The development charge (DC) rates for non-landed residential use have been slashed by 0.2% on average, on the back of a muted Government Land Sales (GLS) bidding and slower economic outlook.
The cut follows a 0.3% and 5.5% decrease in DC rates during the September 2019 and March 2019 review, respectively.
Tricia Song, Head of Research for Singapore at Colliers International, believes the trimming of DC rates would be “modestly comforting for property developers who have had to grapple with more uncertainties following the roll-out of new cooling measures in July 2018 and now the COVID-19 outbreak”.
Notably, five out of the 118 sectors witnessed a DC rates reduction of between 3% and 7%. Rates were unchanged for the other 113 sectors.
The biggest decrease of 7% applies to Sector 34 which include areas like Sophia Road and Upper Wilkie Road as well as Sector 35 which include Cavenagh Road, and Bukit Timah Road.
“This could be due to the collective sale of Casa Sophia in January 2020, which was sold for $29 million or $1,205 per sq ft per plot ratio (psf ppr). That was below the implied land rate in Sector 34 ($1,347 psf) before 28 February 2020,” said Song.
She added that the DC rate decline of 5.4% in Sector 46, which includes Grange Road and Irwell Bank Road, could be due to the Irwell Bank GLS site tender that registered a top bid of $1,515 psf ppr. Aside from being significantly lower than expectation, the figure was also below the implied land rate in the Sector of $1,719 psf before 28 February.
Meanwhile, the DC rates remained unchanged for commercial, landed residential, hotel/hospital, industrial and place of worship/civic and community institution uses as well as for three other land-use groups – namely, nature reserve; agriculture; and drain, road, railway and cemetery.