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Steep hike in development charge rates for non-landed residential sector

By Lin Zhiqin

/ EdgeProp |

September 1, 2017 2:06 PM SGT

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The Ministry of National Development has raised the development charge (DC) rates for land use groups: commercial; landed residential; and non-landed residential for the period of Sept 1 to February 28, 2018. DC is payable to the state by property owners when approval is granted for land use intensification or for change of use. The DC rates remain unchanged for the other use groups.

The DC rates for the non-landed residential use group saw the largest increase of 13.8% on average. 116 out of 118 sectors saw their DC rates increase by between 6% and 29%. The largest increase of 29% applies to sector 100 (Tampines Road / Hougang / Punggol / Sengkang area), followed by a 28.1% increase in sector 101 (Paya Lebar Road / Ubi area / Macpherson Road / Eunos Link / Aljunied Road / Sims Avenue / Jalan Eunos Area). Christine Li, research director at Cushman & Wakefield, attributes the steep hike in the two sectors to the collective sale of Rio Casa in sector 100 for $575 million and the strong launch of Park Place Residences in sector 101, where all 215 units released in Phase 1 were sold at an average of $1,900 psf.

For the commercial use group, the DC rates were raised by an average of 3.8% in 59 out of the 118 sectors. The largest increase of 11% applies to: Sector 101 (Paya Lebar Road / Ubi area / Macpherson Road / Eunos Link / Aljunied Road / Sims Avenue / Jalan Eunos Area); Sector 113 (Yuan Ching Road / Corporation Road / Jurong West Ave 2 / PIE / KPE / Choa Chu Kang Ave 1 / Choa Chu Kang Way / Choa Chu Kang Road / Woodlands Road / Upper Bukit Timah Road / Bukit Batok area / Bukit Panjang area); Sector 114 (Boon Lay / Jurong West / Pioneer / Tuas / Sungei Kadut / Choa Chu Kang / Lim Chu Kang area); and Sector 115 (Mandai / Woodlands / Sembawang / Yishun area).

The DC rates for the landed residential use group were raised by an average of 0.3% in 5 out of the 118 sectors. The largest increase of 9% applies to sector 100 (Tampines Road / Hougang / Punggol / Sengkang area).

The sharp increase in DC rates for the non-landed residential and commercial use groups is owing to the buoyant investment markets in the two segments, according to Cushman & Wakefield’s Li. Based on analysis by Cushman & Wakefield Research, developers paid an average premium of 29% over comparable sites for the first five months of 2017. “The increasingly bullish bids by developers in recent land tenders is a testament that home prices is likely to increase when these projects reach the market,” says Li.

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