Revised Development Charge rates released for various sectors in Singapore
CBRE comments that these rates are within expectations.
The Ministry of National Development of Singapore has released the revised development charge (DC) rates, which will be effective from 1 March to 31 August 2021.
The DC rates for Group A (Commercial) have decreased by 1.5% on average. Whilst rates were unchanged for 58 out of 118 sectors, 60 sectors have reduction of rates ranging from 2% to 3%.
The DC rates for Group B1 (Residential, landed) have increased by 1.5% on average. Whilst rates were unchanged for 74 out of 118 sectors, 44 sectors have increase in DC rate from 1% to 6%.
Meanwhile, DC rates for Group B2 (Residential, non-landed) have increased by 0.3% on average. Rates are unchanged for 109 out of 118 sectors, whilst eight sectors have an increase within the range of 3% to 6%. Only one sector has a 4% reduction.
DC Rates for Groups C (Hotel/Hospital), D (Industry), E (Place of Worship/Civic and Community Institution) and three other Use Groups F, G, and H have likewise remained unchanged.
A review is carried out on a half-yearly basis with the chief valuer.
According to CBRE Research’s associate director Catherine He, these DC rate revisions are within expectations.
“[These] revisions have reflected the lower level of transactions over the past six months due to the pandemic, with only minor adjustments in DC rates,” she said.
For Group A (Commercial) DC Rates, He commented that the downward adjustment of 1.5% was not surprising, given the lower level of commercial transactions taking place.
“This was a broad-based decline observed across various sectors, with 60 out of the 118 sectors registering a decline in DC rates. As the commercial occupier markets face further pressure, this may have spurred a marginal downward adjustment in DC rates,” He explained.
“The largest decrease of 3% was applied to sectors in the central region. CBRE believes that this drop in DC rates will motivate the redevelopment of older buildings in the central area, especially those that qualify for the Strategic Development Incentive and CBD Incentive Scheme,” she added.
As for Group B2 (Residential Non-Landed), she noted that most DC rates for this sector has remained unchanged.
“Sectors 97 and 98 witnessed the highest increase of 6.3%. This could be largely attributed to the sale of the Government Land Sales site at Tanah Merah Kechil Link, where it was awarded after keen bidding,” she said.
On Group C (Hotel/Hospital), He acknowledged that this sector was the hardest hit by the pandemic, which explains why the rates remain unchanged.
“The sector hardest hit by the pandemic, with falling tourist numbers and revenues, DC rates for hotels have remained unchanged after a considerably large downward adjustment of 7.8% on average previously,” she said.