Curbs On Suburban 'shoeboxes'

angusbeef · September 7, 2012

those who bought shoebox, at least they are now comforted no more supply in OCR that could drive prices of shoebox.

Curbs on suburban 'shoeboxes'

http://www.todayonline.com/Singapore/EDC120905-0000045/Curbs-on-suburban-shoeboxes

by Sumita Sreedharan

04:46 AM Sep 05, 2012

SINGAPORE - The Government has moved to curb the supply of "shoebox" apartments in suburban areas, extending guidelines - which essentially cap the maximum number of dwelling units in a particular development - from low-density residential estates to all non-landed private residential developments outside the central area.

The move, which takes effect from Nov 4, comes as analysts note falling demand for shoebox apartments, which are smaller than 50 sq m (540 sq ft).

Under the new guidelines, non-landed private residential developments outside the central area will have to adhere to a formula which stipulates that the average size of homes in a particular development will need to be at least 70 sq m.

A more stringent cap will apply in areas which "face more severe infrastructure conditions". These include Kovan and Joo Chiat/Jalan Eunos.

An Urban Redevelopment Authority (URA) spokesperson explained that, in determining an appropriate dwelling unit size norm, it was conscious that the figure has to be "reasonable" to achieve a range of unit sizes, "while not being overly restrictive to prohibit all small units".

The spokesperson added: "We have adopted a dwelling unit size norm of 70 sq m, which is comparable to the average gross floor area of a three-room HDB flat."

By the end of 2015, the stock of completed shoebox units will increase more than four-fold, from about 2,400 units as at the end of last year to about 11,000 units.

Noting that larger households typically reside in suburban areas, URA said: "Increasingly, we are seeing some new housing developments consisting predominantly of shoebox units - as high as 50 per cent to 80 per cent.

"A large concentration of such developments can strain the local road infrastructure as the number of housing units ends up much higher than what was originally planned for."

In November last year, URA introduced a limit on the number of dwelling units for non-landed private residential developments in low-density residential estates.

A more stringent cap was also applied to Telok Kurau.

Writing on his blog yesterday, National Development Minister Khaw Boon Wan recounted how the Telok Kurau area had experienced "a rampant development of tiny shoebox units ... resulting in disamenities such as severe traffic congestion, shortage of car parks and double-parking".

"After consulting with the stakeholders, URA decided to move in, but in a judicious way, without over-regulating or stifling the creativity of developers," Mr Khaw said.

Instead of specifying a minimum floor area for an apartment, URA's approach limits the maximum number of apartments that developers can propose in a particular development.

"This way, developers are still free to build small apartments if there is demand, but there must be a good mixture of large and small units," Mr Khaw noted.

Describing URA's new guidelines as "measured and moderate", Mr Khaw added: "As regulators, we try not to interfere in the normal functioning of the market, or to second-guess it.

"But occasionally, some judicious intervention for public interest is necessary when the market outcome is less than satisfactory."In May, Mr Khaw had said that the Government is monitoring the sales of shoebox apartments and may step in if there is excessive build-up of such units.

Jones Lang LaSalle Head of Research (South East Asia) Chua Yang Liang described URA's formula as "sufficiently flexible" to allow a developer or an architect to "exercise their ingenuity and creativity to provide the optimal mix of large and small units".

Shoebox units made up 27 per cent of sales in the first quarter. The proportion dropped to 19 per cent between April and June.

Mr Nicholas Mak, Executive Director of Research & Consultancy at SLP International Property Consultants, expects the new guidelines to reduce the supply and number of transactions of shoebox units outside the central area from next year onwards.

The lower number of transactions of such apartments would "lead to further moderation" of property prices, said Mr Mak, who also noted that it is usually the smaller developers which build projects where the majority of the units are shoebox apartments.

In response to URA's latest guidelines, the Real Estate Developers' Association of Singapore (REDAS) said it "shares the Government's continual effort to maintain quality living environment in Singapore". It added: "We look forward to periodic review of the guidelines taking into consideration the changing market demand for housing."