Published: 28 February 2018
Against the rise of bullish land bids by developers hurrying to boost their land-bank in 2017, the government has hiked development charge (DC) rates for non-landed residential use by 22.8 per cent on average. This is a bigger hike compared with the 13.8 per cent increase during the last revision in September 2017 and the biggest increase since September 2007, when the rate soared by an average of 57.8 per cent.
Singapore revises its development charge (DC) rates on a semi-annual basis through its statutory arm – Ministry of National Development – which consults the Chief Valuer who takes into consideration on the recent land sales and property transactions. The latest DC rates will be valid from 1 March 2018 to 31 August 2018.
Whenever sites are redeveloped or intensified on them, the increase in gross floor area or value through the change of use attracts DC which is payable for enhancing the use of sites above their existing baseline.
Commercial Development Charge
The DC rates for Use Group A (Commercial) have increased by 2.7% on average. 41 out of the 118 sectors have increases in DC rates ranging from 4% to 16%. There is no change to the DC rates for the remaining 77 sectors. The largest increase of 16% applies to the following sectors:
• Sectors 1 & 2 (Cross Street / Collyer Quay / Fullerton Square / Boat Quay / South Canal Road / South Bridge Road / Church Street / Telok Ayer Street)
• Sectors 3 to 5 (Ophir Road / Rochor Road / Victoria Street / Hill Street/ Singapore River / Suntec City / Raffles Boulevard)
• Sector 6 (Collyer Quay)
In the state tender during September 2017, the sale of the commercial site in Beach Road achieved S$1,706 psf ppr, higher than the S$1,689 psf ppr achieved for the white site along Central Boulevard in 2016 may have contributed to the hike in commercial.
During the previous DC rate revision (for the Sept 1, 2017 to Feb 28, 2018 period), commercial use DC rates went up on average by 3.8 per cent.
Residential Development Charge
The DC rates for Use Group B2 {Residential, (non-landed)} have increased by 22.8% on average. 116 out of 118 sectors have increases in DC rates ranging from 12% to 38%. There is no change to the DC rates for the remaining 2 sectors. The largest increase of 38% applies to the following sectors:
• Sector 19 (River Valley Road / Kim Seng Road / Jiak Kim Street / Martin Road / Mohamed Sultan Road / Clemenceau Avenue / Outram Road)
The rate hike in Sector 19 was due to the record price for 99-year leasehold private residential land located at Jiak Kim Street during the state tender that closed on 5th December; the winning bid of S$1,733 per square foot per plot ratio (psf ppr) was put forth by Frasers Centrepoint (now known as Frasers Property) was almost 40 per cent above the previous record of S$1,239 psf ppr achieved at Martin Placein June 2016 for a nearby site which GuocoLand is developing into the Martin Modern condo.
• Sector 23 (Oxley Rise / Oxley Road / Penang Road / Orchard Road / Dhoby Ghaut / Handy Road / Selegie Road)
• Sector 34 (Sophia Road / Upper Wilkie Road / Mackenzie Road / Niven Road / Kirk Terrace / Adis Road)
The Handy Road tender saw a near-record price (of S$1,722 psf ppr) paid by CDL Regulus Pte. Ltd. during the Government Land Sale in Feb 2018 likely attributed the steep increase in Sector 23 and 24.
Two other high-profile sites awarded such as Pearl Bank Apartments near Chinatown and Royalville in Bukit Timah have successfully completed their collective sale may also have resulted in an increase of DC rates for Sectors 18 and 109, which rose by 31.6 per cent and 35.0 per cent, respectively.
The DC rates remain unchanged for Use Groups:
B1 {Residential, (landed)}
C (Hotel/Hospital)
D (Industry)
E (Place of Worship / Civic and Community Institution), and 3 other Use Groups F, G and H.
There are no changes to the Use Groups Table and the Geographical Sector maps.
The revised DC rates is to be used in conjunction with the Use Groups Table and the set of Geographical Sector maps to correspond its location, will be effective from 1 March 2018. The new rates will apply to cases which are granted Provisional Permission (PP) or 2nd and subsequent extensions to the PP on or after the effective date.
Developers and owners in any disagreement over the DC payable can appeal for a re-assessment of valuation by the Chief Valuer, as provided for in the Planning Act.