Bookmark & Share
Commercial properties under use group A are to pay more for development charges (DC) as rates are revised for the period of 1 March to 31 August this year, according to the Ministry of National Development (MND) on Friday, 27 February.
This is the third consecutive time an increase was imposed in the DC rates for the use group.
DC rates for use group A have an average increase of 2 percent, with the increases ranging from 4 to 9 percent in 31 sectors while those for the remaining 87 sectors remained unchanged. The biggest increase of 9 percent applies to areas in the central business district and fringe area, as well as those in the Orchard Road shopping belt.
These include Maxwell Road,Telok Ayer Street, Hoe Chiang Road and Keppel Road, Marina Gardens Drive, Marina Mall, Sheares Avenue and Marina Link, and the Eu Tong Sen Street / Park Crescent / Upper Pickering Street / Upper Cross Street areas.
According to JLL, the commercial upside is a surprise although only 26 per cent of the sectors recorded upside revision.
Dr Chua Yang Liang, Head of Research for South East Asia at JLL said: “Interestingly, most of the large increases occur in sectors with a presence of shophouses. This type of real estate has caught the attention of investors and prices have been on an upward trend of late. This is possibly one factor that has motivated the significant increase in commercial rates in these sectors.”
Meanwhile, DC rates remain unchanged for other use groups such as B1 (Landed residential), C (Hotel / Hospital), D (Industry) and E (Place of Worship/Civic and Community Institution), MND said.
The unchanged DC rates for industrial properties came as a surprise to some market watchers with JLL noting that as a rise was expected on the back of empirical evidence showing upside in land values. However, CBRE said the unchanged rates for use group D reflects the current mixed sentiments pervading in the industrial property market.
Looking ahead, JLL said that while the change in DC rates may not have significant impact on development in general, it does reflect the dissonance in the wider property market. “This divergent trend between the residential and commercial markets is likely to continue into 2015 but the dissonance should gradually diminish as the large office supply weighs in,” he added.
DC rates are reviewed on a half-yearly basis, and in consultation with the Chief Valuer.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
Related Articles:
Singapore office, retail rents strongest in APAC: JLL