The S$460 million development charge (DC) for Pine Grove, which was launched for collective sale last week, may deter potential buyers.
The DC for the Pine Grove site is approximately 9.5 percent higher, in line with the rate increases announced recently, said many property analysts. They noted that the total cost of Pine Grove works out to around S$2.2 billion, or S$1,152 psf ppr.
Pine Grove is one of the en bloc properties affected by a higher DC rate.
Analysts said residents at en bloc properties may accept a lower indicative price in order to balance out the higher DC rate just to maintain the attractiveness of the total costs of the property.
Nicholas Mak, Executive Director of Research at SLP International, said the total price of the land matters more to the developer.
“If the asking price by the owners is too high, the developers may consider using the money to buy government land instead,” he said.
The increase in DC will also affect the seller’s profit margins. “Previously, we were looking at as high of a profit margin of 50 to 100 percent,” said Ms. Christina Sim, Director of Investment at Cushman & Wakefield.
But now, “if you get a margin of 15 to 30 percent, I think you’re considered quite lucky,” she added.