Subsidy clawbacks could hit 20% for Singapore’s tallest public housing project at Pearl’s Hill: Analysts

Analysts predict subsidy clawbacks for Singapore's Pearl's Hill BTO project could reach 20% due to high subsidies and construction costs. Read more at straitstimes.com.

SINGAPORE - Build-To-Order (BTO) flats at Pearl’s Hill, Singapore’s tallest super high-rise public housing project at over 60 storeys, are likely to fall under the Prime category and could come with higher additional subsidies, which would translate to higher subsidy clawbacks, analysts say.

Prime and Plus flats come with stricter resale conditions such as a 10-year minimum occupation period and subsidy clawback, with a higher clawback rate for Prime flats.

This is to limit the “windfall effect” that allows owners of flats in attractive locations near the city centre to sell them for a substantial profit upon reaching the usual five-year minimum occupation period.

Berlayar Residences on the former Keppel Club site – the first public housing project launched within the Greater Southern Waterfront – has a subsidy clawback rate of 14 per cent, the highest to date, because of its “location and the transformative potential of the surrounding precinct”, Singapore Realtors Inc said.

As for the new Pearl’s Hill BTOs in Outram, analysts expect the subsidy clawback to be more than 14 per cent, with several expecting a rate of between 18 per cent and 20 per cent because the Government may have to provide substantially higher subsidies to keep flat prices affordable.

“As the pricing for new BTO flats takes reference from recent transactions of comparable resale flats in the vicinity, substantial subsidies will likely be required for Pearl’s Hill BTOs to ensure affordability, especially in view of the BTO income ceiling of $14,000,” Mr Eugene Lim, key executive officer of ERA Singapore, said.