ST : Fees to enhance residential sites go up

Sep 1, 2010

Fees to enhance residential sites go up

Govt raises DC rates by 13% on average amid buoyant market

By Joyce Teo

RECENT property market exuberance has prompted the Government to hike the fees that developers pay to enhance the use of residential sites.

The Ministry of National Development (MND) announced yesterday that from today, such fees - called development charges (DC) - for the landed and non-landed homes sectors will climb by an average of 13 per cent.

The charge is adjusted every six months and closely reflects changes to land and property values.

It is paid if a developer wants to intensify the use of a site, for instance by redeveloping an existing project into a larger one.

In the landed homes segment where prices have seen strong increases, the largest rise of 36.4 per cent was registered in Sentosa.

And, in the non-landed homes sector, the largest rise of 28 per cent is in the Tanjong Rhu area as well as the Farrer Park and Balestier areas.

Property experts said the impact of the MRT Circle Line - particularly in the Braddell, Bartley, Upper Aljunied and Woodleigh areas as well as the Bishan and Ang Mo Kio areas - had been factored into the DC rate hikes.

These two localities, said Jones Lang LaSalle, will see strong increases of approximately 20 per cent for landed homes, with non-landed homes seeing an increase of about 15.6 per cent.

Commercial sites in these two areas will see rises of 7.3 to 7.5 per cent, it said.

Colliers International's director of research and advisory, Ms Tay Huey Ying, said the new DC rates were reflective of the market during the review period, given the pick-up in interest for development land amid Singapore's strong economic recovery.

But, she added, the upward DC adjustments, combined with the recent market cooling measures, could dampen developer sentiment and depress land price threshold levels.

She said this could 'further widen buyers and sellers' price expectations in the collective sale market'.

The MND also announced yesterday that the DC for industrial land will climb 10 per cent on average. And, in the commercial sector, which has seen limited sales activity, the DC will rise on average by 0.8 per cent, with the largest rise of 25 per cent in Jurong Lake District.

CBRE Research noted this was the first time since March 2008 that average DC rates for the commercial segment had increased, reflecting the turnaround in the economy as well as buoyant land values.

There is no change in the DC rates for the hospitality sector.

The MND sets the rates every March and September in consultation with the Chief Valuer.

joyceteo@sph.com.sg