DC RATES MAR 2011

With regard to TC (Group B2, Sector 98):

Hotel use leads hike in DC rates
by Kalpana Rashiwala 

THE government yesterday announced the biggest hikes in average DC rates for hotel and commercial uses since 2007.
The increase for landed residential use, at 18 per cent, was the biggest in more than a decade, according to Jones Lang LaSalle's analysis.
Hotel use led the hike in development charge rates which take effect from today.
The average DC rate for this use has escalated about 27 per cent, reflecting the buoyant hotel business and strong bids for hotel development sites in recent months.
As predicted by property consultants, for the residential segment, the authorities have raised the average DC rate for landed use by a bigger percentage quantum than for non-landed use, at 18 per cent and 11 per cent respectively, given the stronger expansion in landed home prices last year compared with condominium/apartment prices.
The government yesterday also announced average DC rate increases of 13 per cent and 8 per cent respectively for commercial and industrial uses.
DC is payable to the state in exchange for the right to enhance the use of some sites or to build bigger projects on them. The Ministry of National Development, in consultation with the Chief Valuer, revises DC rates twice a year, on March 1 and Sept 1. The revisions are based on current market values.
'The DC revision exercise is the Chief Valuer's way of providing a more accurate representation of current land prices,' as CB Richard Ellis executive director Li Hiaw Ho puts it.
Jones Lang LaSalle's South-east Asia research head Chua Yang Liang said: 'The impact of this latest round of revisions is unlikely to dampen or stir market sentiments . . . not every development project will be affected.'
For hotel use DC rates, the biggest increase of 39.3 per cent, according to Jones Lang LaSalle's analysis, was in the Orchard/ Somerset and Tanglin/Cus-caden vicinities - home to many hotels in the shopping belt.
The Robinson Road/Ce-cil Street area, too, saw a 39.1 per cent growth, not surprising given the record hotel land price of $1,072 per square foot per plot ratio (psf ppr) fetched earlier this year for the Ogilvy Centre site. That land bid was 214 per cent above the land value implied by the Sept 1, 2010, hotel use DC rate for the location.
Clarke Quay/Clemenceau Avenue/Havelock Road - where a hotel site was sold in September last year at a land price 98 per cent above its Sept 1, 2010, DC rate implied value - also saw a 39.1 per cent DC hike. Hotel rates islandwide had been left untouched in the previous revision on Sept 1, 2010.
For commercial use, the biggest rise in DC rate of 29 per cent was in the geographical sector that includes the 'white' site above Tanjong Pagar MRT Station which GuocoLand clinched for $1,006 psf ppr late last year.
In the industrial category, the steepest climb was 19.6 per cent, in the geographical sector that includes Tuas, Jurong and Woodlands.
A 30-year leasehold plot at Pioneer Road North was sold by the state in December at a land price which was about 238 per cent above the land value implied by the Sept 1, 2010, industrial use DC rate for the location.
The second highest rate hike for industrial DC rates of 13 per cent was in the Paya Lebar/Ubi area.
As for landed residential use, the steepest hike of 25 per cent was in Sector 108, which covers Holland Road, Sixth Avenue, Eng Neo Avenue, Adam Road and Farrer Road.
Analysts highlighted two Good Class Bungalow (GCB) transactions at 61 Belmont Road and 18 Astrid Hill, at land prices which were at least double the Sept 1, 2010, DC rate for the sector, as likely triggers for the latest rate hike in the sector.
The effect also rubbed off on the neighbouring sectors 68 and 69, which include the Botanic Garden/ Gallop Road and Ridout/ Peirce Hill/Swettenham Road vicinities respectively, each posting a 23.5 per cent increase, based on JLL's numbers.
Increases in landed residential DC rates were recorded in 116 of the total 118 geographical sectors that Singapore is split into for DC computation. Rates were left untouched in Jurong Islands and other nearby islands, and Pulau Ubin/Tekong. The smallest gain of 7.7 per cent was in Sector 67, which includes the Nassim, Orange Grove and Ladyhill locale.
Credo Real Estate managing director Karamjit Singh said: 'Many GCB Areas saw hikes in landed residential DC rates because over the past six months, GCB prices have risen the most among various property types. However the impact of the hikes would not be felt within the GCB market itself since DC is not payable for a plot that is redeveloped into a single dwelling unit such as a bungalow. Rather, the effect is more likely to be felt among developers of other mixed landed properties near the GCB Areas which have seen a DC rate rise.'
For non-landed residential use, the biggest rate hike was in the Punggol/ Upper Serangoon Road area, followed by Braddell/ Potong Pasir/ Bartley and Bishan/Ang Mo Kio. Analysts attributed this to recent sales of sites in these locations, including by the state.
The Business Times - 1 Mar 2011 

MND revises DC rates

by Julie Quek 

SINGAPORE - The Ministry of National Development (MND) has revised the rates for development charges (DC) for the next six months, as part of its half-yearly review.

The increases in the rate of DC, the tax payable by the developer when a property site is developed into a more valuable project, will take effect from March 1.

On average, the rates for landed residential property have increased by 18 per cent, with the largest increase of 25 per cent in Sector 108, which includes Holland Road, Sixth Avenue, Eng Neo Avenue, Adam Road and Farrer Road areas.

Some analysts, like Ms Callie Liew, COO of the HSR Property Group, said the increase will lead to a corresponding increase in land costs and expect developers will be "more measured" in their bids going forward.

However, other market watchers said the increase in DC rates is unlikely to have a major impact on collective sales.

Dr Chua Yang Liang, head of research, South-East Asia, Jones Lang LaSalle, said: "DC, as a component of overall development charges, is actually quite a small component. And DC charges are only imposed on those developments that have the potential to be over and above what the site has been approved for."

Analysts estimated that about 50 to 60 per cent of en bloc projects have no development charge component. They said that only projects with a higher development charge component of 5 per cent or more of total land value, such as land sites re-zoned for a different use, will likely feel a significant pinch from the latest increase.

Meanwhile, DC rates for non-landed residential properties have also been increased, by an average of 11 per cent. The largest increase is 17 per cent in Sector 100, which includes Upper Serangoon Road and Punggol.

Analysts said that before the DC rates are revised, the Chief Valuer takes into consideration how the market has behaved over the previous six months.

Dr Chua said: "It depends very much on where the market is heading, whether there are transactions recorded over the next six months. If there are values that rise, then chances are DC rates may rise accordingly."

The rates for commercial development have increased by an average of 13 per cent, with the largest increase of 29 per cent in Sector 9, which includes Peck Seah Street, Maxwell Road and the Anson Road area.

For hotels and hospitals, the rates have gone up by an average of 27 per cent, while development charges for industrial and warehousing use have been raised 8 per cent on average.

The ministry said the DC rates for other land uses - which include places of worship, open space, agriculture, drain and roads - have not changed. It added that if there is any disagreement over the development charges payable, developers and owners can opt for a case-by-case valuation by its Chief Valuer.

Today - 01 Mar 2011