At this time, there is a huge collective sale fever that you can find in Singapore. But there is also a downside here. The DC rates used for the non-landed residential use are very high at this point. They raised with around 13.8%, which is a pretty high increase.
The DC rates are up in almost all the geographical sectors, some with just 6%, while others go up to 29%. The increase seems minimal, but it goes to show that the DC rates are getting pretty high. And yes, the developers have to pay them to enhance the use of some sites, same goes if they want to build some larger projects in there as well.
15 residential estates were put in collective sale, and only half were successful. The DC rate increase does manage to affect even many sales, and the developers do need to raise the price to get a good profit.
Some developers are offering lower prices to get some leasehold properties via a collective, something that does discourage owners to put them for a collective sale. The raise is something expected according to the head of consultancy and research at JLL Singapore. But even if this may not seem problematic, it’s safe to say that there can be some rather problematic situations shortly.
Between the months of March and August, some major active collective sales ended up in the billions range. So it’s safe to say that the sales are going well, but the DC rate increase may not have a positive impact on this in the very near future.
A thing to keep in mind here is that the rates went up for the landed residential users and the commercial ones too, something that you need to keep in mind for sure.
The increase of DC rates and the fact that the developer bids are also rather strange at this time may lead to an increase shortly too. It may be a problematic thing to deal with, but one that will most likely pay off extremely well in the end for the entire market. For the time being, it’s hard to understand where the market goes, but based on the presumptions above, we believe that an increase in the overall prices is on the table, and this will come sooner rather than later!
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