The development charge (DC) rates in Singapore for the fiscal period of March 1 to August 31, 2019 were released recently by the Urban Redevelopment Authority (URA).These rates are revised biannually by the Ministry of National Development on March 1 and Sept 1 respectively. The new rates are determined on the basis of the recent sales and land value assessment carried out by the taxman’s Chief Valuer at the Inland Revenue Authority of Singapore (IRAS)across various land groups in the officially demarcated 118 geographical sectors of Singapore.
The new rates reveal a cut in the rates levied on non-landed residential use. In 94 geographical sectors, the DC rates have been reduced by 4 to 13 percent. Though the rates remain unchanged in the rest of the sectors, the new rates reflect an average of 5.5 percent rate reduction in the last fiscal term. This contrasts sharply with the 9.8 percent rise noted in the DC rates for non-landed residential use in September 2018.
On the other hand, the new rates for landed residential use remain unchanged.
Similarly, DC rates for landed community use by various civic and religious industries and institutions also remain the same. The new rates also reflect no changes for certain other landed groups like land allocated for nature reserves and agricultural land, burial grounds and cemeteries as well as land allowed for the development of civic amenities like drains, roads, and railways.
Land groups which have commercial use, however, have seen a rise in the DC rates. For instance, the rates for hotels and hospitals have seen an average hike of 45.6 percent. September 2018 had seen a 11.8 percent rise for this commercial use land group. The new rates are based on the raise capped for 116 sectors. The rise in these sectors ranges between 7 percent to 74 percent. Only 2 sectors reflect unchanged DC rates in this land group. The upward activities in the hotel and office land groups have led to a rise in the overall DC rates for commercial use land groups as a whole.
The DC rates for commercial use have gone up by a noticeable 9.8 percent on average on March 1 ,2019. Last September this land group had reflected an average rise of 8.3 percent.The DC rates for commercial use have risen cumulatively in 116 sectors. Individually the sectors reflect a hike on the range between 3 percent to 17 percent.
Because the DC rates are a reflection on the real-time performance of the real estate market, it is safe to estimate that the rate cuts in the non-commercial land groups stem mainly because of a decline in residential land activity in the recent past.