URA tightens rules to curb proliferation of shoebox units in heartlands

SINGAPORE — From Jan 17 next year, the maximum number of units allowed in new private housing projects in the heartlands will be reduced — effectively deterring developers from building an excessive number of shoebox units.

Under new guidelines announced by the Urban Redevelopment Authority (URA) on Wed (Oct 17), several new areas — including Marine Parade, Balestier and Loyang — will also be subject to more stringent requirements due to the severe strain which the “cumulative effect of new developments” could pose on local infrastructure.

URA first unveiled the guidelines in 2012 to “moderate the excessive development of shoebox units”. The tightening comes as the authorities observed shrinking dwelling unit sizes in new private housing projects.

Ms Goh Chin Chin, group director for development control at URA, said that the revised guidelines will help to manage potential strains on local infrastructure and safeguard the liveability of residential estates.

"This will also encourage developers to provide a more balanced mix of unit sizes to cater to the diverse needs of homebuyers, including large families," added Ms Goh.

URA currently sets the maximum permissible number of housing units for a development outside the central area by dividing the development's proposed building gross floor area by 70sqm. Under the new guidelines, it will be divided by 85sqm, and 100sqm for a total of nine areas.

These areas are Marine Parade, Joo Chiat-Mountbatten, Telok Kurau-Jalan Eunos, Balestier, Stevens-Chancery, Pasir Panjang, Kovan-How Sun, Shelford and Loyang. Currently, only four areas — Telok Kurau, Kovan, Joo Chiat and Jalan Eunos — are subject to stricter guidelines.

Mixed-use developments will also have to comply with the rules. Developers are encouraged to vary the sizes of the housing units that they propose in a development to cater to the diverse needs of the market, URA had previously said.

In 2012, then-National Development Minister Khaw Boon Wan cited the example of the Telok Kurau area which 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.

URA said that since 2012, it has continued to monitor the distribution of unit sizes in each development to cater to different needs, as well as the number of new developments in certain areas which can cause considerable strain on local infrastructure.

While the formula sets the limit on the number of dwelling units, the actual number that can be supported in any development will be assessed based on the site context, existing site conditions, and the impact on the local infrastructure, URA reiterated.

It will also assess the “overall layout, design and unit sizes of the development proposals, and may add other requirements where necessary to protect the quality of the living environment”.

Analysts told TODAY the new guidelines again show that the Government is monitoring the property sector closely, and is prepared to make policy adjustments when necessary.

In July, the Government announced numerous cooling measures in the form of tighter borrowing limits and higher stamp duty rates after private home prices rose more than 7 per cent in the first six months of the year. 

Knight Frank Singapore's head of research Lee Nai Jia said that the trend of shoebox units getting smaller had to "come to a stop" to prevent a surplus.

Agreeing, Mr Desmond Sim, CBRE head of research for Singapore and South-east Asia, noted that unit sizes of recent developments are getting smaller.

Smaller units tend to command higher per square foot prices, and can therefore be more lucrative for developers to build and sell.

Buyers of such units are typically drawn by their lower absolute price compared to bigger units.   

Mr Ong Teck Hui, national director for research and consultancy at JLL, said that the increase of the average unit size of 70sqm to 85sqm will generally result in “a lower number of units being built in a residential project, as well as units having bigger floor areas”.

"This is likely to have the effect of reducing the average selling price (in psf terms) of a residential project. With an increased floor area, the psf sale price of an apartment or condominium will also be lower as the developer will try to maintain an affordable absolute price for the unit."

This, in turn, will moderate the trend of rising prices, Mr Ong added.

The Real Estate Developers' Association of Singapore (Redas) said that the new guidelines could affect buyers who prefer smaller apartments.

"Developers build based on market demand to cater to the diverse needs of all segments of the market. They are building less smaller dwelling unit sizes in new private housing projects as demand for such units has reduced over the years," a Redas spokesman said on Thursday in response to TODAY's queries.

"Notwithstanding this, with the new guidelines, developers have to build bigger units which may affect the affordability of people who want to retire and downsize and millennials who want smaller dwelling units and flexible living."

URA SETS SIZE LIMIT TO CURB 'EXCESSIVELY LARGE BALCONIES'

To address public feedback that some balconies in new private homes are “oversized”, the URA announced on Wednesday (Oct 17) new guidelines to limit their sizes.

It also tweaked a Balcony Incentive Scheme introduced in 2001 to encourage balconies, private enclosed spaces and private roof terraces — collectively known as private outdoor spaces — in private non-landed residential developments.

Under the scheme, a developer can get a bonus 10 per cent of gross floor area (GFA) above the maximum permitted for development to provide such private outdoor spaces.

“The BIS was introduced to enable residents to access outdoor spaces from their homes. It also sought to facilitate high-rise greenery to improve the quality of the living environment,” said URA.

“However, we have observed that some developments today have excessively large balconies in relation to the size of the indoor spaces of a unit,” it added.

"We have also received feedback from homebuyers who prefer units without balconies that it is challenging to find such units in the market, especially in new developments."

Under the new guidelines, the bonus GFA cap for these spaces will be reduced from 10 per cent to 7 per cent.

The changes will take effect from Jan 17 next year.

Separately, the total balcony area for each unit will be capped at 15 per cent of the nett internal area.

“This will ensure that these balconies are not disproportionately large relative to the main unit,” said URA, adding that each balcony must have a minimum width of 1.5m as measured from the external building wall to enable it to function as a meaningful outdoor space.

Developers will be required to inform homebuyers of the allowable balcony screens at the point of purchase to ensure that balconies are not fully enclosed.

CBRE's Mr Sim said that when developers acquire a piece of land, say from a collective sale, the price they pay do not include the bonus GFA granted by URA.

While developers do have to pay a development charge for the "bonus" private outdoor spaces, they stand to gain by selling these spaces as part of a unit’s GFA to the buyer.

He said: "Basically, there will be a cap on the amount of balcony space to be created in a development. The balcony is being sold together with the unit, sometimes at the detriment of the buyers. They might not need so much balcony space."

On Wednesday, URA also rolled out a new scheme — which takes effect immediately — to encourage developers to build more indoor recreation spaces such as gyms, function rooms, libraries, game rooms and reading rooms.

The scheme provides bonus GFA capped at 1 per cent of the total GFA. This extra GFA is on top of what the developer is allowed to build on the site.

A spokesman for the Real Estate Developers' Association of Singapore (Redas) said on Thursday it welcomes the new scheme as "it allows developers to provide additional facilities and covered communal spaces for residents."

It also noted that the reduction of bonus GFA cap for private outdoor spaces "arose from URA’s observation that the full 10 per cent bonus GFA is not usually taken up".

"The new guideline of 7 per cent Bonus GFA cap aims to provide homebuyers more choices of units with and without private outdoor spaces and allow developers the flexibility to choose from a menu of available Bonus GFA incentives that best fit their own business needs," Redas added.