Development charge rates for commercial industry, residential raised
Real estate experts say these hikes were within expectation.
The Ministry of National Development’s revised development charge (DC) rates with residential landed area receiving the highest increase.
Experts in the real estate market said these revisions were within expectation.
“The DC rate revisions for the period between 1 September 2021 to 28 February 2022 are largely within expectations; these revisions have reflected the rebound in transactions over the past six months, with notable adjustments to DC rates in the commercial and industrial sectors,” commented Catherine He, Head of Research, Colliers Singapore.
Group A, or the commercial industry, had an upward adjustment of 0.7, with most increases being in the Downtown Core Planning Area.
"However, Use Group A (Commercial) did not see much change with 29 sectors increasing while 89 remained unchanged, with an overall slight average increase of 0.7%. Most of the increases were in the Downtown Core Planning Area," noted Knight Frank head of research Leonard Tay.
B1, meanwhile, or the residential landed area, received the highest increase of 4.8% on average, with all 118 sectors acquiring increases from 1% to 10%.
"The increase is largely within expectations, with the strong activity observed in the GCB market which was boosted by fresh demand from digital economy entrepreneurs, key executives and continued demand from new citizens, amid Singapore’s recovering economy, ample liquidity and the low interest rate environment," said Tricia Song, CBRE head of research.
Group B2, or the residential non-landed zone, previously saw an increase of 10.9%, with cooling measures tempering that to 0.3%. According to He, this could be due to investors taking a wait-and-see approach as they re-evaluate their options. Sector 92 saw the largest increase at 15% due to sites sold at Thiam Siew Avenue.
Group D, or the Industrial zone, saw an increase by 2.2% on average after remaining unchanged for several revisions. This also marks the first increase in DC rates since September 2018.
Wong Xian Yang, Head of Research, Cushman & Wakefield, attributed this jump to industrial investment sales totaling to $4.4b for 2021, showing demand from industrialists and investors.
Only Group C, or the hotel and hospital zone, decreased. Wong pins this on the gradual recovery of the tourism sector and limited transactions of hotel properties. Despite this, however, the gradual opening of borders, and the redevelopment opportunities to take advantage of ESG openings could serve as the way forward for recovery, according to Wong.
" And we could see higher investment activities in this market as investors look for redevelopment opportunities to leverage on ESG opportunities and bet on an eventual return of tourism to pre-covid levels," Wong said.