Land betterment charge rates marginally increased for residential properties
The Singapore Land Authority (SLA) has recently announced the revision of land betterment charge (LBC) costs from March 1 to Aug 31. The review is performed half-yearly in discussion with the chief valuer of the Inland Revenue Authority of Singapore.
Several use groups saw LBC prices unchanged, consisting of commercial and industrial usage groups, while housing, together with the inn and healthcare facility purpose groups saw minimal rises.
The small revision for this user group straightens with the stabilising price growth observed for landed residences alongside reducing sales action, claims Tay Huey Ying, head of research and consultancy, Singapore at JLL. Caveats housed for landed residences for the last six months fell by close to 50% from the previous duration, while URA’s price index for landed houses enhanced by merely 0.6% q-o-q in 4Q2022, compared to a quarterly average of 2.3% in 2Q2022 including 3Q2022.
Sectors with the biggest increases include sector 99 (Pasir Ris, Loyang, and Changi), sector 100 (Tampines Road, Hougang, Punggol and Sengkang), and also sector 58 (Bukit Timah, Central Expressway, Balestier Road, Tessensohn Road furthermore Race Course Road).
For the landed home use group, average LBC premiums boosted by 0.4% (versus a hike of 10.2% in September 2022). Twelve sectors saw increases ranging from 3% to 4%, although the standing 106 sectors saw no change.
LBC prices for the resort and also friendliness group were increased by 1% generally, the initial boost executed from March 2019, includes Edmund Connection’s Lam. Eighteen out of the 118 sectors saw a rise in LBC prices varying from 4% to 10%, with the remaining 100 sectors finding no change.
Commenting on the unmodified LBC rates for industrial properties, CBRE’s Song monitors this adheres to the lack of expensive office purchases out there. She adds:” We believe this signals the government’s sight of the resilience of business real estate worths, in spite of much higher financing expenses and macroeconomic unpredictabilities.”
For the residential, non-landed use group, LBC prices raised by 0.3% on average, a sharp comparison from the 12.9% hike during the last review in September 2022. Thirteen out of 118 geographical sectors found up revisions, which ranged from 2% to 5%, while the standing 105 sectors saw no improvement.
Sector 97 (extending Bedok South Avenue, New Upper Changi Road, Bedok Roadway plus Upper East Coast Roadway) saw the greatest boost of 5%. “The chief valuer probably connected the boost in land worths to the collective sale of Bagnall Court earlier this year, as well as the statement of even more focused eco-friendly areas in the Bayshore development, which will boost the liveability of residential areas,” claims Lam Chern Woon, Edmund Tie’s head of research study as well as consulting.
Tricia Song, head of research, Southeast Asia at CBRE, adds in that other sectors that saw boosts were those that have found a shared sale or Government Land Sale (GLS) tenders.
JLL’s Tay believes weaker production efficiency is most likely factored into the judgment to keep LBC rates the same for industrial estates. Production result progress slowed down to 1.1% y-o-y in 3Q2022 and contracted by 2.6% y-o-y in 4Q2022, ending 9 successive previous quarters of growth. Tay adds that the latest LBC review might have even taken into consideration the “tepid interest” seen for commercial state land sale plots preceding the evaluation.
