Industrial development charge rates trimmed for the first time in a decade

As industrial production grinds to a halt.

Policy makers have trimmed development charge (DC) rates for industrial land on back of excessive supply, soft sales, and lower investor interest for industrial sites.

The Ministry of National Development (MND), in consultation with the Chief Valuer, said yesterday that industrial DC rates have decreased on average by 3%, with a magnitude ranging from 3% to 4% for 87 out of 118 sectors. 

Meanwhile, the DC rates remain unchanged for the remaining use groups, including Commercial, Landed Residential, Non-Landed Residential, and Hotel/Hospital.

JLL noted in a report that this is the first time where there is a major decline in Industrial DC rates across over 74% of the sectors in Singapore. The last time this happened was in September 2005.

“The downward adjustment in the DC rates for industrial has been the largest we have seen since September 2005, when the average decline was at 4.5 per cent. At that time, the overall annual industrial production growth slowed from almost 14 per cent in 2004 to 9.5 per cent by 2005,” said Dr Chua Yang Liang, Head of Research for Singapore and South East Asia at JLL.

He added that this recent islandwide adjustment is as expected with the six consecutive months of shrinkage in GDP output of the manufacturing sector, alongside a fall in export orders given the sluggish Chinese economy.

“In the recent few years, our industrial production has slowed to some 1 to 2 per cent per annum. This recent downward adjustment in Industrial DC rates, despite the dearth of industrial land transactions, is an affirmation of the weakening industrial land market dragged down by weaker global demand and internal restructuring,” added Dr Chua.