Land betterment charge rates increased marginally for residential properties
The Singapore Land Authority (SLA) has announced the revision of land betterment charge (LBC) rates from March 1 to Aug 31. The review is carried out half-yearly in consultation with the chief valuer of the Inland Revenue Authority of Singapore. Most use groups, including commercial and industrial, saw LBC rates unchanged, while the residential use group and the hotel and hospital use group saw marginal increases.
For the non-landed residential use group, LBC rates increased by 0.3% on average, a sharp contrast from the 12.9% hike during the last review in September 2022. Thirteen out of 118 geographical sectors saw upward revisions, which ranged from 2% to 5%, while the remaining 105 sectors saw no change.
Sector 97 (spanning Bedok South Avenue, New Upper Changi Road, Bedok Road and Upper East Coast Road) saw the biggest increase of 5%. “The chief valuer probably attributed the uplift in land values to the collective sale of Bagnall Court earlier this year, as well as the announcement of more targeted green spaces in the Bayshore precinct, which will improve the liveability of residential spaces,” says Lam Chern Woon, Edmund Tie’s head of research and consulting.
Tricia Song, head of research, Southeast Asia, at CBRE, adds that other sectors that saw increases were those that have seen a collective sale or Government Land Sale (GLS) tenders.
For the landed residential use group, average LBC rates increased by 0.4% (versus a hike of 10.2% in September 2022). Twelve sectors saw increases ranging from 3% to 4%, while the remaining 106 sectors saw no change.
Sectors with the largest increases include sector 99 (Pasir Ris, Loyang, and Changi), sector 100 (Tampines Road, Hougang, Punggol and Sengkang), and sector 58 (Bukit Timah, Central Expressway, Balestier Road, Tessensohn Road and Race Course Road).
The small revision for this use group aligns with the stabilising price growth observed for landed homes alongside slowing sales activity, says Tay Huey Ying, head of research and consultancy, Singapore, at JLL. Caveats lodged for landed homes in the last six months fell by nearly 50% from the preceding period, while
URA’s price index for landed homes increased by just 0.6% q-o-q in 4Q2022, compared to a quarterly average of 2.3% in 2Q2022 and 3Q2022.
LBC rates for the hotel and hospitality group were raised by 1% on average, the first increase implemented since March 2019, observes Edmund Tie’s Lam. Eighteen out of the 118 sectors saw an increase in LBC rates ranging from 4% to 10%, with the remaining 100 sectors seeing no change.
Commenting on the unchanged LBC rates for commercial properties, CBRE’s Song notes that this follows the absence of big-ticket office transactions in the market. She adds: “We believe this signals the government’s view of the resilience of commercial property values, despite higher financing costs and macroeconomic uncertainties.”
JLL’s Tay believes weaker manufacturing performance is likely factored into the decision to keep LBC rates unchanged for industrial properties. Manufacturing output growth slowed to 1.1% y-o-y in 3Q2022 and contracted by 2.6% y-o-y in 4Q2022, after nine consecutive prior quarters of expansion. Tay adds that the latest LBC review could have also considered the “tepid interest” seen for industrial government land sale plots preceding the review.