URA revision of DC rates unlikely to adversely affect land prices

Jones Lang LaSalle offers persuasive arguments.

In its latest analyst perspective, the property research firm said the latest DC rates revision is unlikely to affect the enbloc market adversely.

“Based on the collective sale cases that Jones Lang LaSalle is managing, no DC is payable for about 16% while another two-thirds had their rates maintained. In other words, more than 80% of our collective sale sites have experienced no increase in overall land price. For the remainder, the effect on overall land price increases is less than 1% as the DC component is small compared to the overall land price," said Mr Karamjit Singh, Head of Investment Sales at Jones Lang LaSalle.

“We even have an interesting case involving a rezoning from industrial to residential (non-landed) use that will see its overall land price reduce by about 3% as the base DC rate (for industrial) has increased but the proposed non-landed residential rate was maintained. In general, the impact of this round of DC rates revision for collective sales is marginal," he added.

The comments came as the Urban Redevelopment Authority rolled out a new revision of the development charge (DC) rates effective 1 September 2013 to 28 February 2014, which saw a continued increase in average rates for use group B1, B2 and D of 6.8%, 4.9% and 15.4% respectively.

Rates for use group B2 have seen a marginal upside with average increase of 4.9% from the March 2013 revision considering the credit tightening measures introduced recently, noted Jones Lang LaSalle.