Development charges dip for non-landed residential use

Straits Times – 01 Mar 12

Summary:

  • Charges that developers pay to enhance the use of a plot of land have finally been reduced or left flat for some sectors, as the slowing property market takes its toll (I think it’s more for the luxury prime areas, rather than the rest of Singapore.)
  • The new development charges, which are reviewed every 6 mths, were released yesterday and reflect recent land and property values for the varying market segments.
  • They take effect today and are applied when the value of a site is increased because of re-zoning or when a taller building can be erected following a change in the plot ration.
  • Development charges for residential non-landed sector have been cut by 3% on average on the back of cautions land bids by developers in the past 6 mths.
  • This is the first time the charges have come down in more than 2 years.
  • The biggest drops – the cut was 14% – for the residential non-landed sector occurred in Punggol town and the Upper Serangoon Road area and the areas of Hougang, Upper Paya Lebar Road, Toa Payoh and Bishan.
  • Charges on commercial land have been increased by 6% on average and 15% for hotel and hospital sector.
  • But rates for commercial land in Sengkang and Seletar areas have shot up by 52%, likely due to the sale of a retail site in Sengkang West Ave, with a winning bid of $1,155 per sq ft per plot ratio in Jan. This bid is almost 300% more than the land cost implied by the previous development charge rate. (I am hardly surprised by this. More people are now moving to Sengkang and Punggol. And many residents who had previously refused to move there, upon staying there, now realized that it is actually very accessible because of the expressways, North-East Line, and LRT around the estate. In fact, many of my clients, especially the young couple, would rather stay in Punggol / Sengkang and get a car, than to stay in Redhill and not get a car. So, it’s just a different way of looking at life.)
  • Rates for residential landed and industrial and warehousing uses were unchanged.
  • Experts say that the drop in development-charge rates for non-landed residential use is inline with market expectations.
  • “Despite healthy buying momentum in the mass market… factors including ample land supply, concerns of a slowing economy and the possible bearing of the additional buyer’s stamp duty on the market have resulted in developers becoming more cautions in bids,” said Ms Chia Siew Chuin, director of research and advisory at Colliers International.
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