Newfort Realty had to incur some S$10 million in additional buyer's stamp duty (ABSD) plus two years back interest, when they proceeded to convert the freehold 68-unit residential project at 18 Mount Elizabeth Road into serviced apartments, since the property acquired in 2012 under the ABSD waiver had to be repaid.
To avert the current abysmal residential market, Newfort Realty pulled the brakes on the planned freehold 68-unit residential project at 18 Mount Elizabeth Road, despite having paid the development charge (DC) of S$3.9 million and the show flat was almost ready.
While it initially failed to obtain an approval for the conversion from the Urban Redevelopment Authority (URA), it succeeded in its subsequent appeals, given its commitment to keep the freehold property as a serviced residence for at least 50 years.
But by not following through its intention to develop the property as a residential project for sale, Newfort Realty no longer qualifies for the additional buyer's stamp duty (ABSD) remission and hence incurred S$10 million for ABSD plus two years of interest (as the property was acquired in 2012).
An additional S$25-30 million is spent on refurbishing and refitting the freehold estate into a 98-unit serviced residence, to be branded and managed under Oakwood.
Newfort Realty paid S$92.2 million in 2012 to acquire the 37-unit freehold estate Chateau Eliza in a collective sale at a land price of S$1,743 psf per plot ratio.
The DC was incurred to add more balcony space as part of saleable gross floor area as the existing property already exceeded its maximum plot ratio.
But the lacklustre residential market prompted the developer to change tack.
Since late 2011, developers here are required to develop the residential site and sell all the units under the development within five years, or pay the ABSD.
For sites bought between Dec 8, 2011, and Jan 11, 2013, a 10% ABSD is payable.
For sites bought from Jan 12, 2013, a 15% ABSD is payable.
The ABSD, with interest at 5% per annum, becomes payable immediately upon expiry of the five-year deadline.
Source: The Business Times