MND revises condo DC rates downward by 0.2%
This is said to be reflective of the muted GLS bidding.
The Ministry of National Development (MND) has revised the development charge (DC) rates for use group B2, or non-landed residential properties, downward by 0.2% on average for the period 1 March to 31 August, an announcement revealed. The review is carried out on a half-yearly basis in consultation with the Chief Valuer.
This comes after 0.3% decrease in DC rates during the September 2019 review and a 5.5% dip in DC rates during the March 2019 review.
“We believe the cut in rates is reflective of the relatively muted Government Land Sales bidding and general slower economic outlook,” commented Tricia Song, head of research at Colliers. “The trimming of the DC rates for non-landed residential use in this review should be modestly comforting for property developers who have had to grapple with more uncertainties.”
Meanwhile, DC rates remain unchanged for use groups A (commercial), B1 (landed homes), C (hotel/hospital), D (industry), E (place of worship / civic and community institution), and three other use groups F, G and H.
Song noted that the unchanged DC rates for commercial properties is the first pause after seven consecutive increases since the September 2016 review. Its last revision on the previous review rose by an average of 1.7%.
“We believe the capital values have stabilised - as reflected in some transactions in late-2019 – which could explain why there was no change in the DC rate for commercial use,” Song said.
In addition, she is also explained that hotel DC rates remained unchanged as the sector saw a
a sharp 45.6% increase in the March 2019 revision. “We see room for hotel DC rates to ease should transacted valuations fall,” she added.
MND’s report mentioned that five out of the 118 sectors have reduced in DC rates ranging from 3% to 7%, whilst the rates are unchanged for the remaining 113 sectors.
Sector 34 (Sophia Road / Upper Wilkie Road / Mackenzie Road / Niven Road / Kirk Terrace / Adis Road) and sector 35 (Cavenagh Road / Bukit Timah Road / Mackenzie Road / Upper Wilkie Road / Edinburgh Road / Buyong Road) saw the largest declines as it fell by 7%.