The Singapore Land Authority (SLA) announced an increase to Land Betterment Charge (LBC) rates for the period of 1 March 2025 to 31 August 2025.
The increases in LBC rates will affect most use groups including commercial, residential, hotel/hospital, industrial and places of worship / civil and community institution. The LBC rates for all other use groups remain unchanged.
The LBC is a form of tax payable by developers when enhancing or adding alterations to a development such as redeveloping en bloc sites or intensifying the use of an existing building.
According to SLA, the average LBC rates for the place of worship / civic and community institution use group rose by 6% – the highest across all use groups. LBC rates in all geographical sectors for this use group saw a rise of between 4% to 6%.
“This is the first time that adjustments were made for this use group since September 2014, more than ten years ago,” says Leonard Tay, head of research at Knight Frank Singapore.
Table: Revised Land Betterment Charge rates across sectors for the period of 1 March 2025 to 31 August 2025 (Source: JLL, SLA)
The second-highest rise in LBC rates were in the landed residential use group. Rates in all geographical sectors in this use group saw an average increase of 2.9% across all 118 geographical sectors. This marks a slight acceleration from the 2.8% average increase seen in September 2024 where 115 out of 118 sectors saw an LBC rate increase.
The rise follows the higher landed transaction volume observed in 2024, notes Wong Shanting, head of research and market intelligence at ERA.
“With a projected higher landed transaction volume this year, the increase in LBC can help to moderate landed price increase for 2025,” adds Wong.
The increase in LBC rates could also deter homeowners seeking to redevelop their older landed properties as well as prospective homebuyers looking to purchase and redevelop older landed homes.
Meanwhile, rates for the non-landed residential use group rose by an average of 0.3%. Just nine of the 118 sectors saw an increase of 3% to 4%. This marks a reversal from the 5.4% fall in average LBC rates seen six months ago when rates in 116 sectors declined between 2% to 16%.
Only two non-landed residential sites changed hands since the last LBC rate change in September 2024. The 24-unit River Valley Apartments was sold for $56 million in Feb 21 while the 255-unit Thomson View condo was purchased for $810 million by a joint venture between UOL Group and CapitaLand Development (CDL).
“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,” remarks Chua Yang Liang, head of research and consultancy in Southeast Asia for JLL.
The highest increase seen was in sectors 19 (River Valley), 46 (Killiney), 47 (Clemenceau Avenue) and 48 (Outram Road).
“The increase in LBC rates occurred in areas where multiple government land sale sites have been sold,” points out Wong. “This may be a pre-emptive move to curb developers’ appetite for en bloc sites in these areas.”
Last year, four GLS sites were awarded in the vicinity of River Valley and Zion Road. The latest site to be awarded was River Valley (Parcel B) to GuocoLand Limited for $627.84 million ($1,420 psf ppr (per plot ratio)) in Feb 13. The homegrown developed submitted the highest of five bids for the 126,326 sq ft site when the tender closed a week prior.
Other recently awarded GLS sites in the area include River Valley Green (Parcel A) for $464 million ($1,325 psf ppr), Zion Road (Parcel B) for $730.09 million ($1,304 psf ppr) and Zion Road Parcel A for $1.1 billion ($1,202 psf ppr).
Connectivity in the River Valley and Lentor area were also enhanced with the new Thomson-East Coast Line. “This ultimately resulted in higher land values in the surrounding,” adds Wong.
The LBC rates for commercial land will increase 0.6%, underpinned by a 2% to 6% rise in 22 out of 118 geographical sectors. The rise is a moderation of the 1.5% average rate increase seen last September when LBC rates in 52 sectors rose 3% to 5%.
The rate increase for this use group is mostly targeted in the Orchard Road, Stemford Road and River Valley areas.
“The rise in LBC is likely due to the increase of strata commercial property prices around City Hall/Bugis and Orchard Road,” says Knight Frank’s Tay. “With the limited supply of new strata office spaces in central locations, the demand for affordable boutique and smaller office remained robust.”
The move can be seen as a pre-emptive measure considering developers’ redevelopment intentions in the area, says ERA’s Wong. “Government agencies may be aiming to prevent mass redevelopment in the area, which could lead to an inflation in prices.”
In November last year, Hotel Properties Limited (HPL) bought Concorde Hotel and Shopping Mall for $821 million ($1,804 psf). It was one of the largest collective sale deals of the year. The ageing Far East Shopping Centre along Orchard Road was also offered for sale at $908 million. However, the deal was aborted in April 2024 after failing to secure URA approval to redevelop the property under the Strategic Development Incentive (SDI) scheme which would have allowed it to obtain an additional 20% gross floor area.
Rates for the industrial uses rose the least; by an average of 0.1%. The rise stems from a 4% to 9% increase in 13 out of 118 geographical sectors.
Overall, the refreshed LBC rates is unlikely to have any significant impact on the market trend nor shift developers’ and investors’ confidence in the overall property investment market, concludes JLL’s Chua.
“Developers remain cautious given the high cost of redevelopment and policy risks,” says Tan Hong Boon, executive director of capital markets at JLL.
