Property consultants said development charges (DC) will likely rise, starting 1 March, due to higher land and real estate prices over the past six months.
DC rates are revised every 1 March and 1 September by the Ministry of National Development (MND) of the year across Singapore’s 118 geographical sectors. The rates are tracked in real estate circles, as they can affect redevelopment sites with a significant DC component and reflect land values.
During the last revision that came into effect on 1 September 2010, the average DC rates for non-landed and landed residential uses were increased by approximately 13 percent each. This time, real estate consultants are expecting a larger increase in DC rates for landed residential use, compared to non-landed residential use, due to a more buoyant performance for landed home prices in 2010.
The average DC rate for industrial use, which saw a 10 percent increase from 1 September 2010, could rise another five percent beginning 1 March, said Tang Wei Leng, Executive Director of Investment Services of Colliers International.
Meanwhile, the average DC rate for hotel use, which remained unchanged in the earlier revision, could jump 10 percent this time, on the back of strong visitor arrivals in 2010.
“The prices of all the hotel sites awarded recently by the Urban Redevelopment Authority (URA) reflect premiums of 98-214 percent to the land values implied by the prevailing DC rates for hotel use for the respective locations or geographical sectors,” said Ms. Tang.
The average DC rate for non-landed residential use could jump by up to 30 percent from 1 March, while the average landed residential DC rate could be in the range of 25 to 35 percent, said Jones Lang LaSalle (JLL).
Colliers International also expects a five to eight percent increase in the average DC rate for landed residential rates, compared to a five percent hike in the average DC rate for non-landed residential use.