DC rates for commercial use likely to fall

Property Guru – Fri, Feb 24, 2012

Development charges (DC) for most major use groups have moved upwards every six months since September 2010. However, property consultants expect this trend to reverse as another revision takes effect come 1 March 2012.

According to a Business Times report, the movement will likely be visible in certain use groups, as some property market segments approach an inflexion point in addition to the weak economic outlook.

It appears that DC rates for non-landed residential and commercial uses will be under pressure while those that are listed for landed residential and industrial use will stay firm.

DC rates for commercial use went up 21.7 percent during the revision on 1 September last year, but according to Chia Siew Chuin, Director of Research and Advisory at Colliers International, the rates could drop by five percent.

She added that there could be a 10 percent decline in DC rates across the old financial district, which covers Cecil Street, Raffles Place (pictured), Shenton Way, Anson Road and Robinson Road, as office rentals in the area corrected in Q4, following dwindling demand in the office sector.

"Rents are expected to decline further under the weight of about 1.8 million sq ft oncoming supply this year. Moreover, office land deals have been muted in the past six months, reflecting the cautious outlook for the sector," she said.

DC rates across the 118 geographical sectors in Singapore are revised by the Ministry of National Development, in consultation with the Chief Valuer. Related Stories:

Business & Science Park rents remain firm

Project Eco-Office celebrates 10th anniversary

IFS Capital - Providing Financial Solutions for Property Firms