For residential areas where strong land sales have lifted values, charges could surge
DEVELOPERS may soon have to pay more to redevelop non-residential sites such as land for hotels or hospitals.
A key government fee for redeveloping sites will be revised again next month, and property consultants expect it to be raised for land used for purposes other than to build homes.
The good news is: Development charges should not jump much for residential plots this time, after already having been jacked up a few times last year.
Selected areas, however, could still see bigger fee hikes, said consultants. These include Novena, Geylang, Ang Mo Kio and Orchard Boulevard, where recent strong land sales have pushed up values.
Development charges, which can amount to millions of dollars, are based on recent land and property values. They are calculated based on sectors and 118 locations, and adjusted in March and September every year to keep them up to date.
A rise in these charges for residential sites in some areas means that, for instance, it would be more expensive for developers to buy and redevelop collective sale estates in these parts of Singapore.
Overall, however, the current slowdown in the housing market means that the upcoming round of revisions should result in only very moderate rises for most residential sites.
Development charges for non-landed residential sites are likely to go up by only 10 per cent on average, compared to 58 per cent last September, said Ms Tay Huey Ying, the director of research and consultancy at Colliers International.
She said the soaring land prices that sent development charges surging last year have ‘screeched almost to a halt’ since last September.
In particular, the collective sale market – previously the main driver of spikes in development charges – has quietened to near-silence in the last few months.
Consultancy CB Richard Ellis also said it expects only ‘moderate increases’ in selected locations. These include Sixth Avenue and Sentosa for landed sites and Ardmore and Orchard Boulevard for non-landed sites.
It suggested that the Government may also slow the rate of rises in development fees after taking into consideration the ‘subdued state’ of the residential market. The once-frenzied response to both development sites and new home launches has waned significantly.
On the other hand, non-residential sites – including hospital, hotel, office and industrial land – are still seeing buoyant activity and could be subject to heftier fee hikes.
Hospital land could see the biggest overall hike in charges, boosted by the recent record bid for a stateowned site at Novena, said Colliers’ Ms Tay. She is projecting a rise of between 15 per cent and 20 per cent on average for hospital sites.
DTZ Debenham Tie Leung added that funds have been moving their investments into hospital assets in Singapore, which could also prompt a rise in the development fees for this sector.
Also, industrial land – which saw a rise in development fees of just 2 per cent in the last round – should experience a much bigger jump, said consultants.
Office and hotel plots are also expected to have their development charges raised, by at least 30 per cent, said Jones Lang LaSalle.
Its director for South Asia research, Mr Chua Yang Liang, said the fees could be pushed up by recent office land sales at Jalan Sultan and Toa Payoh, and hotel plot sales at Upper Pickering Street and New Market Road.
Source: The Straits Times 22 Feb 08