Policy easing keeps developers keen on en bloc sites despite higher charges

Landed residential LBC rates rise 3.5%, whilst non-landed rates climb 3.4%. 

Developers are expected to remain interested in redevelopment and collective-sale projects despite higher Land Betterment Charge (LBC) rates, as recent policy changes have eased some of the added cost pressure, property consultants said.

The latest rates, which apply from 1 September, increased by an average of 3.5% for landed residential sites and 3.4% for non-landed residential sites. Commercial rates rose 1.7%, whilst industrial rates rose 3.9%.

The residential increases were slower than in the previous six-month review, when landed and non-landed rates rose 4% and 4.1%, respectively, according to CBRE.

The moderation comes as the government eased redevelopment rules, including longer Additional Buyer’s Stamp Duty remission periods for larger collective sales and lower consent thresholds for some older developments.

“The easing in LBC rate increases this cycle bodes well for the rejuvenation efforts and should not dampen en bloc activities significantly,” said Tricia Song, CBRE head of research for Singapore and Southeast Asia.

Huttons Asia shared a similar view, saying the mild increase is unlikely to discourage developers from acquiring collective-sale sites.

“However, a realistic selling price and location attributes of the development are still key determining factors for a successful collective sale,” Mark Yip, CEO of Huttons Asia, said.

Yip said developers continued to compete for government land as they built up their project pipelines. He pointed to sites including Kallang Close, Dunearn Road, Dover Drive, River Valley Green and Peck Hay Road, which drew bids between March and August.

CBRE said the sharpest non-landed residential rate increases were linked to the Kallang Close government land sale site, which attracted four bids and was awarded at $1,415 per square foot per plot ratio. Rates in neighbouring sectors 55 and 56 increased 23.6%.

Separately, Knight Frank expects landed home prices to rise by around 3% to 5% this year, with demand remaining healthy, particularly for homes priced between $5m and $10m.

Industrial properties recorded the largest average LBC increase at 3.9%, with rates rising across all sectors.

Leonard Tay, head of research at Knight Frank Singapore, said investment in facilities for advanced manufacturing, artificial intelligence infrastructure and logistics automation is expected to remain firm.

Manufacturing fixed-asset investment commitments rose 124.8% quarter on quarter to $5b in the second quarter from $2.2b in the first, largely driven by electronics investments, Tay added.