Saturday, September 1, 2012

DC rates up for all but landed residential properties

SINGAPORE: The government has increased the property development charges for non-landed residential, industrial, commercial and hotel segments.

Analysts said the sharper increase in charges for industrial properties is driven by stronger investor demand seen in the year.

A development charge is a levy that's payable by the developer when a property site is developed into more valuable project.

The development charges for non-landed homes will increase by 1 per cent on average, following the 3 per cent cut during the last revision in March.

According to the National Development Ministry, the sector comprising Bedok North, Simei and Tampines New Town will see the highest increase of 12 per cent in DC rates.

Analysts said the recent land sales near Tanah Merah MRT station could have contributed to the increase.

Some market watchers said the smaller-than-expected increase in DC rates for the non-landed residential segment reflects a stabilisation in land values. They had earlier expected the charges to go up by 3 to 5 per cent on average.

Meanwhile, the DC rates for landed residential segment remain unchanged.

The charges for industrial segment, however, will see a sharper increase of 14 per cent on average, with the largest increase of 23 per cent in Ang Mo Kio and Yio Chu Kang Road area.

The levy for commercial segment has been revised upwards by an average of 9 per cent.

Chris Koh, director, Chris International, said: "Quite a lot of investors have shifted their attention to commercial and industrial developments. Over the last two years, we saw prices in these areas rise very high. I can understand why the government would want to look into it and make sure developers do not take advantage and start redeveloping commercial buildings and making a very heavy profit with all the investors buying." 

The DC rates for the hotel and hospital segment have also risen by 11 per cent on average.

Considering these increases, analysts said developers will look a little harder at future en bloc deals. 

Donald Han, special advisor, HSR, said: "There is now a higher component that he has to pay in order to be able to maximise its plot ratio, and that eats into the profitability. If you look at some of the collective sale sites... in particular Lavender area, Syed Alwi, Rangoon Road... where DC components have actually gone up by double-digits, it's deemed a little less attractive for developers to partake."

The change in DC rates will take effect from September 1, with the next review due in six months.



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Email: marshe_inc@yahoo.com.sg
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