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It’s a tax imposed by the authorities when planning permission is allowed for development projects that raise the value of their property, for example via rezoning to a higher value use, or an increase in plot ratio, or both.
Residential
Sectors 97 and 98 seen the maximum growth of 6.3%, which might result from the purchase of this Government Land Sales sites at Tanah Merah Kecil Link where bidding has been hotly contested, notes Catherine He, associate director of CBRE Research.
Furthermore, Tay Huey Ying, head of consultancy and research, Singapore, states that the upwards adjustment”has probably been fuelled from the strong 3.0% q-o-q growth in the URA’s residential non-landed PPI in 4Q2020, and developers’ growing appetite for residential development land in 2H2020″.
For landed home, DC prices are increased by a mean of 1.5% considering holding apartment from March 2018. “This is very likely to happen to be underpinned by the 2.1% y-o-y growth in URA’s landed residential house price index (PPI) at 2H2020,” says Tay.
She finds that though the landed residential PPI dropped 1.6% q-o-q in 4Q2020, the index jumped 3.7% q-o-q in 3Q2020. The landed residential prices were retained unchanged in August 2020. March’s upward adjustment in acquired residential DC prices reflects the market moves.
Commercial
By March 1, DC prices for business improvements will be revised by a further 1.5%, once they had been reduced for the first time in four years at September 2020. The present downward revision was because of the”lower degree of commercial transactions occurring”, says CBRE’s He. 60 from those 118 registered a decrease in DC prices, which range from 2% to 3%.
That is in accord with the market trends for your retail and office property markets, each of which are still facing headwinds by the effect of the Covid-19 pandemic, notes JLL’s Tay.
The biggest reduction of 3% has been applied to businesses from the central area, and He considers that this will inspire the redevelopment of older buildings in the central region, particularly the ones that qualify for the Strategic Development Incentive and CBD Incentive Scheme.
JLL’s study also shows that Grade-A CBD office rents remained on the downtrend at 4Q2020, decreasing 2.7% q-o-q, notes Tay.
On the upside, Tay claims that investment grade retail and office properties are still garner shareholders’ interest regardless of the short-term challenges. She stocks that according to data accumulated at Feb 26, a few $4.37 billion worth of commercial assets were transacted throughout the DC review interval between September 2020 and this February, that will be roughly 57% greater compared to $2.78 billion realized in the past six months.
Hotel
The hotel industry is hardest hit by the pandemic, with decreasing tourist numbers and earnings. DC prices have remained unchanged following a sizable downward adjustment of 7.8% on average before.
Commercial
Tay states this might be since the Chief Valuer believed the”thin fascination seen for industrial GLS plots throughout the DC review period”, in which there was just one successful tender for 20-year leasehold package at 160 Gul Circle.
CBRE’s He anticipates that occupier and investor sentiments will improve, which might cause a restoration in real estate activity, particularly in the residential and business sectors. Because of this, there could be transaction activity, resulting in greater alterations to DC prices.