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Thread: Fees raised for commercial, hotel sites

  1. #1
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    Default Fees raised for commercial, hotel sites

    http://www.straitstimes.com/archive/...sites-20140301

    Fees raised for commercial, hotel sites

    Residential development charges stay flat, but...

    Published on Mar 01, 2014

    By Cheryl Ong


    THE charges developers pay the Government to enhance a site, to make it more valuable, have been lifted significantly for commercial and hotel plots.

    But development charges remained mostly flat for the rapidly slowing residential segment, a move which experts had expected.

    These charges, which can run into millions of dollars, are closely watched by developers as they can play a key role in affecting the viability of a project.

    In the latest six-monthly review of these charges, out yesterday, the rise in charges was steepest for commercial sites, with a jump of 14.6 per cent on average.

    Rates for hotel sites rose by 13.4 per cent on average, but were unchanged for industrial sites.

    The charge rose just 1 per cent for sites earmarked for non-landed homes and about 1.1 per cent for landed homes, the Urban Redevelopment Authority (URA) said.

    Development charges reflect recent land and property values for the different market segments.

    They are applied when the value of a site goes up owing to a re-zoning or when a taller building can be erected after a change in the site's plot ratio.

    Consultants said the commercial plot hike may have been caused by newly launched mixed-use projects in the review period. "Overall, the office and retail market didn't jump 15 per cent, but specific launches where new high prices were achieved could have set new records," said Century 21 chief executive Ku Swee Yong.

    The steepest hike of 29 per cent for commercial plots was in areas such as Sixth Avenue, Holland Road and Eng Neo Avenue.

    Mr Ku said the KAP Residences launch in King Albert Park, where commercial units were sold for an average price of $5,446 per sq ft (psf), could have lifted values.

    As for hotel sites, the jump was sparked by landmark deals such as The Westin Singapore, bought by the Daisho Group for $1.5 million per room in December, said Mr Chua Yang Liang, head of South-east Asia research at Jones Lang LaSalle.

    Ms Chia Siew Chuin, research and advisory director at Colliers International, said the revision could have been driven by the sale of a plot on East Coast Road for $1,326 psf - 128.8 per cent above the land value imputed by the development charge for that area.

    The East Coast and Marine Parade areas have also seen many boutique hotels springing up, underpinning the increase in charges, Mr Ku added.

    However, the flat residential and industrial rates were no surprise as both segments have not performed well, consultants said.

    "The chief valuer looks at the land prices and transactions in the market to revise the development charge," said Mr Ku.

    So recent industrial launches, where prices have been discounted, "couldn't make a mark".

    But Ms Chia said recent industrial land transactions indicated that development charges were "trailing behind land prices".

    Prices of 15 industrial sites sold in the last six months, for instance, were 18.3 per cent to 73.4 per cent higher than the land values imputed by the development charge. The flat increase in residential development fees also came as no surprise on the back of a lacklustre housing market.

    URA data showed prices of non-landed homes fell 0.3 per cent in the six months to Dec 31, weakening from a 2.2 per cent hike in the preceding six months.

    Ms Chia said this reflected a halt in overall price increases and a slowdown in the private residential market after tighter borrowing limits were introduced.

    For sites slated for non-landed homes, the largest rises were in areas like Paya Lebar, Aljunied, MacPherson and Sims Avenue.

    Landed sites with the steepest hikes were in Sengkang, Punggol, MacPherson and Aljunied. The revised charges take effect today.

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  2. #2
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    Default Development charge rates up from today

    http://www.businesstimes.com.sg/arch...today-20140301

    Published March 01, 2014

    Development charge rates up from today

    Modest rise in residential DC rates 'in line with softening home prices'

    By Kalpana Rashiwala [email protected]


    DEVELOPMENT charge (DC) rates - payable for enhancing the use of some sites or to build bigger projects on them - have been raised from today by an average of 15 per cent for commercial use and 13 per cent for hotel/hospital use.

    For landed and non-landed residential uses, the average increase is about one per cent each, while rates for industrial use have been left completely untouched.

    The Ministry of National Development, in consultation with the Chief Valuer, revises DC rates based on current market values twice a year - on March 1 and Sept 1. The rates are stated according to use groups across 118 geographical sectors in Singapore.

    DC rates for the major use groups are expressed as per square metre of gross floor area.

    Property consultants said the modest rise in residential DC rates was in line with softening home prices in the past half year.

    Signs of incipient softening in the industrial property market were probably behind the decision to leave DC rates for the use group unchanged. This was despite ample evidence of industrial sites fetching prices at state tenders that were higher than land values implied by the previous DC rates, argued Colliers International director Chia Siew Chuin.

    Jones Lang LaSalle's (JLL) head of SE Asia research, Chua Yang Liang, said the DC rate hike for hotel use was supported by the active hotel investment market.

    "Typically, DC is payable for sites where the development potential has not been fully maximised (mostly privately held sites)," explained Karamjit Singh, head of investments and residential at JLL. "Even for sites where the gross floor area has been maximised, DC rates are still relevant for the amount of money payable to the state to build the 10 per cent bonus GFA for balcony and other use. This applies even to 99-year condo sites bought at state tenders," he added.

    During the heyday of collective sales, DC rates were closely monitored by property agents and owners with en bloc potential. However, the impact of this round of DC rate revisions on residential en bloc sales is very minimal, said Mr Singh. "In any case usually less than half of en blocs attract DC and even then DC forms a relatively small component of the entire land cost."

    This round, non-landed residential DC rates have been raised in only 15 geographical sectors (by 6 to 10 per cent), with no changes in the remaining 103 sectors. The largest increase at 10 per cent is in Sector 101 (Paya Lebar/Aljunied/Macpherson/

    Sims Avenue/Eunos Link). The increase was supported by the sale of a 99-year private housing site in Geylang East Avenue 1 at a state tender in January at $776 per square foot per plot ratio (psf ppr) - or 67 per cent above the land value implied by the-then prevailing Sept 1, 2013, DC rate, explained Colliers' Ms Chia.

    She suggested that a 9.1 per cent rise in Sector 100 (including Sengkang/Punggol) could have been due to the sales of two adjoining sites in Upper Serangoon View in December for $522 psf ppr - 33 per cent more than the Sept 1, 2013, DC rate-implied land value. The other locations that saw higher non-landed residential DC rates include the sectors that include Kallang, Upper Boon Keng, Geylang Bahru, Tampines, Bedok Reservoir, Kembangan, Pasir Ris, Choa Chu Kang, Woodlands, Sembawang, Seletar, Bukit Batok, Mount Emily, Bendemeer and Whampoa.

    Commercial use DC rates were raised for 89 geographical sectors (by 14-29 per cent), with no changes in the other 29.

    The biggest hike of 29 per cent was for Sector 108 (which includes Sixth Avenue, Holland Road, Commonwealth Avenue Tanglin Road, Adam Road). This was supported by the sale of 100 Taman Warna which, based on JLL's analysis, was 54 per cent above the previous DC rate-implied land value. In Upper Thomson, the transaction of Long House at 41 per cent premium to the previous DC rate-implied land value probably supported a 22 per cent hike for Sector 107.

    The same percentage rate hike was seen in Sector 53 (which includes Little India), in the light of Serangoon Plaza's sale at 169 per cent above the DC rate-implied land value - producing a knock-on effect on the neighbouring Sector 58, which posted a 21 per cent rise.

    Tang Wei Leng, executive director (investment sales) at Colliers International, said DC rates remained unchanged for the two major commercial en bloc sales she is working on - The Arcade in Collyer Quay and Tanglin Shopping Centre. "In the past six months, there have been no significant commercial property deals in these locations to justify any change in DC rates."

    For landed residential use, DC rate were upped in 13 sectors by 9-10 per cent, with no change for the remaining 105 sectors. For hotel/hospital use group, the biggest jump of 31 per cent is arein Sectors 93 & 94 (Changi Road/East Coast/Marine Parade area).

    From today, the Urban Redevelopment Authority's website offers a new free e-service that allows information on DC rates to be accurately retrieved for any site on a Geographical Information System-enabled digital map.

  3. #3
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    it's near by my uncle's house

  4. #4
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    Looks like En Bloc is no longer that juicy for developer and higher risks to those who speculate. Caution Caution.

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