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Thread: Government raises DC rates

  1. #1
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    Default Government raises DC rates

    Published March 1, 2007

    Government raises DC rates

    Biggest hikes in downtown areas such as Raffles Place, Marina Bay


    REFLECTING rising property and land prices over the past six months, the government yesterday increased development charge (DC) rates.

    The biggest increases were concentrated in the new and existing downtown locations such as Raffles Place and Marina Bay.

    Jones Lang LaSalle's analysis showed that the highest jump in DC rates, of a whopping 90.5 per cent, was recorded for hotel use in the Raffles Place and neighbouring locations.

    The government also raised DC rates - payable for enhancing a site's use - for non-landed residential use by as much as 54.8 per cent in both the new and existing downtowns - including Marina Bay and Raffles Place, and by 38.5 per cent in Shenton Way.

    These areas saw new apartment launches, like Marina Bay Residences, One Shenton and Lumiere, achieve high prices in the past three months.

    For landed residential use, Sentosa led the gains with a 27.7 per cent hike, not surprising given that a record price for a bungalow plot - $1,308 psf - was achieved at Sentosa Cove late last year.

    Good Class Bungalow (GCB) locations like Holland Road/Sixth Avenue, Tanglin, Chatsworth, Nassim and White House Park, saw increases of 10-16 per cent in landed DC rates, mirroring the robust GCB deals in the second half of last year.

    The biggest DC rate hike for commercial use was 44.4 per cent - in Raffles Place. Increases of 34.1-38.5 per cent were chalked up in other areas of the new and existing downtowns, including Shenton Way and Tanjang Pagar.

    These areas have seen several office deals in the past six months, including Lippo Centre, Anson House, Dapenso Building and Crosby House, observed CB Richard Ellis.

    The commercial use rate for the Tanglin/Cuscaden area was raised 39.5 per cent. CBRE said this could be due to the sale of 6B Orange Grove Road by FJ Benjamin.

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

    The average DC rate hikes from today, of 14.4 per cent for non-landed residential use and 11.7 per cent for commercial use, marked the first double-digit increases in seven years, according to Jones Lang LaSalle's analysis.

    The average DC rate for landed residential use was raised 6.4 per cent, while that for the group that includes hotel and hospital use went up 27.3 per cent.

    CBRE noted that the sharp rise in hotel DC rates - which followed no change, and a 1.6 per cent increase in the two preceding revisions on Sept 1 and March 1 respectively last year - reflects the rapidly rising level of interest in hotel sites in the last six months, on the back of strong tourism numbers.

    The award of the Collyer Quay site in December at a then-record unit land price of $1,540 psf per plot ratio may have contributed to the sharp rise in hotel DC rate for the area, it reckons.

    The area around Singapore River saw a 48.1 per cent increase in hotel DC rates, and the Moulmein/Novena area, around 43 per cent - both areas where hotel sites have been sold in recent months.

    For non-landed and landed residential, commercial and hotel uses, DC rates were raised in virtually all of the 118 geographical sectors or locations across Singapore.

    Interestingly, the Ardmore/Draycott, and Angullia Park vicinities - which saw record residential land prices achieved in the past six months - saw relative modest increases of 16.7 and 20 per cent respectively in non-landed residential DC rates.

    DC rates for industrial and other uses were left unchanged.

  2. #2
    mr funny is offline Any complaints please PM me
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    Default Hefty rise in development charges for business areas

    March 1, 2007

    Hefty rise in development charges for business areas

    By Joyce Teo, Property Correspondent

    THE rush to buy homes in the Marina Bay area late last year has contributed to hefty increases in a charge payable to the Government by developers when they want to enhance a property site.

    The downtown area also recorded hefty jumps in the charge for the commercial and hotel sectors.

    The Government yesterday raised the development charge, as it is known, for non-landed residential use in the downtown areas of Marina Bay, Shenton Way and Robinson Road by up to 55 per cent.

    While high, this was not a total surprise, given that new projects like Marina Bay Residences, One Shenton and Lumiere were sold at $1,600 per sq ft (psf) to $3,450 psf, late last year, well above the previous launch price of $1,200 psf for tower two of The Sail @ Marina Bay in late 2005, consultants said.

    Development charges, which are revised twice a year on March 1 and Sept 1, closely mirror property values. They vary according to land use and 118 locations.

    The charges can range from hundreds of thousands of dollars to tens of million of dollars for large projects.

    The National Development Ministry, in consultation with the chief valuer, yesterday raised the charge for non-landed residential use by 14 per cent on average, compared to a 9 per cent rise six months ago.

    The charge for landed residential use rose by 6 per cent on average, from 1 per cent previously, while the charge for commercial use increased by an average of 12 per cent, from 2 per cent.

    However, the biggest jump was in the hotel and hospital segment, where rates rose by 27 per cent on average, compared with no change six months ago.

    The rates for other uses such as industrial use remain unchanged.

    In the residential sector, Sentosa posted significant increases in the charge for landed use (28 per cent) and non-landed use (nearly 28 per cent) as the values of Sentosa Cove properties have risen considerably.

    In the Orchard Road area, collective sales have led to a 16 to 21 per cent rise, though the hike is lower than the 32 to 38 per cent rise previously, said Mr Li Hiaw Ho, executive director of CBRE Research.

    The hikes for non-landed residential use would affect the collective sale market to a certain extent as developers would have to price in higher charges, consultants said.

    'But the increases would not derail the collective sale trend because the major shocks in development charge increases already happened in the past few revisions,' said Mr Lui Seng Fatt of property consultancy Jones Lang LaSalle.

    However, some developers may raise the selling prices of existing and future developments as the increase in development charges have jacked up their replacement costs, said a property expert.

    In the commercial sector, the charge for the Battery Road/Chulia Road/Collyer Quay area showed the biggest rise of 44.4 per cent, probably boosted by the keen competition and bullish bids seen for the Collyer Quay site, said Mr Li.

    The Marina Bay area locked in a 31.6 per cent rise in the charge, giving the area an implied land value of $465 psf per plot ratio (ppr), he said.

    However, the consortium developing the Marina Bay Financial Centre secured savings for phase two of the project by locking in its rate at $423 psf ppr in the middle of last month, said Mr Li.

    In the hotel segment, the increases in the charges were dramatic - at up to 90.5 per cent in the downtown areas, reflecting the record bid for the Collyer Quay site, he said. Interest in hotel sites has been strong in the past six months, with four hotel sites awarded, up from one in 2005 and none in 2004, he added.

    The Government had released several hotel sites for sale to cater to an expected rise in tourism.

    Mr Lui said the hefty increases in the hotel charge had been expected. 'It has been almost 20 years since we have seen so many hotel sites made available.'

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