Ministry of National Development (MND) has trimmed development charges for large swathes of the real estate market. Development charges were trimmed for four of the five major use groups - commercial, non-landed residential, hotel or hospital uses and industrial use.
Development charge is a tax that is levied for permission granted to carry out development projects that increase the value of the land. These charges are reviewed half yearly, in March and October.
Rates for landed residential use remained unchanged.
‘Under pressure from demand and supply imbalances in the office / retail sector and cooling measures from the residential front, the cut is not unexpected,' said Research Head at CBRE, Desmond Sim.
DC rates fell the steepest for the industrial sector – averaging down 3.1%. The Tuas / Choa Chu Kang / Kranji area dropped the most – a 16% decline.
JLL’s Chua sees the decline in industrial DC rates as “in line with market expectations.”
Rates for commercial use corrected down 2% on average due probably to the weakening CBD rental market.
DC for Central Business District (CBD), including Raffles Place, Bugis and Marina Bay dipped 5%.
DC Rates for non landed residential use fell 1% on average owing to underlying weakness in the residential market, noted Dr Chua Yang Liang, JLL research head for South-east Asia.
DC for Core Central Region (CCR) of Chatsworth / Bishopsgate / Jervois Road sector dipped 3.9%.
DC for Newton Circus, Goodwood Park / Balmoral dipped 3.8%
DC for other sectors in District 9, 10, 11 and Downtown Core dipped between 1.6% and 3.6%.
Several areas in the Bukit Timah, River Valley Road and Sentosa saw a decline of 4% in the residential sector.
DC rate as a component of the entire land price is usually less than 10 per cent.
The slight rate decline is "not going to move the needle and make an unviable en bloc sale a viable one," said JLL international director Karamjit Singh.
With the general market stymied by overwhelming economic and financial concerns, the marginal reduction in DC rates becomes moot.
The latest DC rates apply from till Aug 31.