Average Land Betterment Charges 28 Landed Down 54 Non Landed Housing

The newest Land Betterment Charge (LBC) rates for the period of 1st September 2024 to 28th February 2025 have been released by the Singapore Land Authority. According to the latest rates, most use groups are seeing an increase in LBC rates, including commercial, residential (landed), and hotel and hospital use groups. In contrast, the LBC rates for the residential (non-landed) use group have declined.

For the non-landed residential use group, the average LBC rates have decreased by 5.4%. This is a significant drop from the slight increase of 0.1% in March. Chua Yang Liang, head of research and consultancy for Southeast Asia at JLL, believes that this decline is due to the cooling measures in the property market, high interest rates, and the unstable global geopolitical climate. This has resulted in a loss of investor and developer confidence in this market.

Overall, Chua estimates that there will be an average decline of 13% in land values across the island. This is mainly due to recent government land sales in Sectors 108, 112 and 115 (Holland Road/Dunearn Road/Sixth Avenue, West Coast Road/Jurong East, Sembawang/Mandai/Woodlands). Chua notes that the decline in LBC rates for the non-residential sector, by an average of 5.4%, is not surprising.

Over 90% of the sectors (116 out of 118) have registered a decline in LBC rates, with some sectors seeing a decrease of up to 16%. Sector 108 (Commonwealth/Queen Astrid/Watten) saw the biggest decline of 15.4%. Lee Sze Teck, senior director of data analytics at Huttons Asia, believes that this is due to the subdued land sales market in the past six months, high interest rates, construction costs, and modest take-up of new condo launches.

With the increase in government land sales (GLS), there have been more sites sold between March and August. However, the land bids have been within expectations, taking into account the different operating environment, says Lee. He also notes that if the expected lower US interest rates lead to a decrease in borrowing rates in Singapore, this could potentially increase demand and prices in the market. However, developers are still expected to remain cautious in their bidding for land, so Lee believes that LBC rates for non-landed residential properties will remain stable.

The lower LBC rates for the non-landed residential use group are not expected to lead to an increase in en bloc sales. For the landed residential use group, LBC rates increased by an average of 2.8%, in comparison to the 7.8% hike during the last review in March. Over 97% of the sectors (115 out of 118) saw an increase in LBC rates of around 3%, with the remaining three sectors seeing no change. Lee attributes this increase to a pick-up in landed transactions and high-value deals in the Good Class Bungalow (GCB) market. The biggest GCB deal by quantum during this period was the sale of an uncompleted GCB in Tanglin Hill for $93.3 million.

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In the commercial group, LBC rates have edged up by an average of 1.5% as compared to the 3.8% increase in March. Around 44% of the sectors (52 out of 118) saw an increase in LBC rates, ranging from 3% to 5%, while the remaining 66 sectors remained unchanged. According to Lee, there has been slightly more interest in this segment, with some assets linked to the money laundering case that concluded during this period. Some of the high-value deals in this sector include the sale of Paragon REIT’s The Rail Mall along Upper Bukit Timah Road, a 999-year leasehold three-storey shophouse at 182 Telok Ayer Street, and strata-titled units at the freehold Grade A commercial development Solitaire on Cecil in the CBD.

Chua from JLL expects the planned US interest rate cut to “lift the fog of uncertainty clouding the investment markets in and around Asia”. In recent months, there have also been several notable sales of commercial buildings, including 30 Prinsep Street by Income Insurance for $142 million, Mapletree Anson by Mapletree Pan Asia Commercial Trust for $775 million, and 20 Harbour Drive by Mapletree Investments for $160 million. Chua comments that JLL is not surprised by the average 1.5% increase provided by the chief valuer.