Rates for residential use rise by up to 38%

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Published September 1, 2006


DEVELOPMENT CHARGES
Rates for residential use rise by up to 38%
Average for non-landed residential up 9%


By KALPANA RASHIWALA



(SINGAPORE) In tandem with rising land values over the past six months, the government yesterday raised development charge (DC) rates for non-landed residential use by as much as 38 per cent in the Nassim/Orange Grove, Chatsworth, Leonie Hill and Oxley areas.


It also jacked up the rate for the Ardmore/Draycott area by 36 per cent. Some of these areas have seen collective sales at bullish prices over the past six months or so - like Eng Lok Mansion, Nassim Park, Lucky Tower, Habitat One, Furama Tower and Hilton Tower.

Likewise, the commercial DC rate in the Somerset area was raised 27 per cent following the recent sale of the plum Somerset Central commercial plot at a record unit land price of $1,455 psf per plot ratio. And given the bullish mood this bid created for the prime Orchard Road belt, the government also took the opportunity to raise the commercial DC rate around Orchard MRT - where the landmark Orchard Turn site was sold in December - by 22 per cent.

DC is payable for enhancing a site's use or for building a bigger project on it. DC rates, which are revised twice yearly on March 1 and Sept 1, are specified according to land use and location.

From today, the average DC rate for non-landed residential goes up by 9 per cent, that for commercial use by 2 per cent, and for landed residential use by one per cent. The rates for hotel, industrial and other uses were left unchanged by the Ministry of National Development, which revised the rates in consultation with the Chief Valuer taking into account current market values.

DC rate changes are tracked in property circles because they reflect values and can affect the break even costs of developers seeking to redevelop sites. They also affect en bloc sales deals that have a significant DC component.

In an analysis released last night, Jones Lang LaSalle (JLL) said that for non-landed residential use, DC rates were increased in 64 of the 118 geographical sectors or locations across Singapore.

Fifteen locations saw hikes of 30 per cent or more. These include Tanglin/Cuscaden, One Tree Hill, Paterson/Lengkok Angsa and River Valley/Kim Yam - all popular en bloc sale locations. Other popular en bloc haunts like Cairnhill and Newton saw DC rate hikes of 11.8 per cent and 11.1 per cent respectively, according to JLL.

The rate for Sentosa went up 27.3 per cent - not surprising given continued strong interest in Sentosa Cove as seen in the recently launched Oceanfront condo by City Developments, said JLL's regional director and head of investments, Lui Seng Fatt.

Colliers International director for research and consultancy Tay Huey Ying said that 'in general, the new DC rates are now more aligned with current market values' and close the gap between recently transacted land values and land values implied by DC rates. For landed residential use, the biggest increase of 17.5 per cent was on Sentosa, which last week saw record land bids for bungalow plots at Sentosa Cove.

Rates for Good Class Bungalow areas on the mainland like Holland/Sixth Avenue, Chatsworth/Bishopsgate, Ridout and White House Park also saw double-digit increases. Knight Frank director Nicholas Mak noted that GCB prices in some of these locations have appreciated on average by 15-20 per cent in the past six months. In all, landed residential rates went up in 12 locations and remained unchanged in the other 106.

Commercial DC rates were raised between 2.9 per cent and 26.7 per cent in a total of 34 locations and held constant in the other 84 areas. The rate for the Raffles Place/Golden Shoe area went up 9.8 per cent, while rates in Marina Bay and Bayfront rose 9.3 per cent. The Harbourfront area saw a 14.3 per cent increase, probably reflecting higher commercial values with the impending opening of Vivocity mall.

The DC rate in Selegie was raised 10 per cent, perhaps due to the sale of Paradiz Centre and redevelopment of Selegie Centre, market watchers say. A 9.7 per cent hike was recorded for the Tampines area.

In absolute terms, the highest DC rates are: Ardmore/Draycott/Claymore for non-landed residential use ($6,000 per square metre of gross floor area), Nassim/Orange Grove/Ladyhill for landed residential use ($3,450 psm of GFA), and the area around Orchard MRT Station for commer cial use ($5,000 psm of GFA).