The residential sector is expected to lead the increase in development charges (DC), which are payable to intensify or enhance the use of some sites.
“The upcoming DC rate revision is likely to be monitored closely by industry players as the extent of revision would indicate the government’s assessment of the exuberance of the property market, providing clues on the government’s propensity to implement further market cooling measures,” said Tay Huey Ying, director for research and advisory at Colliers International.
Several property consultants said DC rates for non-landed residential use could see an increase of about 10 percent to 15 percent on average from September 1, while the rate for landed residential use could surge by about 20 percent on average.
In the last revision effective March 1, 2010, DC rates for landed and non-landed residential use climbed 12.5 percent and 8.5 percent on average, respectively.
Meanwhile, DC rates for industrial, commercial and hotel use could see moderate increases on average.
“Chief Valuer is likely to consider the positive impact generated from the opening of Marina Bay Sands and the improved accessibility from the newly opened MRT stations on the Circle Line in assessing upcoming DC rates,” said Ms. Tay.
Sentosa, the CBD and the prime residential districts could see the biggest increases in commercial and residential DC rates, according to Chua Chor Hoon, research head for DTZ South-east Asia.
Revisions on DC rates are also tracked by those involved with redevelopment sites with a large DC payment, which include some en bloc sale sites.
“If the DC rate increases significantly, a developer would typically pay less to the owners, making it harder to transact en bloc sales,” said property consultant Lee Hon Kiun, director of Landmark Property Advisers.
DC rates, revised every March 1 and September 1 of the year, are specified by use groups across 118 geographical sectors across Singapore. The review is carried out by the Ministry of National Development, with the advice of the Chief Valuer, who considers current market values.
DC rates for non-landed residential use could see an increase of about 10 percent to 15 percent, lead by city-fringe locations, said Ms. Tay. Geographical sectors containing the Circle Line stations at Mountbatten, Macpherson and Dakota, as well as the Kampong Bahru and Fort Road areas, could see the biggest increases of about 30 percent.
Meanwhile, Desmond Sim, associate director of Jones Lang LaSalle, estimated that suburban locations could see the biggest increases of around 20 percent in non-landed residential rates, due to the optimistic land bids at state tenders.
Mr. Sim also predicts a 15 percent to 20 percent increase in landed residential DC rates. “A bigger increase is expected at Sentosa Cove, as well as districts 9, 10 and 15, given the stronger transaction volume and price movements in these areas,” he said.