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For commercial use, DC rates for 59 of the 118 sectors were increased by three percent to seven percent, while rates for the other 59 sectors were left untouched.
The Ministry of National Development, in consultation with the Chief Valuer, has raised the development charge (DC) rates for commercial use by 1.7 percent on average, while retaining the rates for hotels for the period 1 September to 29 February 2020.
Revised on a half-yearly basis, DCs are payable when planning permission is granted to carry out development projects that raises the value of land, such as rezoning to a higher value use or increasing the plot ratio.
For commercial use, DC rates for 59 of the 118 sectors were increased by three percent to seven percent, while rates for the other 59 sectors were left untouched.
The sharpest increase of seven percent applies to Tampines Road, Ang Mo Kio, and Upper Bukit Timah Road (Sectors 100, 105, 112) areas.
Tricia Song, head of research for Singapore at Colliers International, revealed this is “the seventh consecutive increase in commercial DC rates since the September 2016 review”.
She noted that DC rates at Sector 51 (North Bridge Rd, Beach Rd) climbed 3.6 percent to $10,150 per sq m, probably due to the recent Duo Tower and Galleria transaction at $2,570 per sq ft (psf).
“DC rates at Sector 7 (Cecil St, Robinson Rd, Shenton Way) and Sector 9-10 (Anson Rd, Palmer Rd, Tanjong Pagar Road) went up 2.9 percent to 3.1 percent, probably due to some large-ticket commercial deals in these locations announced over the past six months. These included: Anson House ($2,435 psf), 71 Robinson ($2,756 psf), and Frasers Tower (50 percent stake) ($2,865 psf).”
Meanwhile, DC rates for hotels remain unchanged partly due to the lack of significant hotel transactions over the last few months.
“While investors are still interested in hospitality assets, the 45.6 percent hike in DC rates for hotel use since 1 March 2019 proved to be too punitive for hotel land deals,” she said.
Hotel transactions since then focused on income assets, like Ibis Novena, Bay Hotel and a stake sale in Marina Mandarin.
Moreover, hotel statistics have not been too bullish, she added.
“Year-to-June tourist arrivals grew just 1.35 percent to 9.32 million while hotels’ REVPAR (Revenue Per Available Room) was flat at $183.9 (-0.2 percent year-on-year).”
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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