http://www.todayonline.com/business/development-charges-commercial-residential-properties
Published: 4:00 AM, March 1, 2017
SINGAPORE – From Mar 1, developers will face higher development charges (DC) for commercial and residential (non-landed) properties, which have increased on average by 1.3 per cent and 4 per cent respectively.
Land slated for hotel and hospital use will see a 2.6 per cent increase on average. DC rates for industry, however, were reduced by about 3.7 per cent on average.
According to the Urban Redevelopment Authority, the DC rate is a tax levied when planning permission is granted to carry out development projects that increase the value of the land, such as rezoning to a higher value use, and increasing the plot ratio.
The increase in the commercial DC rates is largely centred on areas in the Central Business District, with the largest increase in the commercial sector of 29 per cent for sector 11 including Shenton Way and Raffles Quay as well as Marina Bay Financial Centre.
According to Desmond Sim, head of CBRE Research for Singapore and South East Asia, this increase was likely to be influenced by investment activities around the robust bid for Central Boulevard and some key commercial buildings such as Asia Square Tower 1, 77 Robinson and Capital Square.
“The DC rate changes are largely within expectations. Sectors which saw changes in DC rates have steadily chalked up sales transactions in the last six months,” said Mr Sim.
“The upward revision of DC rates for commercial and non-landed residential is seen as ‘playing catch-up’ as developers’ hunger for prime commercial sites and residential sites has driven land prices further north over the last six months, despite concerns over the supply overhang and soft leasing demand in both sectors,” agreed Christine Li, director of research at Cushman & Wakefield.
Similarly, DC rates for residential (non-landed) real estate increased in line with the activities in the respective sectors and its vicinities. Key transactions include the collective sale of Shunfu Ville (sectors 103 and 104); Raintree Gardens (sectors 53, 57 and 103) and the residential site at Perumal Road (sectors 30, 31, 32 and 53), added Mr Sim.
“The land price of Perumal Road was 70 per cent higher compared to the implied land value. In addition, key areas associated with (recommendations by) the Committee on the Future Economy, with the likes of Tengah and the vicinity of Jurong Innovation District, saw a marked increase in rates,” he noted.
The largest increase of 17 per cent applies to sector 53 including Jalan Besar, Syed Alwi Road, Serangoon Road and Lavender Street, and sector 57 including Balestier Road, CTE/PIE, Serangoon Road and Bendemeer Road.
Rates for Group C (hotel/hospital) increased by 2.6 per cent on average, with just over a quarter of all sectors seeing an increase in DC rates, ranging from 4 to 19 per cent.
The increase in this group is somewhat surprising, said Ms Li, as there has not been any hotel transaction in the last six months.
Rates for Group D (industry) decreased by 3.7 per cent on average, with declines across all 118 sectors, ranging from 2 to 14 per cent. Analysts said this was in line with the market conditions associated with industrial space. Industrial prices and occupier market have been facing pressure.
“Going forward, manufacturing continues to face headwinds due to the advent of the Trump presidency, which has led to increased market uncertainty as Trump’s protectionist stance could lead to decreased trade flows in Asia,” said Ms Li.
The new rates will apply to cases that are granted provisional permission or extensions on or after the effective date. ADDITIONAL REPORTING BY RUMI HARDASMALANI
Published: 4:00 AM, March 1, 2017
SINGAPORE – From Mar 1, developers will face higher development charges (DC) for commercial and residential (non-landed) properties, which have increased on average by 1.3 per cent and 4 per cent respectively.
Land slated for hotel and hospital use will see a 2.6 per cent increase on average. DC rates for industry, however, were reduced by about 3.7 per cent on average.
According to the Urban Redevelopment Authority, the DC rate is a tax levied when planning permission is granted to carry out development projects that increase the value of the land, such as rezoning to a higher value use, and increasing the plot ratio.
The increase in the commercial DC rates is largely centred on areas in the Central Business District, with the largest increase in the commercial sector of 29 per cent for sector 11 including Shenton Way and Raffles Quay as well as Marina Bay Financial Centre.
According to Desmond Sim, head of CBRE Research for Singapore and South East Asia, this increase was likely to be influenced by investment activities around the robust bid for Central Boulevard and some key commercial buildings such as Asia Square Tower 1, 77 Robinson and Capital Square.
“The DC rate changes are largely within expectations. Sectors which saw changes in DC rates have steadily chalked up sales transactions in the last six months,” said Mr Sim.
“The upward revision of DC rates for commercial and non-landed residential is seen as ‘playing catch-up’ as developers’ hunger for prime commercial sites and residential sites has driven land prices further north over the last six months, despite concerns over the supply overhang and soft leasing demand in both sectors,” agreed Christine Li, director of research at Cushman & Wakefield.
Similarly, DC rates for residential (non-landed) real estate increased in line with the activities in the respective sectors and its vicinities. Key transactions include the collective sale of Shunfu Ville (sectors 103 and 104); Raintree Gardens (sectors 53, 57 and 103) and the residential site at Perumal Road (sectors 30, 31, 32 and 53), added Mr Sim.
“The land price of Perumal Road was 70 per cent higher compared to the implied land value. In addition, key areas associated with (recommendations by) the Committee on the Future Economy, with the likes of Tengah and the vicinity of Jurong Innovation District, saw a marked increase in rates,” he noted.
The largest increase of 17 per cent applies to sector 53 including Jalan Besar, Syed Alwi Road, Serangoon Road and Lavender Street, and sector 57 including Balestier Road, CTE/PIE, Serangoon Road and Bendemeer Road.
Rates for Group C (hotel/hospital) increased by 2.6 per cent on average, with just over a quarter of all sectors seeing an increase in DC rates, ranging from 4 to 19 per cent.
The increase in this group is somewhat surprising, said Ms Li, as there has not been any hotel transaction in the last six months.
Rates for Group D (industry) decreased by 3.7 per cent on average, with declines across all 118 sectors, ranging from 2 to 14 per cent. Analysts said this was in line with the market conditions associated with industrial space. Industrial prices and occupier market have been facing pressure.
“Going forward, manufacturing continues to face headwinds due to the advent of the Trump presidency, which has led to increased market uncertainty as Trump’s protectionist stance could lead to decreased trade flows in Asia,” said Ms Li.
The new rates will apply to cases that are granted provisional permission or extensions on or after the effective date. ADDITIONAL REPORTING BY RUMI HARDASMALANI
