Development Charge Rates Increased for Commercial, Residential and Industrial Units with a Cut on Hotel Use


The development charge rates for commercial, residential, and industrial use properties were raised for the very first time right since March 2019 and the new implications became active from March 1 for the next six months. This happened as a result of the broad-based recovery of the property market in Singapore; however, the hotel segment is an exception as it went down due to the pandemic effect.

Note that DC rates are paid by developers to the state for availing rights to make the best use of sites and to build larger projects over them. If we check reports from the past, the DC rates were reduced for three straight rounds since September 2020 due to ongoing crises. However, the Ministry of National Development has finally decided to raise the rates by 0.7 percent for commercial properties. Furthermore, healthy investment sales in the industrial sector triggered a rise of 2.2% in the DC rates for industrial units that were otherwise left unchanged for the past several months.

The DC rate growth for the landed as well as non-landed residential units also tapered for the previous rounds due to cooling measures; however, a very small rise was observed for the non-landed use. This DC rate revision round experienced a rise of 4.8% for the landed residential use properties with a rise of only 0.3% for the non-landed use properties. It was compared with a 6.3% rise for the landed use property and a 10.9% rise in the non-landed use property during past revisions.

Properties available for the landed residential use experienced a DC rate rise of 1% to 10% for all 118 sectors. The Head of Research for CBRE South-East Asia projects revealed that this growth is potentially driven by influential class bungalow activity relating to rising demands from key executives, entrepreneurs, and new citizens in the digital economy market. The economy in Singapore has started recovering now with the low-interest-rate environment and enhanced liquidity.

In a similar manner, the considerable hike in the non-landed residential use property DC rates is a big relief for the market that is experiencing worse impact after cooling measures applied in December 2021. Only six sectors have experienced a rise in DC rates ranging from 3% to 15%; however, it stayed unchanged for the other 112 sectors.

The biggest rise was reported from Guillemard Road, Dunman Road, Old Airport Road, and Mountbatten Road with a 15% range. Experts state that it can be due to the sale of some land parcels for $1488 psf ppr or $815 million at Thiam Siew Avenue. This major sale was closed by a joint venture between Sunway Developments and Hoi Hup Realty.

The Senior Research Director at Huttons Asia, Mr. Lee Sze Teck, has recently reported that flat DC rates keep the cost to intensify land use also uncharged. Therefore, the developers may look at en bloc marker to manage their landbank. Furthermore, the marginal rise of 0.7% in DC rates is not expected to hinder the sales of en blocs in the commercial property sector.



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