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News Release

Singapore

Jones Lang LaSalle’s Perspective: URA’s Revision of development charge rates for the period 1 Mar 2009 to 31 Aug 2009

Downward Revisions as Expected: More Revisions Expected in line with Economic Outlook


SINGAPORE, 27 February 2009 – The URA has revised the development charges or DC for the period 1 Mar 2009 to 31 Aug 2009. As expected, downward revisions were made to the commercial, hotel and non-landed residential sectors. The landed residential and industrial sectors remained status quo.

The non-landed residential sector witnessed the highest correction with a 25-30% contraction posted for Sentosa (117) and Districts 9 and 10. These are the areas with luxurious residential projects that have also seen the greatest correction in prices over the past six months. For example based on caveats lodged, the resale prices of Ardmore Park had dropped by some 8-9% between September and December 2008. Jones Lang LaSalle data for High End residential resale capital values also recorded a similar drop of between 16-18% in 2H08. Areas in District 11 and the Marina Bay vicinity registered a correction of approximately 20%. On the average, the non-landed residential sector saw an average revision of -15.3% islandwide.

Despite the large revisions to the DC Rates, Dr Chua does not reckon there would be a sudden rush by developers to reinitiate enbloc deals or change their development plans. He says “Our market understanding is that most developers had locked away the earlier DC rates when they made their planning applications to capitalize on the exemption of bay windows and planter boxes from GFA calculation prior to rescission of policy on December 31, 2008.  The savings in DC rates is not sufficient to warrant such a move”.

As predicted, the commercial sector witnessed revisions of approximately 18% in its DC rates. Key areas such as Orchard/Somerset (41) and the CBD have contracted between 15 – 17.6%. There were also corrections in some fringe areas (outside the central area) as well as sub-regional centres e.g. Little India (31), Kampong Glam/Sultan Gate (28), Marine Parade (94), Tampines/Bedok Reservoir/Bedok Nth/Kembangan (98) and AYE/Pasir Panjang/Science Park (111) all registered a 4-5% correction.

In light of the economic climate and sentiments, more corrections are expected in future DC rate revisions.