Development charges raised for commercial, industrial properties

SINGAPORE — Following the Government’s plans to develop the North Coast Innovation Corridor, development charges (DC) for commercial and industrial properties in northern areas such as Yishun, Sembawang and Woodlands were raised most sharply in the latest review by the National Development Ministry.

The increases in the DC rates — the tax payable by the developer when a property site is developed into a more valuable project — will take effect from today. The review is carried out on a half-yearly basis, in consultation with the Chief Valuer.

The DC rates for commercial properties were increased by an average of 24 per cent, with the largest increase of 39 per cent in the Yishun, Sembawang, Woodlands, Choa Chu Kang and Jurong West areas.

For industrial properties, the increases — of between 14 per cent and 26 per cent — were limited to four sectors, with the largest increase of 26 per cent in the Woodlands, Senoko, Sembawang and Yishun areas.

Last month, the Government had announced, under its Land Use Plan, that two new commercial nodes will be developed to bring jobs nearer to homes and further decentralise business activities from the Central Business District.

The North Coast Innovation Corridor will include areas such as Woodlands, Seletar, Punggol and parts of the Sembawang coastline which are currently occupied by a shipyard.

The Southern Waterfront City will include areas such as Pasir Panjang, Alexandra and Tanjong Pagar.

Mr Ku Swee Yong, Chief Executive Officer of International Property Advisor, said: “The northern parts have been a laggard in terms of development charges for the last two years. The charges were probably raised to gear up for industrialists looking to set up shop there.”

Despite the jump in development charges for the northern areas that will be part of the new commercial node, the DC rate of S$5,950 is less than half the top rate of S$13,300 in Orchard and Scotts Road. The same is true for industrial properties at S$840, as compared to S$1,750 for the Pasir Panjang area.

Jones Lang LaSalle head of research (South-east Asia) Chua Yang Liang reiterated that the increase could be “possibly motivated by the need to close the gap” in values relative to surrounding areas.

Property analysts also pointed out that the value of properties in general in these northern areas have increased.

For instance, Parc Rosewood and Eight Courtyard — condominium projects in Woodlands and Yishun respectively — transacted at more than S$3,000 per square foot between August last year and February, as compared to just around S$1,000 psf in the previous six months, said Mr Nicholas Mak, Executive Director of Research and Consultancy at SLP International.

Meanwhile, DC rates inched up an average of 4 per cent for landed residential properties and 26 per cent for hotel/hospital properties.

The rates for non-landed residential properties were unchanged.