New URA guideline to curb shoebox units in central area

There is a need to ensure a good mix of dwelling unit sizes in the area to cater to different household sizes and segments, said URA. PHOTO: ST FILE

SINGAPORE – A new guideline was introduced on Tuesday to curb the proliferation of shoebox units in non-landed private residential projects in the central area, and to ensure there will be sufficiently large units built to encourage more families to move there.

With effect from Jan 18, 2023, all flats and condominiums within the central area, as well as the residential component of commercial and mixed-use developments, will be required to provide a minimum of 20 per cent of dwelling units with a nett internal area of at least 70 sq m, the Urban Redevelopment Authority said.

This comes as the URA has seen “a persistent trend in declining dwelling unit sizes in the central area,” which is in conflict with its planning intent to position this area as an attractive place to live, work and play.

The central area covers 11 planning areas including Outram, Newton, River Valley, the Singapore River, Marina South, Marina East, Rochor, Orchard and the Downtown Core, Huttons Asia said.

In a bid to encourage more live-in population in the central area, the URA said there is a need to ensure a good mix of dwelling unit sizes there to cater to different household sizes and segments.

Ms Catherine He, director and head of research for Singapore at Colliers, called this a timely development.

“As of the third quarter this year, the median area for new residential units in the central area has dropped to 73 sq m from 94 sq m in the third quarter of 2017, as the central area was exempted from the previous guidelines,” Ms He said.

Developers may also be maximising land efficiency to cope with rising land costs, she said.

“Without this guideline, there might be an overwhelming number of smaller units left on the shelf,” she added.

In 2018, the URA cut the maximum number of units allowed in new private flat and condo developments outside the central area in a bid to manage potential strains on infrastructure.

The minimum average unit size for such developments outside the central area went up from 70 sq m to at least 85 sq m. The new guidelines applied to new development applications for projects submitted on or after Jan 17, 2019.

Other analysts said Tuesday’s new rule may not have significant market impact as many new developments in the central area already include a number of big units, and buyers of such units usually have the financial means to do so.

However, as this guideline will result in fewer smaller units built in the central area, investment property buyers may need to shell out more for such units in future, said Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie.

Mr Ong Teck Hui, JLL’s senior director of research and consultancy, said the new guideline is unlikely to affect high-end developments, which typically have bigger and more luxurious units.

“But some smaller projects tend to feature more small units to attract buyers with a limited budget. Developers who rely on such a sales strategy will have to provide a higher proportion of bigger units,” he said.

The new rule is unlikely to affect sale prices in the central area, as 64.3 per cent of this area’s new sale transactions in the first three quarters of 2022 were of units of 70 sq m or larger, Mr Ong noted.

But smaller collective sale sites in the central area may have to temper their asking prices, Huttons Asia senior research director Lee Sze Teck said.

He believes several collective sale sites in the central area and in Marina Gardens Lane may be affected.

“Together with the increase in land betterment rates and changes to how gross floor area is computed, the costs to developers will rise and eat into their margins,” Mr Lee said.

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