The development charge (DC) rates paid by developers to enhance a site or to build bigger projects on them have been raised by the Ministry of National Development for the period of March to August 2014.
DC rates for Use Group A (Commercial) rose by an average of 15 percent, or ranging from 14 to 29 percent in 89 out of 118 geographical sectors. The largest hike of 29 percent applies to Sector 108 – Adam Road, Farrer Road, Queensway, Tanglin Road, Sixth Avenue, Holland Road, Holland Avenue, Alexandra Road, Eng Neo Avenue area and Commonwealth Avenue.
For Use Group B1 (Landed Residential), the increase is between nine to 10 percent in 13 out of 118 sectors. While the DC rates for 105 sectors remained the same, nine sectors saw the biggest uptick of 10 percent.
These are Sector 98 (New Upper Changi Road / Bedok / Simei area); Sector 100 (Tampines / Hougang Avenue 2 / Punggol Road); Sectors 101 & 102 (Paya Lebar / Aljunied / Macpherson); Sectors 105 & 107 (Upper Thomson Road / Sembawang Road / Lentor Avenue / Yio Chu Kang Road / Ang Mo Kio Avenue 3 / Marymount Road / Thomson Road); Sectors 111 & 112 (Clementi / West Coast/ Jurong East area); and Sector 113 (Upper Bukit Timah / Hillview / Bukit Batok / Jurong West area).
“The revision of DC rates for landed residential use is largely in line with URA’s price index for landed homes, which slid 0.7 percent in 2H2013 compared to the 0.8 percent rise recorded for 1H2013,” said Chia Siew Chuin, Director of Research & Advisory at Colliers International.
For Use Group B2 (Non-landed Residential) the hike ranges from six to 10 percent in 15 out of 118 sectors. Although the DC rates for 103 sectors remained unchanged, the largest increase of 10 percent is in Sector 101 – Aljunied, Eunos Link, Paya Lebar, Macpherson and Sims Avenue.
“This (hike) is not surprising, as the URA non-landed residential price index softened by a marginal 0.3 percent in 2H2013, compared to the 2.2 percent growth in 1H2013,” Chia noted.
The small adjustments in the residential group merely align the DC rates with the market, said Dr Chua Yang Liang, Research Head at Jones Lang LaSalle.
For Use Group D (Industrial/Warehousing use), the DC rates remain the same, but those for Group C (Hotel/Hospital) climbed by an average of 13 percent. The heftiest rise of 31 percent is in Sectors 93 & 94 (Changi Road / East Coast / Marine Parade area).
“The current DC Rate adjustments echo the sentiments we have observed in the last six months particularly in the commercial sectors,” said Chua, adding that the hike in commercial rates is unlikely to have any negative impact on the market going forward.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg
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