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The Ministry of National Development on Wednesday (31 August) announced increases in development charge (DC) rates for sites developed or redeveloped for commercial, non-landed residential, hotel and hospital uses.
However, DC rates for industrial, place of worship/civic and community institution and other use groups remain unchanged.
The latest DC rates will apply for the period of 1 September 2016 to 28 February 2017.
The DC rates for commercial sites were increased at an average of 0.6 percent, while DC rates for use groups that cover hotels and hospitals were raised to 1.4 percent.
“This is a reversal from the last revision in March 2016, where the DC rates for commercial, non-landed residential and hotel/hospital were decreased,” said Cushman & Wakefield director of Research, Christine Li.
14 out of the 118 sectors saw increases ranging from 4 percent to 5 percent. The largest increase of 5 percent applies to Sector 12 (Bayfront Avenue) and Sectors 41 to 43 (Orchard Road / Somerset Road / Scotts Road / Orchard Boulevard / Cuscaden Road / Tanglin Road).
Analysts attribute the rate increases to recent market activities.
“Capital market has shown little signs of price retreating compared to the last six months on the back of increased market activities. In 2Q2016, total real estate investment sales amounted to S$7.22 billion in the second quarter of 2016, surging 205 percent from the previous quarter, and is the highest in 11 quarters,” said Li.
Meanwhile, CBRE Research head for Singapore and Southeast Asia, Desmond Sim said “DC rates in the central business district have been restored to the implied values of September 2015. The sales of two major deals Asia Square Tower 1 and Straits Trading Building indicate that capital values are still held tightly by landlords and therefore reflected in the implied land values.”
DC rates are reviewed twice a year – on 1 March and 1 September – 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
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