DC fees dip the most by 7.8% for Lodge/Hospitality

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Normally, DC prices are reduced across various use classes, with the exclusion of businesses at the residential, acquired team.

The development fee is payable if planning consent is given to the evolution of projects that raise the value of their property, like rezoning to a greater usage or raising the plot ratio. The prices are assessed on a half-yearly foundation in consultation with the Chief Valuer.

Back in 1H2020, there have been also few funds market transactions for its Chief Valuer to possess”the ideal comparables”, says Desmond Sim, head of study (Southeast Asia) in CBRE. Nonetheless, Sim considers the weak occupier marketplace in many sectors might have prompted the Chief Valuer to create minor downward tweaks into the DC prices for specific businesses.

Hotel/Hospitality

Group C (Hotel/Hospitality) saw the biggest average decrease of 7.8%, followed closely by Group A (Commercial) which dropped by 3.6% normally.

Despite a dearth of true resort trades, we now have the decrease in DC prices is reflective of their working requirements for hotels awarded the sharp declines in global travel and earnings,” says Song.
Moreover, the biggest decrease of 15% has been seen in businesses with higher resort density, including City Hall, Fullerton Road, Marina Bay Sands and Orchard Road regions, ” she adds.

There’s been a shortage of hospitality prices this season, a stark contrast to 2019, which saw a record amount of $5.7 billion of hospitality trades take notes .

Commercial

The Chief Valuer has cut DC prices for industrial usage by 3.6% normally. Sim finds that it’s become the very first time in four decades because DC prices are reduced for Group A (Commercial).

Colliers’ Song notes that the most significant reduction of 7% applies to businesses that have high concentration of retail and tourists malls, for example Marina Bay Sands, the Bayfront region and Orchard Road.

Tay Huey Ying, head of consultancy and research in JLL Singapore concurs, adding that traveling natives had retained overseas visitors away while nationally shoppers have turned into e-commerce or purchasing at suburban regions since work-from-home was falsified throughout the Circuit Breaker period.

On the upside, Leonard Tay, head of research at Knight Frank Singapore states the drop in DC prices in Group A (Commercial) might have been cushioned from the office industry, which will be”more resilient to the first effect of the pandemic when compared with the retail industry”.

Song claims that industrial and residential properties are comparatively more resilient than retail and hotel properties, reflected from the milder declines in DC prices.

DC prices for its residential (non-landed) category have decreased by 0.8% on average, the fourth successive time prices are lowered. Song considers that the cuts could be on account of comparatively muted Government Land Revenue bidding, feeble collective earnings market, along with the overall slower economic prognosis.

“Most government property sales have their tender final dates extended,” adds Song. Back in March, three GLS websites shut: Canberra Drive website B and A saw four and five bids with high bid costs of $644 and $650 psf ppr respectively, below market expectations. The Executive Condominium website at Fernvale Lane obtained 7 bids with a high bid of $555 psf ppr.

JLL’s Tay points out that DC speed reductions in the residential usage group happen mostly from the RCR places. “The Chief Valuer might have obtained cue in the URA’s non-landed residential house price index (PPI) fad which revealed that RCR was the only area which experienced a q-o-q drop in non-landed home made PPI at 2Q2020,” she adds.

She doesn’t anticipate the decreased DC prices to re-energise the residential collective earnings market, because developers nevertheless have large unsold stock built up in the previous boom.

Industrial

Concerning the industrial DC prices, it’s decreased by 0.9% normally. “The normal decline is comparatively mild, representing the relative strength of this industrial land,” she adds.
Industrial applications such as data and logistics centers have been relatively resilient, says Song. But, other sections of industrial usage are influenced by international supply chain disruption because of the pandemic.