Land Betterment Charge Rates Adjusted for Non-Landed Residential Use
Recent changes to the Land Betterment Charge (LBC) rates reflect the evolving dynamics in Singapore’s property market. LBC rates for non-landed residential use will see a decline in the coming months, while rates for other key property types, including landed residential, commercial, and hotel developments, will rise but at a slower pace.
These changes come in the wake of subdued bids for Government Land Sales (GLS) plots, a trend attributed to a mix of factors such as ongoing property cooling measures, high interest rates, and geopolitical uncertainties. According to Dr. Chua Yang Liang, JLL’s head of research and consultancy for South-east Asia, these conditions have contributed to a decline in developer interest, particularly in the non-landed residential sector. However, there is still optimism, particularly in the commercial and hospitality sectors, where land values have seen some growth.
For non-landed residential developments, the LBC rates are set to drop by an average of 5.4% for the period from September 1, 2024, to February 28, 2025. This adjustment follows a slight increase of 0.1% in the previous period and signals a cautious outlook for the residential market. The decline is largely due to weaker land values in areas like Holland Road, West Coast Road, and Sembawang, where recent GLS tenders have been conservative.
Despite the lower LBC rates, property experts like Mr. Lee Sze Teck, senior director of data analytics at Huttons Asia, suggest that this will not necessarily lead to a surge in collective sales activities. The market remains subdued, with factors like high construction costs and modest sales at new condo launches contributing to the cautious environment. However, a potential future cut in interest rates by the US Federal Reserve could lead to an uptick in demand, prompting developers to replenish their land banks sooner than expected.
In contrast, landed residential properties are experiencing a more modest increase in LBC rates, up by 2.8% on average. This is driven by a recent increase in transactions, particularly in the Good Class Bungalow (GCB) market, which has seen record-breaking deals.
Commercial property LBC rates will also see a slight rise of 1.5%, while rates for hotels and hospitals will increase by 0.6%. Industrial properties, places of worship, and other specialized land uses will see no change in their LBC rates.
While these adjustments might not have an immediate significant impact on the market, they do underscore the need for investors to consider broader economic and geopolitical factors when making decisions. The outlook is cautiously optimistic, with some areas of growth, but also potential challenges ahead due to ongoing global uncertainties.
By staying informed about these changes, property developers and investors can better navigate the evolving landscape and make more strategic decisions in the coming months.
