Development charge rates lowered for industrial properties

Development charge (DC) rates for industrial properties will be reduced in most areas while rates for office, retail and residential will remain unchanged in the next six months.

The Ministry of National Development said in a statement on Monday (Aug 31) that DC rates for industrial properties will be lowered by between 3 per cent and 4 per cent for 87 out of 118 sectors. This will be for the six months beginning Sept 1.

The biggest drop of 4 per cent applies to several areas including Sector 98, which includes Kaki Bukit, Bedok, Xilin Avenue, Simei and Changi South.

Development charge is a tax that is levied when planning permission is granted to carry out projects that increase the value of the land. This could involve rezoning of a site to allow higher value use or when the plot ratio is increased to allow the building of a larger project.

CBRE’s research head for Singapore and Southeast Asia, Desmond Sim, said in a statement: “The sedated industrial market over the past six months probably led to minor corrections in the DC rates for industrial. This is the first decrease in DC rates for industrial after having remained unchanged for the last three revisions.”

Dr Chua Yang Liang, head of research for Singapore and Southeast Asia at JLL noted: “The downward adjustment in the DC rates for industrial has been the largest we have seen since September 2005, when the average decline was at 4.5 per cent. At that time, the overall annual industrial production growth slowed from almost 14 per cent in 2004 to 9.5 per cent by 2005.”

“In the recent few years, our industrial production has slowed to some 1 to 2 per cent per annum. Correspondingly this recent downward adjustment in Industrial DC rates, despite the dearth of industrial land transactions, is an affirmation of the weakening industrial land market dragged down by weaker global demand and internal restructuring,“ added Dr Chua.

MND said DC rates for all other use groups including commercial, residential, hotel/hospital and places of worship will remain unchanged.

Source : Channel NewsAsia – 31 Aug 2015

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