Advertisement
Singapore markets closed
  • Straits Times Index

    3,224.01
    -27.70 (-0.85%)
     
  • Nikkei

    40,369.44
    +201.37 (+0.50%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Bitcoin USD

    70,356.26
    -912.46 (-1.28%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • FTSE Bursa Malaysia

    1,536.07
    +5.47 (+0.36%)
     
  • Jakarta Composite Index

    7,288.81
    -21.28 (-0.29%)
     
  • PSE Index

    6,903.53
    +5.36 (+0.08%)
     

Development charges for non-landed residential sites up 2.7%

The DC rates for non-landed residential sites have been raised by an average of 2.7 percent for the period of 1 September 2016 to 28 February next year following two straight years of contraction, said the government...

The upward revision in DC rates for non-landed residential sites may have been fuelled by the bullish bids for several GLS sites in the past six months, said analysts.

The development charge (DC) rates for non-landed residential sites have been raised by an average of 2.7 percent for the period of 1 September 2016 to 28 February next year following two straight years of contraction, said the Ministry of National Development.

According to the Urban Redevelopment Authority (URA), the DC rate is a tax levied when planning permission is granted to carry out development projects that increase the value of the land, such as rezoning to a higher value use and increasing the plot ratio.

ADVERTISEMENT

Notably, 39 of the 118 geographical sectors saw DC rates increase by five to 12 percent, while rates remained unchanged for the other 79 sectors. Sector 48, which includes River Valley Road, Kim Yam Road, Martin Place and Mohamed Sultan Road, posted the highest increase of 12 percent.

Desmond Sim, CBRE Research Head for Singapore and South East Asia, said DC rate increases were “focussed predominantly in the CBD, probably because infrastructure is falling into place and as such, the Chief Valuer would like to maintain the premium for properties in the CBD”.

“The Chief Valuer had probably given due regard to the improving market sentiment in the non-landed residential segment, reflected in the 60 percent quarter-on-quarter increase in overall sales volume in Q2 2016 and moderate decline in the (URA’s) all-residential private property index for three successive quarters since Q4 2015,” said Tay Huey Ying, Research Head at JLL Singapore.

She noted that the fairly aggressive upward revision may have been fuelled by the keen and bullish bids for several GLS sites in the six months from March to August 2016.

The Martin Place site, for instance, drew a total of 13 bids “with the winning price of $1,239 psf per plot ratio representing the highest unit land price ever received for a pure residential GLS site”, said Tay.

Based on JLL’s analysis, the transacted price was 42 percent above the land price imputed by the sector’s DC rate prior to the latest revision. Following this revision, the DC rate for this sector would better reflect market land value.

But Tay was surprised that DC rates for landed residential sites were unchanged as this runs counter to market trends.

The URA index shows that landed home prices have fallen by a total of 12.5 percent since Q4 2013, “yet the DC rates for this use group have been left unchanged at March 2014’s rates”, she said.

The DC rates are reviewed every six months, in consultation with the Chief Valuer and the Inland Revenue Authority of Singapore (IRAS).

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg