Latest land betterment charge rates reflect hot suburban vs cool prime condo markets

Rates up an average 3.8% for commercial, 7.8% for landed residential, 0.1% for non-landed residential, 0.7% for hotel, and 1.7% for industrial use

Mar 01, 2024

THE latest land betterment charge (LBC) rates unveiled on Thursday (Feb 29) reflect the polarised performance and sentiment in the private condominium market between the suburbs and in prime locations.

JLL Research’s analysis shows that the sharpest cut of 19.2 per cent for LBC rates for non-landed residential use was in the Tanglin/Cuscaden area, followed by chops of 18.8 per cent in the Ardmore/Draycott/Claymore area, Orchard, One Tree Hill, Paterson/Lengkok Angsa and Nassim/Orange Grove/Ladyhill/Fernhill areas.

At the other end of the spectrum, LBC rates were raised by 14 per cent in the West Coast/Clementi area, and by 10.7 per cent in the Braddell/Toa Payoh area.

CBRE’s head of research for Singapore and South-east Asia, Tricia Song, said: “The polarised performance mirrored the contrasting sentiments between suburban and non-suburban sites seen at state land tenders over the past six months.”

“In particular, the weaker-than-expected bids for the prime Orchard Boulevard site brought down the rates for its surrounding areas, while the better-than-expected bids for Toa Payoh and Clementi sites boosted rates for their respective sectors.”

Market watchers note that the divergence in sentiment between the suburbs and prime locations has resulted from the doubling in the additional buyer’s stamp duty (ABSD) rate to 60 per cent on foreign buyers of private homes in Singapore in April last year. Traditionally, foreign buyers have featured more prominently in the prime residential property market in Singapore.



Developers pay an LBC for the right to enhance the use of some sites or to build bigger projects on them. The rates are announced twice a year, on Mar 1 and Sep 1, following a review by the Singapore Land Authority (SLA), in consultation with the taxman’s chief valuer (CV).

In the latest revision, on average, LBC rates for non-landed residential use inched up just 0.1 per cent.

The LBC rates are based on the CV’s assessment of land values and take into consideration recent land sales. They are stated according to use groups across 118 geographical sectors in Singapore.

Non-landed residential LBC rates rose in 37 sectors; the increases range from 3 per cent to 14 per cent. The rates were cut in 27 sectors, with declines ranging from 1 per cent to 19 per cent. The rates for the remaining 54 sectors were unchanged, the SLA said.

Tay Huey Ying, head of research and consultancy at JLL Singapore, does not anticipate the downward revisions in LBC rates in selected geographical sectors to boost the residential collective sale market because there are “more challenging obstacles in the way”. She cited the buyer-seller price gap, developers’ low risk appetite and the property cooling measures.



LBC rates for commercial use have been raised by 3.8 per cent on average. “This is likely underpinned by returning investors’ interest in assets with a substantial commercial component,” said Tay.

Commercial use LBC rates were increased in 104 out of the 118 geographical sectors by between 3 and 9 per cent, with no changes for the remaining 14 sectors.

CBRE’s Song attributed the increases to “a few large-ticket office and retail property transactions, such as Far East Shopping Centre and Shenton House”. “We expect this may dampen sentiment for commercial collective sales in the near term,” she added.

LBC rates for landed residential use rose by 7.8 per cent on average. Rates increased by between 7 and 8 per cent in 116 sectors; no changes were made in the remaining two sectors.

New landed homes costly, but still appealing

Leonard Tay, head of research at Knight Frank Singapore, said: “Newly developed landed homes by boutique developers, while costly due to elevated material and construction costs, continue to appeal to buyers when weighed against the option of rebuilding aged properties themselves.”

For the use group that covers hotels and hospitals, LBC rates were upped by 0.7 per cent on average. Rates rose by around 5 per cent in 18 geographical sectors; there were no changes in the remaining 100 sectors. The biggest increases were in places like Robinson Road, Orchard, Orange Grove and Bugis. Observers note that hotels have been enjoying good business, especially from tourists to Singapore.

For the industrial use group, rates were raised by 1.7 per cent on average. The LBC rates in this group increased in 42 sectors by between 3 and 5 per cent. There were no changes for the remaining 76 sectors.

Said Tay of JLL: “The chief valuer likely considered the performance of the overall industrial property market, which saw rents and prices rising for the 13th consecutive quarter in Q4 2023, as well as land transactional evidence in the six months from Sep 1, 2023 to Feb 29, 2024.”

LBC rates remain unchanged for places of worship or for places for civic and community institution use. Also left untouched were the rates for other use groups covering open spaces/nature reserves, agriculture and drains/roads/railways.

Under the Land Betterment Charge Act, which took effect on Aug 1, 2022, charges for the enhancement of land value were consolidated under the SLA.

The LBC regime replaced the development charge (DC), temporary development levy, and differential premium regimes. The DC Table of Rates was correspondingly replaced with the LBC Table of Rates, which continues to be revised on a half-yearly basis.

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