Monday, September 03, 2012

Govt revises DC rates

The Ministry of National Development (MND) has announced the latest revisions to development charge (DC) rates affecting the property market, starting from 1 September to 28 February next year.  

For Group A comprising commercial developments, DC rates rose by nine percent on average, with the largest spike of 20 percent in Sector 53 (Farrer Park / Syed Alwi / Balestier Road / Lavender area) and Sector 93 (Marine Parade Road / Joo Chiat Road / East Coast Road / Haig Road area).

Chia Siew Chuin, Director of Research & Advisory at Colliers International, said that the increase is “slightly above expectations, given that there has been a lack of pure commercial sites sold under the GLS programme in the last six months”, although strong sales of strata office units could have been the main driver for the uptick.

According to Dr. Chua Yang Liang, Head of Research, South East Asia, at Jones Lang LaSalle (JLL), the Chief Valuer could have been “motivated by the ongoing urban regeneration in these areas, especially in Sector 53 Lavender and Kitchener Road area.”

For residential (landed) properties or Group B1, DC rates held steady across all sectors.

On the other hand, Group B2 or residential (non-landed) properties saw a climb averaging one percent, as DC rates for 15 sectors grew from eight to 12 percent while DC rates for the other 103 sectors remained steady.

The revision for the housing sector “comes within expectations”, noted Chua.

Meanwhile, Group C or the hotel / hospital sector saw DC rates rise by an average of 11 percent, with the highest upward movement of 26 percent in Sector 53.

“Given the lack of hotel GLS sites being sold, as well as hotel transactions, it is surprising that 116 DC sectors recorded increases, to average at 10.8 percent for this use group. However, the hotel sector is doing well with robust room occupancies and rates,” noted Chia.

In addition, Group D comprising industrial / warehousing use properties grew by an average of 14 percent. The largest increase of 23 percent was seen in Sector 105 (Ang Mo Kio / Yio Chu Kang Road area).

Chia attributed the rise to “brisk sales and unrelenting price increases of strata-titled industrial properties and continued demand for industrial lands by developers and industrialists”.

The four remaining use groups (E, F, G and H) did not witness any changes in DC rates.

DC rates are revised on a half-yearly basis in consultation with the Chief Valuer.

View the original article here

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