presses the button sooner than later … I would think that they would do something this year. That’s my speculation, especially this year, when you have a lot of mid-end and low-end homes coming up. I suspect it will be the abolishing of ABSD,” said Mr Kwek on the sidelines of CDL’s financial results briefing yesterday.

“But for us in the industry, we are looking at it through a very small lens. The Government is looking at it in a bigger picture. Not only are they concerned about the residential market, they are also concerned about the other structural issues,” he added.

The ABSD is a tax levied on both individual property buyers as well as developers.

The amount of ABSD that individuals have to pay depends on their residency status and the number of properties they already own, while developers are required to pay 10 to 15 per cent of the land cost unless they build, complete and sell all units five years from the date of the land acquisition.

Last week, Real Estate Developers’ Association of Singapore president Augustine Tan renewed calls for the Government to tweak the property cooling measures to engineer a soft landing.

However, Minister for National Development Lawrence Wong reiterated on Wednesday that the Government has no plans yet to unwind the cooling measures.

Private property prices had fallen 8.4 per cent by the last quarter of 2015 from their peak in the third quarter of 2013, showed data from the Urban Redevelopment Authority.

However, the decline after nine consecutive falling quarters is still far shy of the more-than-60-per-cent increase in prices after the global financial crisis.

CDL reported yesterday a 6.6 per cent year-on-year increase in fourth-quarter net profit to S$410.5 million, helped by gains from monetising three of its office assets. Revenue for the three months ended Dec 31 inched up 1 per cent to S$855 million.

For the whole year, the company’s net profit rose 0.5 per cent to S$773.4 million from the previous year, even while revenue declined 12.2 per cent to S$3.3 billion.

CEO Grant Kelley said CDL will expand its fund management platform this year and strengthen its foothold in overseas markets such as the United Kingdom, China and Japan, which now account for around 45 per cent of total assets in the company’s portfolio.

“If we look across the world, 2016 is in a different position to 2008. First and foremost, the banks are all capitalised. Secondly, there is no absence of credit. What is in absence is confidence. Historically, when investors lack confidence, it is an opportunity for those who are bold to make above-market returns,” he said.

Also yesterday, developer Ho Bee Land reported a 32.1 per cent year-on-year fall in fourth quarter net profit to S$193.7 million on lower fair-value gains in investment properties.

Revenue for the quarter decreased 28.5 per cent to S$222.6 million. The developer’s net profit for the whole year dropped 23.1 per cent from 2014 to S$242.2 million, while revenue declined 15.1 per cent to S$325.4 million during the same period.

CDL shares gained 0.7 per cent to close at S$7.09 per share yesterday, while those of Ho Bee Land inched up 0.5 per cent to S$1.91 per share. Both the counters outperformed the benchmark Straits Times Index, which was down by 0.6 per cent.

Source : Today – 26 Feb 2016

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