Qualifying Certificate issue for developers with foreign ownership

Under Singapore regulation, real estate developers who have foreigner shareholders and directors are required to obtain a "qualifying certificate" (QC) to purchase residential properties for development as a measure to control foreign ownership of land. Inevitably, all SGX-listed property developers are required to obtain QC as some of their shares may be owned by foreigners or companies.

After issued a QC, the developer is allowed up to seven years to market and sell all the units in the development.  The developer is allowed up to five years to complete construction. After obtaining TOP, the developer is given another two years to completely sell all the units and is not allowed to rent out the unsold units.

If the developer still has unsold units at the end of 7th years, he will be levied a "pro-rated" extension charge based on the proportion of unsold units.

The developer must furnish a banker's guarantee amounting to 10% of the purchase price of the property which will be forfeited if the developer breaks the QC's requirements.

Since January 2011, if the developer cannot fulfil the 5 years from the issue of the QC to complete the project, the developer can opt to pay an "extension charge" which is 8%, 16% and 24% of the property purchase price for the 1st, 2nd and 3rd extended years respectively.

Some developers of about 6 high-end projects are lobbying for an extension of the "pro-rated" extension charge.

These projects include some land acquired during the 2005 collective sale fever to be redeveloped into upmarket condos. These developers may still have unsold units for which an extension charge will have to be paid as foreigners are targeted during the last round of cooling measure by the ABSD whereby they are required to pay an extra 10% stamp duty which has dampened the demand for upmarket condos from this group of buyers.

21 Aug 2012