The latest Land Betterment Charge (LBC) rates for the period between 1 Sep 2024 to 28 Feb 2025 have been released by the Singapore Land Authority. The results show an increase in LBC rates for most use groups, including commercial, residential (landed), and hotel and hospital use groups. However, there was a decline in LBC rates for the residential (non-landed) use group.
In the residential (non-landed) use group, there was an average decrease in LBC rates of 5.4%, which is a shift from the 0.1% increase that was seen in March. According to Chua Yang Liang, JLL’s head of research and consultancy for Southeast Asia, this drop can be attributed to cooling measures in the property market, high interest rates, and global geopolitical risks, which have caused a decline in investor and developer interest in this sector.
Overall, it is estimated that land values across the island have decreased by an average of 13%, largely influenced by recent government land sales in Holland Road/Dunearn Road/Sixth Ave, West Coast Road/Jurong East, and Sembawang/Mandai/Woodlands (Sectors 108, 112, and 115). Chua notes that it was not surprising to see an average decline of 5.4% in LBC rates for the non-residential sector.
According to Chua, over 90% of the 118 sectors registered a decrease in LBC rates, ranging from 2% to 16%. The sector with the biggest decline was Sector 108 (Commonwealth/Queen Astrid/Watten), which saw a drop of 15.4%. Lee Sze Teck, Huttons Asia’s senior director of data analytics, attributes the decline in LBC rates to the weak land sales market in the past six months, due to high interest rates, construction costs, and slow take-up of units in new condo launches.
However, the increase in government land sales (GLS) has seen more sites being sold between March and August, with bids that were in line with market expectations. According to Lee, the anticipated decrease in US interest rates could lead to lower borrowing rates in Singapore and may prompt buyers who have been waiting on the sidelines to enter the market, resulting in an increase in demand and prices. Despite this, he believes that developers will still exercise caution when bidding for land, meaning that LBC rates for non-landed residential properties are expected to remain stable.
The decrease in LBC rates for non-landed residential use is not likely to lead to a surge in en bloc sales. On the other hand, LBC rates for the landed residential use group have seen an average increase of 2.8%, compared to the 7.8% hike in the last review in March. Over 97% of the 118 geographical sectors saw an increase in LBC rates of approximately 3%, with the remaining three sectors showing no change. This rise can be attributed to an increase in landed transactions and high-value deals in the Good Class Bungalow (GCB) market. The largest GCB deal by quantum during this period was the sale of an uncompleted GCB in Tanglin Hill for $93.3 million.
LBC rates for the commercial group have also increased, with an average rise of 1.5%, compared to the 3.8% increase in March. Approximately 44% of the 118 sectors saw an increase in LBC rates, ranging from 3% to 5%. This growth can be attributed to increased interest in the commercial sector, with some assets being linked to a money laundering case that was concluded during this period. Notable high-value deals include the sale of The Rail Mall by Paragon REIT, a three-storey shophouse at 182 Telok Ayer Street, and strata-titled units at Solitaire on Cecil in the CBD.
The demand for condos in Singapore continues to soar due to the country’s limited land availability. As a small but densely populated island, Singapore has been facing challenges in finding land for development. This has prompted the implementation of strict land use policies and a fiercely competitive real estate market, resulting in constantly rising property prices. As a result, investing in real estate, particularly in condos, has become a highly attractive option for potential investors, thanks to the potential for considerable capital appreciation. For more information on Singapore projects, visit Singapore Projects.
JLL’s Chua expects that the anticipated decrease in US interest rates will help to alleviate some of the uncertainty in the investment markets in Asia. In the past few months, several commercial buildings have been sold, including 30 Prinsep Street by Income Insurance ($142 million), Mapletree Anson by Mapletree Pan Asia Commercial Trust ($775 million), and 20 Harbour Drive by Mapletree Investments ($160 million). He adds that the average 1.5% increase provided by the chief valuer was not surprising.