A race against time: Take a look at these unsold projects which will soon be subjected to hefty fines

Developers may have to fork out a total of $587m.

The clock is ticking for five unsold residential developments which will be subject to Qualifying Certificate (QC) rules this year, and their developers are scrambling to dispose of their projects to dodge hefty fines.

The QC Act mandates all developers with non-Singaporean shareholders or directors to acquire the Temporary Occupancy Permit (TOP) for their projects within five years and to sell all the units in their developments within two years from the date of the TOP.

Developers who are unable to meet the deadline have the option to pay for its extension. The QC Act directs developers to fork out 8%, 16%, and 24% of the land purchase price for the first, second, and subsequent years of extension, with the amount pro-rated to the proportion of unsold units..

A report by Squarefoot Research shows that there are five projects which will be affected by QC rules this year. Capitaland’s The Interlace in Depot Road tops the list with an outstanding 169 unsold units. If CapitaLand fails to sell these units, it will be subjected a charge of $41.5m, the report shows.

While 169 units may seem like a lot, it represents only 16% of The Interlace’s supply of 1,040 units. Squarefoot Research believes that with over 80% of the units sold, the developer should have profited from the development and may not see the need to reduce prices immediately.

GuocoLand’s Goodwood Residence in Bukit Timah Road came in second with 49 unsold units, representing 23% of the total number of available units. These unsold flats could bring a fine of $104.7m.

Heeton Holdings’ 30-unit iLiv@Grange has yet to launch since it was completed in 4Q13. The developer has expressed its interest for the project’s en-bloc sale to a single buyer at $2,200 to $2,300 psf, about 25% below its original intended sale price of $3,000 psf.

“With an estimated breakeven price of about $2,200 psf, the developer might be hoping to just break even on this project. Heeton Holdings might face a $5.82m extension charge should they fail to meet the
stipulated deadline by end of the year. Should they choose to buy back the development at $2,200 psf, they will have to fork out an estimated $150m, including Additional Buyer Stamp Duty (ABSD), which would not really make sense for the developer,” the report stated.

CapitaLand’s Urban Resort Condo in Cairnhill Road came in fourth with 22 unsold units, followed by Popular Land’s 8 Raja in Jalan Raja Udang with 19 unsold units.