Revision of development charge rates for the period 1 September 2021 to 28 February 2022
The government has increased the development charge (DC) rates for landed by 6.3 per cent and 10.9 per cent for non-landed residential use groups on the average. This is the second consecutive increase for both groups, after a milder 1.5 per cent rise for landed and 0.3 per cent rise for non-landed residential use starting March 1. The steeper revision was likely prompted by the brisk private home sales with new price points in certain locations, as well as bullish top bids in recent government land sales (GLS).
The higher residential DC rates will add to the development costs of new condominium projects, leading to higher property prices for buyers. It will also affect the collective sale market, where it will shave off value for residential en bloc sellers, while raising the costs for developers to intensify land use at the same time.
As for commercial use, DC rates will be trimmed by 0.7 per cent on average, milder than the 1.5 per cent reduction during the previous revision that took effect on March 1. This could be attributed to a turnaround in office rents and prices, even though retail rents and prices have yet to recover from the pandemic-related measures.