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Chart of the Day: Units unsold as developers fail to comply with RPA
Residential Property Act requirements are less punitive than generally believed, says Maybank Kim Eng.
Maybank Kim Eng noted:
The penalty for non-compliance is either a) the forfeiture of the bankers’ guarantee amounting to 10% of the land cost, or b) the payment of an extension premium, which is pegged at 8%, 16% and 24% of the land cost for each subsequent year beyond the two-year period which the developer fails to sell all its units, pro-rated based on the proportion of unsold units. As land cost accounts for just ~50% of total costs for most of these projects, our analysis shows that the impact on developers’ margins are actually quite manageable.
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