The Land Betterment Rates reflect differences between popular suburbs, and prime condominium areas.
In the Braddell/Toa payoh region, LBC rate increases were 10.7 percent and 14 percent respectively.
Developers pay LBC in order to be able to expand on certain sites.
The polarised results reflected the contrast between suburban and other sites at the state land auctions held over the last six month.
The weaker than expected bids received for Orchard Boulevard’s prime site led to a drop in rates for the area surrounding it, whereas the stronger-than anticipated bids received for Toapayoh and Clementi sites resulted in a rise of rates for these respective areas.
Rates increased by an average of 3.8% in commercial, 7.8% in residential land, 0.1% non-landed residential property, 0.7% hotel and 1.7% industrial use.
The latest rates for land betterment (LBC), announced on February 29th, reflect the stark contrast between suburban and prime condominium markets.
JLL Research’s analysis shows that the sharpest cut of 19.2 per cent for LBC rates for non-landed residential use was in the Tanglin/Cuscaden area, followed by chops of 18.8 per cent in the Ardmore/Draycott/Claymore area, Orchard, One Tree Hill, Paterson/Lengkok Angsa and Nassim/Orange Grove/Ladyhill/Fernhill areas.
Market watchers say that the divergence is due to a doubled additional buyer’s duty (ABSD), a tax on foreign buyers who purchase private homes in Singapore. The ABSD was increased from 40% in April of last year to 60%. Foreigners traditionally have been more prevalent in the Singapore prime residential market.
LBC rates take into account recent land transactions and are based off the CV assessment of land value. They are divided into 118 geographical segments in Singapore.
In 37 sectors, the rates of non-landed residential LBCs have increased. The increases range between 3 and 14 percent. Rates have been cut in 27 areas, with reductions ranging from 1% to 19%. SLA confirmed that rates in the remaining 54 industries were unchanged.
Experts are not expecting the downward revisions of LBC in certain geographic sectors to boost residential collective sale because there is more in the way. They cited a buyer-seller gap in price, low developer risk appetite and the recent property cooling measures.
LBC rates are now higher by 3.8% on average. This is most likely due to a return in interest from investors for assets with a large commercial component.
The LBC rates for commercial users were raised in 104 of the 120 geographical sectors between 3-9 per cent.
CBRE’s Song attributed these increases to some large-ticket commercial and retail property deals, like Far East Shopping Centre and Shenton House. We expect that sentiment may be dampened for commercial collective sale in the near future.
LBC rates in the residential sector increased on average by 7.8 percent. In 116 sectors rates increased by 7 to 8 per cent; the remaining two sectors did not change.
New landed properties are costly but appealing
Although expensive because of the higher costs for materials and construction, buyers still prefer to buy newly built landed properties by boutique developers over rebuilding an old property.
LBC rates increased in average by 0.7 percent for the use group which includes hotels and hospitals. In 18 of the 100 geographical sectors, rates increased by an average of 5 percent. The areas with the highest increases included Robinson Road, Orchard Street, Orange Grove, and Bugis. Observers say that Singapore’s hotels are enjoying good business from tourists.
Rates were raised in the industrial usage group by an average of 1.7%. The LBC rate in this group has increased in 42 different sectors between 3 and 5.0%. The remaining 76 industries did not change.
The chief assessor likely took into account the performance of industrial property markets, where rents, prices and land transactions were all up for the thirteenth consecutive quarter from Q4 2023.
LBC rates will remain the same for all places of worship, civic and community institutions. Also left untouched were the rates for other use groups covering open spaces/nature reserves, agriculture and drains/roads/railways.
Land Betterment Charge Act: The Land Betterment Charge Act took effect in August of 2022. Charges for the improvement of land value are consolidated into the SLA.
The LBC system replaced the DC, temporary development levies and differential premium regimes. The DC Table of Prices was correspondingly substituted with the LBC Table of Prices, which continues its half-yearly revision.
Developers are required to pay an LBC if they want to expand the scope of their projects or enhance the use and value of certain sites. The rates are released twice a calendar year, on Sep 1 and Mar 1, following an assessment by the Singapore Land Authority.
In the latest revision of LBC rates, average LBC for non-landed residence use increased just 0.1 percent.
