LBC rates for residential, commercial, industrial, hotel uses raised
LAND betterment charge (LBC) rates for key use groups – residential, commercial, industrial and hotels – in Singapore for the next half year have all been raised for the first time since a September 2011 review.
Developers pay an LBC for the right to enhance the use of some sites or to build bigger projects on them.
The latest LBC rates for the March 1 to Aug 31 period were announced on Feb 29, following a review by the Singapore Land Authority in consultation with the taxman’s chief valuer.
The LBC rates are based on the chief valuer’s assessment of land values and take into consideration recent land sales.
For landed residential use, LBC rates have jumped by 7.8% on average, due largely to demand for this property segment, which saw an 8% jump in home prices for the whole of 2023, said Leonard Tay, Knight Frank Singapore’s head of research.
“Newly developed landed homes by boutique developers, while costly due to elevated material and construction costs, continue to appeal to buyers,” he said.
Tay Huey Ying, JLL head of research and consultancy, found the rate increase to be a “surprise as landed homes saw price growth of just 0.9% in the second half of 2023 after jumping 7% in the first half”.
She pointed to the latest round of property curbs dampening demand, prices and transaction volumes for landed homes in the second half of 2023.
In comparison, rates for non-landed residential use rose 0.1% on average after being cut by an average of 3.2% for the previous revision period from Sept 1, 2023 to Feb 29, 2024, according to JLL.
Mogul.sg chief research officer Nicholas Mak said the discrepancy is due to the assessed land values of landed homes rising faster than those of non-landed residential properties, partly as a result of conservative bids in some state land tenders.
Knight Frank’s Tay noted that the increases in LBC rates for non-landed properties were in areas such as Clementi, where a government land sale (GLS) site in Clementi Avenue 1 was awarded at S$1,250 per sq ft per plot ratio (psf ppr), and Toa Payoh, where a plot in Lorong 1 was awarded at S$1,360 psf ppr. Both parcels were awarded in November 2023.
In the Orchard Road area, some sectors saw steep declines due in part to the award of the Orchard Boulevard GLS site in February 2024 at a land rate of S$1,617 psf ppr, “which is 24% lower than the land value implied from the Sept 1, 2023 rate”, JLL’S Tay noted. — The Straits Times/ann