Several property consultants expect development charge (DC) rates for non-landed residential use to rise on 1 September as prices of land sales for the last six months hover above land values implied by existing DC rates.
At the same time, analysts feel that industrial sites could also see higher DC rates, which are paid to enhance the use of some sites or to build larger developments.
However, DC rates for landed residential and commercial use are expected to remain flat or grow slightly.
But Chia Siew Chuin, International Director at Colliers, predicted that commercial DC rates could increase in locations with strong sales of strata shops or offices, such as Shenton Way, Upper Changi and Changi Roads, Upper Paya Lebar and Upper Serangoon.
DC rates are revised on 1 March and 1 September yearly based on current market values. The Ministry of National Development, in consultation with the Chief Valuer, revises the rates according to use groups across 118 geographical sectors.
Karamjit Singh, Managing Director at Credo Real Estate, said that DC was payable for just five of the 15 successful en bloc deals in 2012.
“If commercial DC rates move up sharply in specific locations – skewed by some recent land deals, en bloc sales and high sale values of strata-titled retail units – going forward, some mixed-use en bloc projects could see their premiums lowered on account of potentially higher DC payable upon redevelopment,” he said.
With the lacklustre market activity, non-landed residential DC rates could fall in some traditional prime areas, said Chia.
“While this isn’t expected to significantly rekindle the interest of collective-sale hopefuls…it would be seen as a positive factor for the market.”
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