Non-landed residential land improvement charges lowered 5.4% on average
Non-landed residential land improvement charges lowered 5.4% on average
Landed residential, commercial, and hotel/hospital rates are up; industrial rates are unchanged.
Aug 30, 2024
The authorities have cut land betterment charge (LBC) rates for non-landed residential use by 5.4% on average for the next half year in response to cautious bids from developers for private residential plots in state auctions.
This is the greatest LBC rate drop for this usage category since March 2019's 5.5% drop.
Developers pay LBCs to improve sites or create larger projects.
The rates are issued twice a year, on March 1 and September 1, after the Singapore Land Authority reviews them with the taxman's top valuer.
The CV's land valuation and recent land transactions determine LBC rates. They are listed by usage group throughout 118 Singaporean regions.
The recent notification on Friday decreased LBC rates for non-landed residential use by 2–16% in 116 geographical areas. The remaining two sectors stay unchanged.
The highest reduction of 15.8% occurred in sector 108, which encompasses Holland Road, Dunearn Road, and Sixth Avenue, according to JLL. A governmental procurement concluded on August 1 for the Margaret Drive private housing property in this neighbourhood.
The winning offer of S$1,154 per square foot per plot ratio (psf ppr) is 29% below the anticipated land value based on the Mar 1, 2024, LBC rate for non-landed residential use.
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Mogul.sg chief research officer Nicholas Mak said the decline in non-landed residential LBC rates is “not surprising, as property developers have submitted conservative bids in recent state land tenders and the government was willing to sell the land at prices that were lower than comparable land parcels in the vicinity
JLL director of research and consulting for Southeast Asia Chua Yang Liang said: “Overhanging property cooling measures, a high interest rate environment, and rising global geopolitical risks have resulted in a loss in developers’ appetite for the Singapore residential market.”
Landed residential, commercial, and hotel/hospital LBC rates increased. Industrial LBC rates remain unchanged.
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LBC rates for landed residential use have risen 2.8% on average. Three sectors saw no rate adjustments, while 115 had 3% increases.
Higher landed transactions and high-quantum Good Class Bungalow (GCB) sales are to blame, according to Huttons senior director of data analytics Lee Sze Teck. The Tanglin Hill GCB under construction sold for S$93.9 million, a record S$6,197 per square foot. The building is roughly 30,000 sq ft.
The average LBC rate increase for commercial usage is 1.5%. Rate increases ranged from 3 to 5% in 52 industries. The remaining 66 sectors stay unchanged.
“There was slightly more interest in the segment and some of the assets linked to the money laundering case were concluded during this period,” said Lee, referring to the sales of shophouses and strata office apartments held by the guilty or their allies.
For hotels and hospitals, LBC rates rose 0.6% on average. The other 102 sectors have not changed, however 16 have had 3–6% rate rises.
JLL's executive director of capital markets, Tan Hong Boon, said that the LBC rate modifications would have little influence on the market in the near term.The atmosphere is more upbeat than six months ago. Still, mounting geopolitical concerns and the US-China trade conflict will cloud short-term investing.
Land Betterment Charge Act, which takes effect on August 1, 2022, combined land value enhancement levies under the SLA.
LBC superseded DC, temporary development levy, and differential premium regimes. The LBC Table of Rates superseded the DC Table and is amended half-yearly.
