They say URA has already been clamping down on such projects
Nov 05, 2012
New rules limiting the number of shoebox units a developer can build on suburban sites kicked in yesterday but there was little sign of a scramble by developers to submit last-minute projects.
One reason is that the authorities had already been clamping down on projects with these popular tiny homes, usually 50 sq m or smaller, for some time.
Developers said that for the past year, the Urban Redevelopment Authority (URA) has been stricter in granting approvals as the number of new shoebox units sold soared.
Developments with too many shoebox units were encouraged to increase the size of their units before provisional permission for the project was given, they added.
Industry players also pointed out that the rules do not completely stop the building of such units. They are merely a cap on the maximum number of such units. This gives developers flexibility to decide on the unit mix for each development.
Many developers had already expected a first round of rules introduced last year to be extended.
Those rules set minimum plot sizes for apartment blocks and restricted the number of homes built on certain sites such as plots in Telok Kurau.
Mr Teo Hong Lim, executive chairman of Roxy-Pacific Holdings, said that "there has not been a real panic situation", where developers are rushing their submissions before the deadline.
"Actually, the main challenge now is securing land and replenishing our landbank in this competitive environment," he added.
EL Development managing director Lim Yew Soon said that with the new rules, URA is just formalising and making official the guidelines it was probably already applying.
OrangeTee managing director Steven Tan agreed that the market had mostly already factored in this change when making purchase decisions as there was a concern among developers that the Government might further tighten the screw on existing guidelines in the shoebox segment.
Most projects already have units with an average size of 70 sq m now, he added.
In September, the Government unveiled a new policy to discourage the fast-rising number of tiny shoebox homes of typically less than 50 sq m being built outside the central city area that could lead to a strain on infrastructure.
It announced plans to place a cap on the number of homes built at each private non-landed development outside this area.
The maximum number of units that can be built is obtained by multiplying the site area by its allowable gross plot ratio, and then dividing that by 70 sq m. This works out to an average unit size of 70 sq m. The central area is unaffected.
But an even tighter cap, already in place in Telok Kurau, is being extended to Kovan, Joo Chiat and Jalan Eunos, where the average unit size is 100 sq m. These rules took effect yesterday.
A URA spokesman said the guidelines have been calibrated judiciously.
"We anticipate that the new development proposals will have a good mix of unit sizes after the guidelines come into operation," he added. "We will continue to monitor and review the guidelines periodically to ensure that the supply of housing units can cater to the diverse needs of all segments of the market."
But do not expect small units to be a thing of the past just yet.
Mr Lee Liat Yeang, a partner at Rodyk & Davidson's Real Estate Practice Group, said while developers need to build larger units to cater to home buyers, they are still likely to build small ones insofar as the new rules allow them to. This is due to the high land cost and continued demand for such units from buyers, especially investors, he said.
Some of Roxy-Pacific's upcoming projects on collective sale sites such as Jade Towers and Westvale Condominium will also consist of small units.
More than 40 per cent of units at these projects are likely to be smaller than 50 sq m. This, however, does not include air-con ledges and balconies.
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