Average of 7.8% increase for landed property segment
The land betterment charge (LBC) for landed residential property was raised by an average of 7.8% across 116 geographical sectors, with only Jurong Island and Pulau Ubin/Tekong unchanged. Leonard Tay, head of research at Knight Frank Singapore, attributed the increase to the URA price index for landed homes rising 8% for 2023, indicating the “evergreen demand” for such properties.
Leonard Tay, head of research at Knight Frank Singapore, said: “Newly developed landed homes by boutique developers, while costly due to elevated material and construction costs, continue to appeal to buyers when weighed against the option of rebuilding aged properties themselves.”
CBRE notes that 13 sectors saw the most significant increase of 8.4%, including Sector 65 (Trevose/ Merryn/ Kheam Hock/ Tudor/ University/ Camden) and Sector 109 (King Albert/ Holland/ Turf Club). Sector 108 (Commonwealth/ Queen Astrid/ Watten) recorded a rate increase of 8.1%. All three sectors saw a healthy number of GCB and landed transactions, says Song.
Two other GCBs were also transacted in Sector 109: the GCB at 56 Garlick Avenue fetched $19.5 million ($1,885 psf), and 20A King Albert Park was sold for $24.80 million ($1,619 psf).
Developers pay land betterment charges (LBC) for the right to enhance the use of some sites or to build bigger projects on them.
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.
At the other end of the spectrum, LBC rates were raised by 14 per cent in the West Coast/Clementi area, and by 10.7 per cent in the Braddell/Toa Payoh area.
CBRE’s head of research for Singapore and South-east Asia, Tricia Song, said: “The polarised performance mirrored the contrasting sentiments between suburban and non-suburban sites seen at state land tenders over the past six months.”
“In particular, the weaker-than-expected bids for the prime Orchard Boulevard site brought down the rates for its surrounding areas, while the better-than-expected bids for Toa Payoh and Clementi sites boosted rates for their respective sectors.”
Market watchers note that the divergence in sentiment between the suburbs and prime locations has resulted from the doubling in the additional buyer’s stamp duty (ABSD) rate to 60 per cent on foreign buyers of private homes in Singapore in April last year. Traditionally, foreign buyers have featured more prominently in the prime residential property market in Singapore.
(Source: EdgeProp / The Business Times)