Dip in development charges for non-landed residential sites

The development charge (DC) rates from 1 September 2014 to 28 February 2015 has been revised, the Ministry of National Development announced on Friday.

The DC rates remain unchanged for landed residential sites.

For non-landed residential use, the DC rates decreased from -2.8 to -5 percent for 55 out of 118 sectors. There is no change to the DC rates for the remaining 63 sectors.

This marks the first decline in residential DC rates after three years, according to JLL.

Dr Chua Yang Liang, Head of Research South East Asia said, “The last time residential rates declined was in March 2012, at about 3 per cent. While this recent decline is modest in comparison, it mirrors what we have seen happening in the wider residential market, where prices as measured by Urban Redevelopment Authority (URA) Islandwide Property Price Index has declined by up to some 3.7 per cent since 1Q 2014.”

The largest decrease at -5 percent are in Sector 72 (Prince Charles Crescent / Alexandra Road / Tanglin Road) and Sector 86 (Telok Blangah Heights / Telok Blangah Drive / Henderson Road /Depot Road / Alexandra Road).

Although the overall fall in DC rates for non-landed residential use is not surprising, Chia Siew Chuin, Colliers International’s Director of Research & Advisory, said the fall in DC rate in Alexandra is somewhat unexpected, as the price for the land sale of Prince Charles Crescent (Parcel B) in April 2014, was a slight 4.6 percent over the DC imputed land cost for the sector as of March 2014.

She added the URA property price indices for non-landed residential homes in the Core Central Area (CCR) have fallen by 2.5 percent in the last six months. As such, there has been a broad downward revision of DC rates in a number of sectors located in this region.

The review of the DC rates is carried out on a half-yearly basis, in consultation with the Chief Valuer. Tan Hong Boon, Head of Land and Collective Sales at JLL said, “The recent changes are within expectations. The weaker market conditions have largely keep values in check with tepid growth in some clusters. The Chief Valuer recognises this as reflected in the downward adjustment to residential rates.”