The commercial property sector is forecasted to be dim with a huge supply of new office spaces, softening real estate market, for commercial occupier end and for residential units due to the cooling measures.
Similarly, the situation for industrial segment is not rosy. The Ministry of National Development has stepped in to assist by lowering the development charge rates for the period 1 March to 31 August 206. Development charge rates are government-imposed charges on the owners of the land or the person who applied for planning permission. The impact could be rezoning for the site to be valued higher or an increased in plot ratio. These rates are revised twice a year.
Four use groups; commercial, non-landed residential, hotel/hospital and industrial were affected significantly. There is no change for the rates for landed residential, place of worship and community Institution.
On average, the rates for the commercial sectors ranged from 2 to 5 percent with the largest applying to the central business district in areas of Raffles Place, Dhoby Ghaut and Marina Bay. This is likely due to worsening of Office Grade A units by ten percent year on year.
Rates for hotel and hospital decreased by an average of two percent.
Rates in the industrial segment declined on a range from 3 percent to 16 percent. Sector 114, which includes sites in Sungei Kadut, Boon Lay and Jurong West, has the largest decrease of 16 percent. Some sectors had two consecutive corrections for their DC rates.
The deterioration of the DC rates is expected since the property market is getting soft.
These moves strongly suggest the real estate prices could continue to edge down for 2016. Looking forward, this could encourage owners to intensify the use of land and be creative in increasing the potential of the land.