Development charge rate hike won't dampen collective sale fever

Romesh Navaratnarajah1 Mar 2018

The development charges for non-landed homes is up by 22.8 percent.

The Ministry of National Development, in consultation with the Chief Valuer, has raised the development charge (DC) rates for non-landed residential use by an average of 22.8 percent, on the back of aggressive land bidding by developers at both state tenders and en bloc sales.

The DC rate hike, which ranged from 12 percent to 38 percent, will be felt across 116 out of 118 sectors, with sectors 19, 23 and 34 witnessing the biggest increase of 38 percent.

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“The latest round of DC revision is a clear reflection of the escalating residential land prices paid by land-starved developers at both state tenders and collective sales,” said Christine Li, research director at Cushman & Wakefield.

“The steep increase in Sectors 23 and 34 is most likely due to the near-record price paid (of $1,722 psf ppr) for the Handy Road Government Land Sale site last month,” she said.

Li noted that the high-profile en bloc sale sites awarded like Pearl Bank Apartments near Chinatown and Royalville in Bukit Timah also resulted in DC rate hikes for sectors 109 and 18, at 35 percent and 31.6 percent respectively, reported the Business Times.

Nonetheless, Li does not expect the DC rate revisions to dampen the current en bloc sales fever as developers have built up a huge war chest of capital over the past few years.

Developers, however, may “moderate their bids for sites which have a low development baseline and are accordingly subjected to high development charges, in order to maximise their gross floor area under the Master Plan”, she explained.

Tay Huey Ying, Singapore research and consultancy head at JLL, believes the sharp increase in DC rates may “widen the buyer and seller price expectations for sites that attract significant development charge levy and this could lead to more sites experiencing protracted sales period”.

Meanwhile, the DC rates for commercial use also increased by an average of 2.7 percent, with 41 out of the 118 sectors witnessing an increase of between four percent and 16 percent.

Effective from 1 March, the new rates will apply to cases that are granted Provisional Permission (PP) or second and subsequent extensions to the PP on or after the effective date, said the Urban Redevelopment Authority in a statement.


Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email


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