Saturday, September 1, 2012

Development charges go up today

Straits Times: Sat, Sep 01

HIGHER property prices have prompted the Government to raise development charges (DC) for the commercial and industrial sectors, although the residential segment was largely untouched.

These charges are applied when the value of a site is lifted as a result of rezoning or when a taller building is permitted following a change in the plot ratio.

Taking effect today, they were released yesterday by the National Development Ministry. They are reviewed every six months.

The new charges reflect recent land and property values for the various market segments.

Charges have been hiked by 9per cent on average for commercial land and 14 per cent for industrial and warehousing use.

However, the residential landed sector did not see rates rise, while rates in the non-landed segment inched up by an average of just 1 per cent - largely owing to higher values in the suburban and city fringe areas. The average fee for hotels rose 11 per cent.

Experts say the rise in the commercial segment comes on the back of recent commercial en bloc sales and an active commercial strata-unit market. The biggest rise came in the areas of Lavender, Kitchener Road, Haig Road and Marine Parade, where rates have been lifted 20 per cent.

This could be due to the ongoing urban regeneration in the Lavender and Kitchener Road areas, said South-east Asia research head Chua Yang Liang at Jones Lang LaSalle.

"This neighbourhood has much hidden value, given its proximity to the city centre and improved accessibility," he said. "The chief valuer has revised the DC... in this area accordingly, reflecting the higher land values driven by ongoing regenerative effort in the neighbourhood despite the lack of reported deals."

Colliers International director of research and advisory Chia Siew Chuin said sales of strata retail units at Centropod @ Changi and Millage were likely to have contributed to the rise as well.

On the industrial front, however, the rise was supported by the brisk sales and unrelenting price increases of strata-titled industrial units, experts say. Continued demand for industrial land by developers and industrialists also fuelled this gain, said Ms Chia.

Generally, the most telling increases were in the mature locations in the central, east and north-east regions, she added.

For instance, gains of 19 to 23 per cent were seen in Bedok and Tampines and the Ang Mo Kio and Yio Chu Kang Road areas, on the back of keen competition and bullish tender bids.

On the recent Thomson Line announcement, Dr Chua said that depending on how much land values trend over the next six months, the DC along this corridor could change. "The rates could be revised again to reflect the market expectation when these stations are eventually operational, as we have seen previously in the commercial rate after the opening of the integrated resort on Sentosa."

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