For the first time since March 2019, the development charge (DC) rate for residential, commercial, and industrial use was raised. The rate for the six months starting Tuesday was also raised (March 1).
Singapore’s property market has made a lot of progress in the last few years, except for the hotel sector, which is still hurting from the pandemic. This came after that.
Developers pay DC to the state to be able to use some sites better or build bigger projects there.
As of now, the rate for commercial use has gone up 0.7 percent on average. This is the third time the rate for commercial use has been cut since September 2020. After a few changes, DC rates for industrial use went up 2.2% on average. This was after they had been the same for a long time.
People who live in homes that are both landed and non-landed are seeing less growth in DC rates. Non-landed homes have seen a much smaller rise.
A lot of people who live in a home that isn’t on land pay more in DC fees this time around, but they pay less for non-landed use. A 6.3% rise in land use and a 10.9% rise in non-land use were seen in the last revision.
A rise in DC rates for land-based residential use was found in all 118 sectors. The rise was between 1% and 9%.
Ms Tricia Song at CBRE, said this was due to “strong demand from digital economy entrepreneurs, key executives, and new citizens.” This was due to the “recovering economy, ample liquidity, and low interest rate environment.”
On the other hand, JLL’s Tay Huey Ying says that the slight rise in DC rates for non-landed residential use is good news for a market that is still figuring out how the December 2021 cooling measures will affect it.
Only six sectors saw a rise in the DC rate, from 3% to 15%, while the other 112 sectors saw no change.
Guillemard Road, Mountbatten Road, Old Airport Road, and Dunman Road saw the biggest increase of 15%. This could be because land parcels at Thiam Siew Avenue were sold for $815 million or $1,488 a square foot in November last year to a joint venture between Hoi Hup Realty and Sunway Developments.
Mr Lee Sze Teck, a senior research director at Huttons Asia, said that “flattish DC rates mean that the costs to increase land use stay the same, and developers may be more willing to look at the en bloc market to get more land.”
According to Nicholas Mak, the head of research and consulting at ERA Realty, the commercial investment sales market could be more active than the residential sales market.
It will not be a big deal if DC rates for commercial use go up by 0.7%, he said.
People in city center areas like Raffles Place and Tanjong Pagar saw a big rise in commercial DC rates. DC rates rose by about 2.6% to 3.2%. DC rates stayed the same in most suburbs and on the edges of the city, he said.
Among recent office sales were the PIL Building, One George Street, and Robinson 112, he said.
DC rates for hotel and hospital use were cut by 0.7 percent on average because there were fewer tourists and lower occupancy rates.
Leonard Tay, the head of research at Knight Frank, also said that the Marina View government land sales site tender, which had a big hotel component, didn’t go well.
He said that out of 118 sectors, 25 of them saw a drop in DC rates. The biggest drop was 10% in the Shenton Way, Straits Boulevard, Marina Boulevard, and Raffles Quay area, where prices fell by 10%.
Because the Marina View site was sold away for $1.5 billion or $1,379 a square foot in September 2021 to the only bidder who started the site launch, this may have led to this, he said.
In the meantime, DC rates stay the same for all the other use groups: places of worship/civic and community institutions, open space, agriculture, and roads and rails.
