SINGAPORE – Land betterment charge (LBC) rates have risen for industrial, commercial and housing use for the next 6 months from 23 September 2022, with the rates for non-landed residential use seeing the biggest jump due to a robust housing market, together with healthy bids for collective sale plots and government land sales like the Lentoria Site.

Developers pay LBC – which is a replacement of the former development charge (DC) – for the rights to improve the use of land or to develop bigger projects on them.

LBC rates have skyrocketed by an average of 12.9% for non-landed housing use and 10.2% for landed housing use. For commercial usage, the jump is about 5.4% on average, while for industrial usage, the rise is 2.3% on average.

Head of research at Cushman & Wakefield, Mr Wong Xian Yang, noticed that the spike in LBC rates for certain sectors reflected the increased prices in the private industrial, commercial and residential markets for the last 6 months.

“This shows the strong investor interest in Singapore real estate amid an uncertainty in the global economy , and rising rents in the commercial, residential and industrial markets,” he commented.

For non-landed residential use, LBC rates have gone up by an average of 12.9%, a rise of 0.3% from the earlier revision in March.

Analysts indicated “enthusiastic bids” at some Government Land Sales (GLS) plots, following robust take-up figures at major new launches like at the Hillock Green site, in spite of rising unit prices and the recent cooling measures.

Ms Tay Huey Ying, Head of research and consultancy at JLL Singapore, commented that the 12.9% jump – the sharpest since a 22.8% spike in March 2018 – “came as a surprise as developers’ bids have been controlled in the environment of muted economic expansion and soaring interest rates”.

LBC rates for non-landed housing use were risen in 116 geographical areas by between 6% and 20%, with 2 remaining zones facing no change.

The biggest spike of 20% applies to Sector 113, which includes Upper Bukit Timah Road, Choa Chu Kang Road and Jurong West Avenue 2, as well as the Bukit Panjang and Bukit Batok areas.

Ms Tricia Song, CBRE head of research for South-east Asia, pointed to the collective sales of Park View Mansions at $260 million and Lakeside Apartments at $273.89 million, “as developers acquired land ahead of the future Jurong Lake District”.

The Land Betterment Charge Act was enforced on Aug 1, 2022 and allows for the consolidation of charges for the enhancement of land value under SLA.

The new LBC regime took over the Differential Premium, Development Charge and Temporary Development Levy regimes.

Source: https://www.straitstimes.com/business/property/strong-property-market-singapores-reopening-fuel-higher-land-betterment-charge-rates