RESIDENTIAL MARKET DC rates for non-landed residential use dip on weaker home prices The authorities have trimmed development charge rates for non-landed residential use by an average of 1.6 per cent from Monday. This is not surprising given the weakening in non-landed private home prices, say analysts. Landed residential DC rates were left untouched as were the rates for industrial use. For commercial use, DC rates were raised 1.9 per cent on average. DC rates - which are payable for enhancing the use of some sites or building bigger projects on them - will go up by an average of 9 per cent each for two use groups: one which includes hotels and hospitals, and the other, places of worship and civic and community institutions. The increase in the latter use-group is thought to have been supported by prices attained in the sale of sites by the state for temples and churches in locations such as Sengkang, Woodlands and Punggol. As for the 9 per cent average hike in hotel DC rates: Hotel values have remained fairly inflated in the past six months and that could have led Chief Valuer to raise DC rates. But this is slower compared to the previous hotel use DC rate hike of 13 per cent six months ago. DC rates are revised on March 1 and Sept 1 and stated according to use-groups across 118 geographical sectors. The Ministry of National Development (MND), in consultation with the Chief Valuer, revises DC rates based on current market values. The new rates are effective from Sept 1 to Feb 28. The drop in the average DC rate for non-landed residential use is the first since March 2012, an analysis shows. MND said on Friday that non-landed residential DC rates will fall between 2.8 per cent and 5 per cent in 55 geographical sectors, with no change in the remaining 63 sectors. The 5 per cent fall is in Sector 72- Prince Charles Crescent, Alexandra Road and Tanglin Road - and Sector 86 - Telok Blangah Heights, Telok Blangah Drive, Henderson Road, Depot Road, and Alexandra Road. The drop in Sector 72 is probably due to the winning bid by a UOL-Kheng Leong tie-up for Prince Charles Crescent Parcel B at a state tender in April being 14.5 per cent lower than what a Wing Tai-led consortium had paid in 2012 for the next-door Parcel A, said market watchers. For the commercial use-group, DC rates will go up 5-11 per cent in 26 sectors, with no changes in the rest. The top hike applies to Sector 59 only (which includes Balestier Road). The sale of strata commercial units at Balestier Towers in July is thought to have provided evidence for the hike. As knock-on effects, the neighbouring sectors of 58, 60, 61 and 62 saw 8-10 per cent increases. Sector 115, which includes Woodlands, saw a 10 per cent hike, supported by the recent sale of the Woodlands Square office site, again producing a knock-on effect for the nearby Sectors 113 and 114. DC rates for hotel use were raised by 7-10 per cent in 116 sectors. Among the sectors that saw the 10 per cent hike was Sector 51, which includes Beach Road. The sale of 700 Beach Road as a hotel redevelopment site is thought to have been used as supporting evidence. For the use-group covering places of worship and civic and community institutions, rates were hiked in all sectors - by 8-11 per cent. Among the sectors that saw the top-end rise were 106 (which includes the Fernvale locale in Sengkang), 115 (which includes Woodlands) and 100 (including Punggol). A 30-year leasehold plot in Fernvale Link designated for Chinese temple development was sold in July at 185 per cent above the land value implied by the then-prevailing March 1, 2014 DC rate. Commenting on the governments decision to leave industrial use DC rates untouched in all sectors, there was mixed evidence at industrial state land tenders over the past half year - with some sites fetching prices below imputed land values based on the prevailing DC rates at the time, while other plots changed hands at above the respective DC rate-implied land value for the respective locations. Moreover, JTC Corp has trimmed its posted land rents and land premiums by some 5 per cent for the current period starting July 1, 2014, amid mixed manfacturing performance and a softening industrial property market. Perhaps the lack of clarity in the direction of land prices in the industrial property market has prompted the government to monitor the market for a while longer before making any changes to DC rates for industrial use. Source: Business Times – 30 August 2014
Posted on: Mon, 01 Sep 2014 14:52:30 +0000
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