Commentary on the Revision of Land Betterment Charge Rates from 1 September 2026

Impact of LBC on asset rejuvenation push

The recent ABSD remission extensions and lower collective-sale consent thresholds were intended to facilitate urban rejuvenation and unlock redevelopment opportunities for ageing residential assets. While increases in LBC rates typically raise redevelopment costs and compress developers' margins, the easing in LBC rate increase this cycle bodes well for the rejuvenation efforts and should not dampen enbloc activities significantly.  

For commercial uses, the average increase of 1.7% is relatively mild considering the robust investment activity in the commercial sector in 1H 2026, and should not deter rejuvenation, especially in the CBD where there continues to be no increase since March 2024.  

Analysis

The LBC rates for Use Group A (Commercial) have risen by 1.7%, faster than the 0.5% rise in the previous cycle. 46 out of 118 sectors saw increases ranging from 2.5 – 19.0% while the remaining 72 sectors were flat. Some suburban sectors saw large increases, supported by big-ticket mall transactions. The Orchard area also saw some notable increases, likely driven by Paragon and Wheelock Place transactions, while office-dominant areas such as the CBD saw no change in LBC rates.  

In general, the Residential use group B continued to rise, reflecting benchmark developer land bids for several sites, especially for prime (CCR) and city fringe (RCR) sites. The developers’ confidence have been supported by resilient homebuying appetite over the past 6 months across all market segments in private landed and non-landed home sales despite heightened volatility from the Middle East conflict. Lower borrowing costs for developers have also resulted in tighter competition and increased bullishness in CCR Government land sales tenders that closed in the past 6 months – in particular, Peck Hay Road, Dunearn Road (2) and River Valley Parcel C recorded benchmark bid prices above comparable 2025 GLS tenders in the same location.  

B1 (Residential, landed) LBC rates saw a moderate increase of 3.5% on average, albeit slowing from the 4.0% rise in the last round of revision. 108 out of 118 sectors saw a rise in LBC rates ranging from 1.8 – 8.1%, reflecting healthy transaction activity in the GCB and landed market amid low interest rates.

The LBC rates for Use Group B2 (Residential, non-landed) saw growth moderate after a 4.1% increase in the previous cycle. Rates rose 3.4% on average for Sep 2026. 70 out of 118 sectors rose 0.9 – 29.1%, and 48 sectors seeing no change. Revisions for Group B2 sector largely tracked performance at state land tenders. The highest 29.1% increase came from sector 54, largely reflective of the Kallang Close site (in the RCR) which received 4 bids and awarded at S$1,415 psf ppr. While the top bid price was within expectations based on current market conditions, the previous implied land value for sector 54 (Kallang Avenue/Kallang Place/Boon Keng Road/Kallang Bahru) had been $1,022 psf ppr as the area had not seen a new condo launch for more than a decade since Kallang Riverside (212 units) in 2014. This rerating also extended to adjacent sectors 55 (Upper Boon Keng/Sims Avenue/Lor 1 & 3 Geylang) and 56 (Kallang Bahru/Geylang Bahru) which recorded the second highest increases of 23.6%. 

The LBC rates for Use Group D (Industrial) rose by 3.9% on average, after posting 3.2% growth in the previous round. The increase was broad-based, with all 118 sectors seeing an increase in LBC rates ranging from 1.8 – 10.1%. This could be attributed to strong investor interest in the sector due to its attractive yields, with a few portfolio deals recorded in the period and active participation in several IGLS sites.  

Use Group E (Place of Worship/ Civic and Community Institution) saw a broad-based increase of 2.7 – 3.4% across every geographic sector, the fourth straight round of broad-based increase, after 10 years of no increase. This round’s increase is similar to Mar 2026’s 2.8% increase, averaging at 2.9%. SLA said it is to keep pace with the overall growth in land values.

Group A

The LBC rates for Use Group A (Commercial) rose 1.7% on average, faster than the 0.5% increase in Mar 2026. 46 out of the 118 sectors saw an increase in LBC rates ranging from 2.5 – 19.0%, with the remaining 72 sectors seeing no change. 

The largest increase of 19.0% was recorded in sector 96 (Siglap/ Bedok South/ Bayshore Road). While there are no existing major commercial developments in the area, the award of the Bayshore Drive site in Jul 2026 for $2.128 bn ($1,373 psf ppr), which includes a substantial retail component, could have prompted an upward revision of LBC rates.

Another large increase at 12.1% was witnessed in sector 99 (Changi Airport/Loyang/Changi Village/Pasir Ris/Elias), likely driven by the sale of White Sands for $467.00 mil (1,943 psf). This was followed by sector 110 (Commonwealth Avenue West / North Buona Vista Road / Holland Road / Ulu Pandan Road), which saw a 8.8% increase. This could be attributed to the transactions of Holland Piazza for $100.00 mil ($4,586 psf) and 31,31A,33,33A etc Lorong Liput for $70.00 mil ($5,833 psf).

Other notable increases were in the Orchard Road area, following the transaction of Paragon for $3.900 bn ($3,838 psf). In contrast, office-dominant areas such as the CBD recorded no change.

Group B1 (Residential Landed)

Group D (Industrial)