Land betterment charge rates for Landed Residential (B1) rose islandwide

Dr Chua Yang Liang, Head of Research and Consultancy, Southeast Asia

蔡炎亮博士, 研究与咨询部主管 (东南亚) commented:

The latest Land Betterment Charge (LBC) for the period 1 Mar 2025 to 31 Aug 2025 released by the Singapore Land Authority saw upward adjustments to the average LBC rates across the Commercial (A), Landed Residential (B1), Non-Landed Residential (B2), Hotel (C) and Industrial (D) use groups.  Landed Residential (B1) recorded the most impact at 100% of the 118 sectors islandwide, followed by Commercial (A) at 19%, and Hotel (C) with 11% registering an increase.

Key sectors and their magnitudes of change are tabulated. Four use groups (Commercial A, Landed Residential B1, Non-Landed Residential B2, Hotel C and Industrial D) exhibited average increments of between 0.1% and 2.9%, with the broadest change (3.8% to 8.8%) recorded by the Hotel (C) use group, and the most minor variation in the Landed Residential (B1) use group (2.6% to 3.7%).

“These recent changes articulated the underlying mood in the Singapore land market, and the Chief Valuer would have used transactional evidence to support the market assessment. Strong upward pressure on the landed housing market could have motivated the Chief Valuer to increase LBC rates across all 118 sectors. In contrast, the lingering upward pressure on values, albeit weaker, is reflected in the marginal upward revision to LBC rates for the commercial sectors, despite no evidential transactions of the underlying land values. 

The effect of this latest change should not adversely impact the overall market activities since this Land Betterment tax affects developments with increased development intensity and land values.

The recent spate of US trade policy announcements has added to investors’ short-term anxiety over the investment climate in Asia. However, the affirmative longer-term structural trends provide the support that long-term investors such as pension and core funds are positioned for.

We expect investment activity in the short-term to remain reserved, which should limit upward adjustment to the LBC rates, especially in the following review.” opines Dr Chua.

A more detailed analysis of the significant changes and our views are provided below.

Based on recent transactional evidence, we expected some modest increase in LBC rates for this sector as the lingering demand continues to support some revision in land values. The average 2.9% increase exceeds our expectations of 1-2%. All 118 sectors registered some increase ranging from 2.6% to 3.7%. Based on our analysis of recent property transactions, a continual rise in land values of over 20% were recorded, particularly for landed homes in Sector 108 and 113 (Holland Rd/Dunearn Rd/Sixth Ave, Bt Batok/Jurong Rd).

On the non-landed front, the transactional activity is limited to the collective sales of River Valley Apartments in Sector 71 (River Valley/Jln Mutiara/Kay Poh/Shanghai Rd) and Thomson View Condominium in Sector 107, which registered land value increases. Overhanging property cooling measures, the high cost and interest rate environment, and overarching global economic and geopolitical risks continue suppressing investors'/developers' appetite for this market despite the recent increase in non-landed transactions by homebuyers.

Overall, we had estimated an average of 0-1% at best. The overall average revision of a mild 0.3% in land values across the island, despite being weighed down by weakness in recent government land sales sites in Sectors 112 and 113 (West Coast Rd/Jurong East, Bt Batok/Jurong Rd), is, therefore, of no surprise. Only 8% of sectors registered some increase, with the most significant increase of 4.4% recorded in Sectors 19, 46, 47 and 48.

On the commercial (use Group A) segment, the same global economic tardiness and rising geopolitical risks have left global foreign investors and occupiers in a cost-conscious mode. Occupiers have remained cautious and controlled costs through renewal with smaller footprints, if not relocate to cheaper locations. Previously, we had anticipated improvement in market sentiment when US rates are lowered, but that is increasingly unlikely. Regional cross-border funds have been active in Asia, but global investors, in general, still prefer better asset yields in their home country than those offered in Singapore.

In our observation, no reliable transactions for development purposes warrant any significant changes to the commercial land values. We are not surprised by the average 0.6% increase provided by the Chief Valuer. The most significant gains of over 4-6% are recorded in the Orchard area (Sectors 41-43), assumingly inspired by the equity transaction of Ion Orchard.

The uncertain external trade demand ahead has also affected developers' confidence in our industrial sector. Of the limited transactional evidence, a handful showed a contraction in land values. We are unsurprised that the Chief Valuer has kept the industrial rates relatively stable, with an average adjustment of 0.1% across six out of 118 sectors.

The key takeaway is these refreshed rates would not have any significant impact on the market trend nor shift developers' and investors' confidence in the overall property investment market. The LBC reflects the underlying land valuation. 

"While the collective sale market has seen some recent successes, this recent LBC adjustments, will not move the needle much. Overall, developers remain cautious given the high cost of redevelopment and policy risks.” opines Tan Hong Boon, Executive Director, Capital Markets, JLL.

“With sufficient Government Land Sale supplies in the pipeline currently, it is imperative that collective sale sellers remain realistic in their asking prices if they want to close the deal." Hong Boon further added.