July new cooling measures have affected the operations of most property developers, and Lafe Corp is no exception.
Despite having paid the necessary stamp duties for three months till December 31st, the developer decided to abort the deal. Consequently, Lafe Corp group will incur a loss of approximately S$8.5 million from the aborted collective sale.
The group cited expected interest rate increment and newly introduced cooling measures as some of the factors which led it to call off the deal.
Lafe Corp’s board of management has decided to forfeit its deposit for the 15-unit freehold property along Sophia road after acquired it for S$57 million in March 2018.
Additionally, the developer has informed the owners of Fairhaven condominium about their decision.
The management also clarified that if material developments arise out the deal cancellation, it will seek for legal advice to protect the interest of its shareholders.
The directors of Lafe Corp considered existing trade tension between China and the US which is likely to play a crucial role in the global economy. They also factored in the impact of interest rate increase on the cost of borrowing.
Additionally, the newly introduced July cooling measures in Singapore were not favourable for their investment.
Private housing projects have been affected by the new cooling measures. Other developers have also aborted collective sale duties while other sellers have lowered their prices.
Recently, the owners of freehold La Ville located along Tanjong Rhu Road decided to lower the property’s reserve price to S$140.6 million from the initial S$152 million.
This follows after the previous tender in June closed without sealing a deal with any developer.
The interested parties pulled out of negotiations after announcement of new cooling measures.
However, other developers such as Tee Land opted out and bore the loss citing the cooling measures.
In July, Tee Land also called off the deal of purchasing Teck Guan Ville at S$60 million.
Consequently, Tee Land incurred a loss of 1% from the deposit it had made. The developer also cited cooling measures and non-remissible 5% additional buyer’s stamp duty as some of the factors that made it cancel the deal.