Govt lowers development charge for non-landed residential sites

The government has lowered the development charge (DC) for non-landed residential sites by three per cent on average.

This compared to the 12.2 per cent increase during the last revision exercise six months ago.

The most significant decreases are in the Punggol Town/Upper Serangoon Road area, and the Hougang/Paya Lebar Road/Toa Payoh/Bishan areas, which will see rates fall by 14 per cent.

Analysts say the cautious stance among developers in land tender bids may have prompted the government to cut DC rates for the non-landed residential sites.

Colliers International director of research and advisory Ms Chia Siew Chuin said in a statement that this could be due to a number of factors.

These include ample state land supply, concerns of a slowing economy amid global uncertainties as well as the possible bearing of the Additional Buyer’s Stamp Duty (ABSD) on the market that caused developers to bid conservatively for those sites.

Typically, development charges are paid to the government when land-use for a particular site is enhanced upon redevelopment, or more simply put, when a bigger building replaces a smaller one.

It also reflects changing land values.

For residential uses, DC rates mostly apply to the redevelopment of en bloc sale sites.

At the same time, DC rates for luxury residential sites like Sentosa Cove have been reduced by as much as 6.5 per cent.

Analysts say falling prices of luxury homes and rents have caused a lack of interest for land in the high-end locations.

DC rates remained unchanged for non-landed residential uses.

Meanwhile, DC rates have been revised upwards for commercial property uses by an average of 6 per cent.

This is lower than the 21.7 per cent hike in September last year.

For commercial uses, the Sengkang/Seletar Area will see the highest DC rates increases of 52 per cent or S$3,500 per square metre.

DC rates for Hotel and Hospital uses have increased by an average of 15 per cent.

All other DC rates, including those for industrial and warehousing uses remain unchanged.

Source : Channel NewsAsia – 29 Feb 2012

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