By Desmond Sim, Head of Research, Southeast Asia
“Absence of proof is not proof of absence”
The Ministry of National Development has revised the development charge (DC) rates for the period 1 September 2020 to 28 February 2021. The review is carried out on a half-yearly basis in consultation with the Chief Valuer. Under unprecedented times, the first half of 2020 was limited to a few capital markets transactions to arm the Chief Valuer with the right comparables. Nonetheless, the weak occupier market in most sectors have possibly prompted the Chief Valuer to make minor downward tweaks to the development charge rates for certain sectors.
Group A (Commercial)
For commercial, it has been the first time in four years since DC rates have been lowered.
Group B (Residential Non-landed)
On the back of muted residential activity, DC rates for residential have decreased by 0.8% on average, the fourth consecutive time rates have been lowered.
Group C (Hotel/Hospital)
The hardest hit sector so far, DC rates for hotels have decreased the most, at 7.8% on average.
Group D (Industry)
Industrial DC rates decreased by 0.9% on average. The largest decrease of 3% was noted in Sectors 99, 100, 114, 115 and 116.
CBRE expects a subdued investment market for the second half of 2020 which will likely not place more transactional evidence for the Chief Valuer.
However, further economic pressure, especially from external geopolitical tensions as well as from the pandemic, is expected to cause further drag to the occupier markets which will in turn influence further corrections to be made to the development charge rates from the Chief Valuer.
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