Development charges down for commercial use, up for residential

Development charges (DC) for commercial land use have decreased while those for residential land use were raised, with the largest increases in prime areas such as Orchard Boulevard, Stevens Road, River Valley Road and Bukit Timah Road.

DC rates for commercial land use were adjusted down by 1.5 per cent on average in the latest half-yearly review released by the Ministry of National Development yesterday.

The largest decrease of 3 per cent was applied to the central region, including the Raffles Place, Collyer Quay and Shenton Way and Marina Bay Sands areas.

The rates for landed residential use rose 1.5 per cent on average, while those for non-landed use increased by 0.3 per cent on average.

Only one out of the 118 sectors for residential non-landed use – Sector 34, which refers to the Sophia Road area – had its DC rates reduced, by 4 per cent.

The largest increase – 6 per cent – applied to the Bedok South Avenue 1 and the Kaki Bukit sectors.

Property analyst Ong Kah Seng noted that the increased DC rates for residential use are in line with the Government’s recent urging of developers to be prudent in their land bidding.

“The slight increase in DC rates reminds developers of added development costs, so they will not excessively acquire sites to shore up land inventory and over-develop beyond their capacity in this pandemic,” said Mr Ong.

CBRE associate director of research Catherine He said the revisions were “largely within expectations” and reflected the lower level of transactions over the past six months due to the pandemic.

The DC rates were unchanged for hotel and hospital development use, industry use, place of worship/civic and community institution uses as well as for three other land-use groups: nature reserves; agricultural land; and drains, roads and railways.

Mr Leonard Tay, head of research at Knight Frank Singapore, said it was surprising that there were no cuts in DC rates for hotel and hospital development use, given that the hospitality sector continues to suffer from a lack of tourist arrivals as Covid-19 travel curbs are still largely in place.

He said: “Perhaps the Government (hopes) to discourage new hotel developments until economic recovery is certain and some measure of cross-border travel is allowed as that would signal the promise of international visitors for the hotel sector.”