SINGAPORE – Land betterment charge (LBC) rates have been raised for residential, commercial and industrial use for the next six months from Friday, with the rates for non-landed residential use seeing the biggest increase due to a robust property market as well as healthy bids for state-owned land and collective sale sites.
Developers pay a LBC – which replaced the development charge (DC) – for the right to enhance the use of some sites or to build bigger projects on them.
LBC rates have been raised by an average of 12.9 per cent for non-landed residential use and 10.2 per cent for landed residential use. For commercial use, the increase is 5.4 per cent on average, while for industrial use, the increase is 2.3 per cent on average.
Cushman & Wakefield head of research Wong Xian Yang noted that the sharp increase in LBC rates for certain segments reflected higher prices in the private residential, commercial and industrial markets in the past six months.
“This suggests strong investor interest in Singapore property amid global economic uncertainty, and rising rents in the commercial, residential and industrial markets,” he said.
For non-landed residential use, LBC rates have been raised by an average of 12.9 per cent, up from a 0.3 per cent rise in the previous revision in March.
Analysts cited “enthusiastic land bids” at selected Government Land Sales (GLS) sites, following strong take-up at major new launches despite higher unit prices and the latest cooling measures.
Ms Tay Huey Ying, JLL’s head of research and consultancy in Singapore, said the 12.9 per cent increase – the sharpest since a 22.8 per cent spike in March 2018 – “came as a surprise as developers’ bids have been measured in the face of soaring interest rates and slowing economic growth”.
LBC rates for non-landed residential use were raised in 116 geographical sectors by between 6 per cent and 20 per cent, with two remaining sectors seeing no change.
The biggest increase of 20 per cent applies to Sector 113, which includes Jurong West Avenue 2, Choa Chu Kang Road and Upper Bukit Timah Road, as well as the Bukit Batok and Bukit Panjang areas.
CBRE head of research for South-east Asia Tricia Song cited the collective sales of Lakeside Apartments at $273.89 million and Park View Mansions at $260 million, “as developers amassed sites ahead of the upcoming Jurong Lake District”.
In addition, an executive condominium (EC) GLS site in Bukit Batok West Avenue 8 fetched a top bid of $661.67 psf ppr, setting a new record price for EC land, she added.
For landed residential use, the increase of 10.2 per cent on average is the steepest in 11 years, and is likely underpinned by the “relentless rise” in landed home prices, Ms Tay noted.
The landed property price index rose 7.3 per cent in first half of 2022, compared with a 6.6 per cent jump in second half 2021, she added.