New Building Guidelines in Singapore

This ruling will make it even more difficult to en bloc terraces and semi-detached homes. It will make it compulsory for almost 100% of terrace owners to agree to a collective sale. Imagine there are 10 units of terraces of 1500 sf each that a developer wants to buy. 9 of them agree and one brokeaway. The combined size of 9 units may be 13,500 sf, enough to make a smallish apartment or condo, but since the single unit is less than 10,000 sf, the deal cannot go ahead.   The second ruling warns us against buying any property below 1.4x plot ratio. Developers generally buy properties at "future" prices and then rebuild into much smaller units, selling them at as much as double the price. This ruling will set a minimum size for redeveloped land with a ratio of 1.4. The scam in the last 5 to 6 years has been this: Developers instead of selling a 1000 sf unit for 1000 psf and get 1m in revenue, break the unit into 2 and sell them for 1800 sf, making them cheaper in quantum at 900k per unit. But the developer earns 1.8m. Only silly Singaporeans and foreigners who are keeping their cash here will do that. Perversely, the Singaporeans may not be that dumb because they know that foreigners will buy anything just to keep their cash here. But think of it this way, if there is another Asian crisis, the foreigners may decide to sell these units at 20% below their cost price. If the rental yield is not high, the price could fall very quickly. This is likened to a house of cards.   I am very curious how the Singapore residential sector will pan out over the next 2 to 3 years. I have some hunches but will keep the cards close to my heart.   Published November 25, 2011

New building guidelines take effect Guidelines will only affect new applications By MINDY TAN A MINIMUM plot size requirement of 1,000 square metres and a guide on the maximum number of dwelling units (DUs) for non-landed residential estates were put into effect by the Urban Redevelopment Authority (URA) yesterday. According to the new guidelines, the minimum plot size requirement for flat developments island- wide is now 1,000 sq m (about 10,763.9 sq ft), with the view to provide more space for landscaping and communal facilities. In addition, for all breakaway proposals from existing landed housing for either flat or landed housing developments within non-safeguarded landed housing areas, the aggregate land area for the left-behind plots must also satisfy the minimum plot size. The impact of this guideline will be felt particularly in the area of en bloc sales for landed housing, noted Tang Woon Ee, partner at Rodyk & Davidson. Citing the example of a breakaway development for a row of terrace houses, she noted that there have been cases of a plot being redeveloped into a block of apartments, with a small, adjoining landed property. 'This will put a stop to this practice, unless the adjoining piece that doesn't want to take part in the collective sale is of that minimum size of 1,000 sq m,' she said. Separately, a guide on the maximum number of DUs for flat and condominium developments within GPR (gross plot ratio) 1.4 residential estates was introduced. The DU guide is also applicable to residential components of mixed-use developments, within GPR 1.4 residential estates, and other low-rise, low-density residential areas. A more stringent formula was developed for areas such as Telok Kurau Estate, which has seen a rapid injection of a large number of units, resulting in significantly higher traffic volumes along the existing narrow local access roads, noted URA. 'If the number of units are being restricted, on average unit sizes will be larger. For developers looking to achieve the same per square foot pricing, you are looking at a higher total quantum that may or may not be supported by the market,' pointed out Ms Tang. The guidelines will only take effect with respect to new applications, added Ms Tang, noting that any formal applications (excluding outline applications) submitted prior to Nov 24 which had been granted provisional permission or will result in provisional permission being granted will be evaluated under the old guidelines. Kovan and Joo Chiat/Jalan Eunos estates were also identified as potentially problematic clusters. URA and the Land Transport Authority are conducting a joint study to determine if more stringent DU guides are required based on the infrastructural capacity of the area. The study is expected to be completed by the third quarter of 2012.