Development charges come down

Modest cuts reflect cautious stance by Government, say consultants

THE Government has made some moderate cuts to the development charges which property developers pay for enhancing the use of non-landed residential sites, such as condominium sites.

This reflects the Government's cautious outlook on the property market, some property consultants say, though one consultant queried any cut in the current red-hot residential market.

The rates for development charges fell by an average of 2 per cent, compared with a 15 per cent cut six months ago. These charges can vary from a few million dollars to tens of millions depending on the size of the project involved.

Some areas were unchanged while others were subject to bigger falls. The rate for Sentosa, for instance, got the biggest cut - 16.67 per cent - while there was a 10 per cent fall for the Balestier area.

There was no change in the latest regular six-monthly review in relation to landed private home sites and industrial sites.

Property consultants mostly said the cuts were within expectations.

This 'reflects the Government's cautious stance with regard to the outlook for the property market, in view of the still uncertain economic outlook', said Colliers International's director for research and advisory, Ms Tay Huey Ying.

'This is especially prominent for the non-landed residential and industrial use group,' she said.
DTZ's head of SEA Research, Ms Chua Chor Hoon, was surprised that the charges were lowered for non-landed residential property given the rally in property prices from the secondquarter.
'The Government is probably being cautious as there were hardly any land deals in the past six months,' she added.

In a statement, CBRE Research said it believed the Government did not 'tamper too much' with the charges as developers started looking for development sites seriously only in July.
'It is heartening to note that the Government had not been unduly influenced by the recent buying fever seen in the home sales market nor the rapidly rising interest seen for development sites,' said Ms Tay.

There has been overwhelming interest in Singapore's private homes market in recent months. Developers have of late shown strong interest in buying land.

Developers will still be keen on redeveloping or acquiring new development sites as the demand for residential properties is still expected to be healthy in the coming months, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

But the overall 2 per cent drop in non-landed residential development charge rates is too small to spur collective sales, he said.

The Government also cut the rates for commercial sites and sites for hotel and hospital use by 4 per cent.

The largest falls for commercial sites of 13 per cent were in such core central business district areas as Raffles Place, Marina Bay and Shenton Way.

The cut in rates for commercial sites was expected, given the weak office market with rents continuing to tumble.

Also, the hotel sector is still suffering from falling visitor arrivals and low occupancy.

The National Development Ministry sets the rates - which reflects land values - every March and September, taking into account market values, in consultation with the Chief Valuer.

The new rates apply from today.


Source, Straits Times, 1 Sep 2009