Commercial DC rates to climb 1.7% after September review: URA

A 7% increase was recorded in Tampines Road, Ang Mo Kio, and Upper Bukit Timah.

Development charge (DC) rates for commercial-use properties will climb 1.7%, on average, compared to the review last March, according to data from the Urban Redevelopment Authority (URA).

This marks the seventh consecutive increase in rates since the September 2016 review.

A report by Colliers International noted that a sharp 7% increase in DC rates was recorded in Tampines Road, Ang Mo Kio, and Upper Bukit Timah Road (Sectors 100, 105, 112). Meanwhile, DC rates at Sector 51 (North Bridge Rd, Beach Rd) also rose 3.6% to $10,150 per square meter (psm), which was attributed to the recent Duo Tower and Galleria deal. 

Furthermore, rates at Sector 7 (Cecil St, Robinson Rd, Shenton Way) and Sectors 9-10 (Anson Rd, Palmer Rd, Tanjong Pagar Road) went up by 2.9% to 3.1%.

Colliers noted that the rate increase in these areas may be due to large-ticket commercial deals in these locations announced over the past six months. These include Anson House, which Arch Capital Management is purchasing for $210m or about $2,435 psf; and 71 Robinson ($2,756 psf) which Sun Ventures which recently obtained a $455m loan apart from other planned investments.

Another notable deal during the period is the purchase of Frasers Tower, which was reportedly sold to Korea's NPS for more than $1.9b.

Also read: Commercial property transactions fell below US$5b mark in H1

DC rates are reviewed on a half-year basis and are payable when planning permission is granted to carry out development projects that increase the value of the land, for example, rezoning to a higher value use or increasing the plot ratio.

Overall, DC rates were notably reduced for the next six months, which Huttons found “hardly surprising”.

“Sectors where DC rates were reduced saw soft land prices over the six month period from March 2019 to August 2019,” said Sze Teck Lee, director for research at Huttons Asia.

“These reductions are hardly significant to boost the enbloc market unless the land plot is very attractively priced. Developers are likely to hedge their bets in view of the uncertain economic situation,” he added, commenting on Singapore’s commercial, residential, industrial and hotel sites.