http://www.straitstimes.com/archive/...sites-20130301

Development charges soar for all but residential sites

Published on Mar 01, 2013

By Melissa Tan


THE charges developers pay to enhance a site have surprisingly stayed flat for most residential sites but are up sharply for commercial and industrial land to reflect soaring prices.

Analysts said the Government could be adopting a wait-and-see approach for residential land after the recent round of cooling measures.

Development charges, which are reviewed every six months, reflect recent land and property values for various market segments.

They take effect today and are applied when the value of a site goes up due to re-zoning or when a taller building can be erected after a change in the plot ratio.

Charges for the commercial sector jumped 24 per cent on average. Analysts said this was likely due to recent healthy sales activity for strata office and retail units.

The biggest increase was 39 per cent in Yishun, Sembawang, Woodlands, Choa Chu Kang and Jurong West.

But the high average increase was "beyond expectations", given declining commercial rents and a lack of market activity for the commercial use category in some areas, said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

Development charges went up by between 14 per cent and 26 per cent for the industrial and warehousing sector with the biggest rises for land in Woodlands, Senoko, Sembawang and Yishun.

The significant increase in rates for these sites is due to the previous low base and several Government Land Sales transactions last year, which have seen record high bids, said Mr Desmond Sim, associate director at CBRE Research.

This move will help industrial land to achieve parity with the other types of land use, he added.

The move to keep development charges unchanged for residential non-landed plots surprised analysts, who pointed to continued increases in tender bids since the charges were reviewed last September.

Ms Chia said some could view this as a "possible sign that the Government is maintaining development costs to keep prices stable, particularly amid a quiet collective sales market".

The en bloc market was fairly quiet last year.

She added that even if development charges are kept low, this may not always translate to lower selling prices as demand would also be a factor.

"The Government could possibly be monitoring the effects of the recent market cooling measures on the residential market, adopting a wait-and-see approach," said Ms Chia.

Charges for residential landed sites grew 4 per cent on average.

The largest increase was in the east where landed estates have become increasingly cramped, leading to traffic congestion and a dip in the overall quality of life.

Sites in estates such as Telok Kurau, Joo Chiat and Siglap got a 15 per cent increase in development charges.

The development charges released yesterday have also shot up for hotel and hospital sites.

Hotel and hospital sites in the western part of Singapore saw the biggest increases with rises of 46 per cent for Jurong Lake District, Jurong East, Bukit Batok, Clementi and the West Coast area.

On average, development charges rose 26 per cent for hotel and hospital sites.

All other segments had no change in their development charges.

Development charges apply at varying levels across 118 geographical sectors.

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