Wednesday, March 27, 2013

New limits on shoebox units in malls

The Business Times  |  MARCH 27, 2013
Malls being proposed must have an average shop size of at least 50 sq m

The Urban Redevelopment Authority (URA) has put a limit to the number of shoebox shop units in future malls, in a move that analysts say could cut speculation in such properties.

From today, proposed malls must have an average shop size of at least 50 sq m. So developers who want many shoebox units - from 9 sq m to 25 sq m - must balance them with bigger ones.

Property analysts say the measure will reduce speculation in commercial properties, which were left largely untouched in the recent cooling measures.

The URA said yesterday that over the last two years, it has received a growing number of proposals to build malls featuring mainly shoebox units, some just 9 sq m - smaller than a carpark lot.

While it did not say how many of such proposals it got, the URA noted that in many cases, the proposed number of shops was more than 10 times what was in the original development.

In a post on his blog yesterday, National Development Minister Khaw Boon Wan hinted that the new rule was to stop developers from targeting investors rather than those looking for a shop.

"If these shops are not suitable for most retailers, then the developers' motive is probably to target individual property investors rather than genuine retailers."

Property analysts like Mr Chris Koh noted that higher stamp duties on residential and industrial properties have turned mass-market investors to commercial properties. "These investors would not be able to afford large spaces, and developers are quick to offer them alternatives," he said.

Typically, the price of retail space is about two to three times that of nearby residential areas.
A recent report by HSR property consultants showed that $109.6 million worth of small strata shop units - 15 sq m or less - were transacted last year, up from $40.5 million in 2011 and $20 million in 2010.

While the URA noted that smaller units cater to shops such as florists and money changers, it said there was a need to ensure a good range of sizes "to meet genuine retailers' space needs... and to serve the public better".

More small retail spaces also means more employees, adding to traffic woes. The URA also wants wider corridors to reduce human congestion during peak periods.

Developer Chip Eng Seng group's chief executive Raymond Chia said Alexandra Central, his firm's latest development, has an average shop size of less than 50 sq m. Of the 115 units, some 20 per cent are shops measuring 15 sq m or less. An estimated 20 buyers bid for each unit when it was launched in January. "Not everyone snapping up small shops is an investor," he said.

But the company's upcoming Yishun project will adhere to the new guideline. "At the end of the day, we too don't want a mall comprising mostly smaller shops, as it isn't good for the image of the development," he said.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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