Relaxed height rules could spur property boom near Changi

Private apartments from the 1990s could end up being ripe for collective sale.

A plan to ease height restrictions could spur land and commercial property values near Singapore’s airports, potentially narrowing the price gap with more developed parts of the island, analysts said.

“The [building] intensification will increase land values in the short term, but it may help reduce unit land costs,” Sing Tien Foo, provost’s chair professor at the National University of Singapore (NUS) Business School’s Department of Real Estate, told Singapore Business Review.

“For example, the cost per square foot of real estate space could be lower, since more space can be built on the same land parcel,” he said in an emailed reply to questions.

Under the rules that will take effect in August, commercial and industrial property may be built nine storeys higher, whilst residential houses may be 15 storeys higher on sites near airports.

The average monthly rental rate in Changi Business Park is about $4.50 per square foot, and $10 in Raffles Place, part of Singapore’s central business district, according to 2024 data from Office Spaces.

Singapore has nine airports, though only two are active civilian airports—Changi Airport, the main international hub, and Seletar Airport, which is mainly used for regional and business flights. The remaining seven are military air bases.

The increase in commercial property values near the airports would hinge on the master plan, particularly whether it revokes existing gross plot ratio controls, said Alan Cheong, executive director of research and consultancy at Savills Singapore.

“If they intend to revise the height limit, if we raise them, then the plot ratios should also increase accordingly,” he said via Zoom.

“Otherwise, if the height increase alone is not accompanied by a plot ratio increase, the case will possibly be that nothing changes.”

Urban Redevelopment Authority (URA) figures show that plot ratios in Changi Business Park Central 2 range from 1.4 to 2.0, meaning that for every square meter of land, a developer can build 1.4 to 2 times that amount in total floor area, also known as the gross floor area. 

For example, a 1,000 square-meter plot allows 1,400 to 2,000 square meters of floor space across multiple levels, such as two floors of 1,000 sqm or four floors of 500 sqm.

In comparison, the Downtown Core, which is part of the central business district, allows much denser construction, with some commercial zones having plot ratios of as much as 5.6.

Wong Xian Yang, head of research for Singapore and Southeast Asia at Cushman & Wakefield, noted that if the gross plot ratio remains unchanged, “the revision of building height limits may not trigger a widespread wave of redevelopments.”

“Selective redevelopment opportunities may still arise in specific pockets where sites have not fully utilized their gross floor area,” he added.

Still, the relaxed height limits are significant for Singapore given that it is a small island, Sing said.

“The buffer imposes physical constraints on land use allocation, which impacts a large tract of the island set aside as buffer zones near civil airports,” he said.

“The relaxation of the height limits could free up airspace near airports and also enable the intensification of land [development] near the buffer zones and along the flight paths of the airports,” he added.

He also expects more stable property prices in the long term.

Cheong said residential properties near airports, particularly older apartment blocks, could become more attractive. “It could encourage owners to consider a collective sale to a developer, who could then redevelop the site for higher or more intensive use.”

He expects a bigger impact around Changi and the Paya Lebar/Macpherson area, where there are more private apartments, unlike in Seletar, which is largely made up of low-rise landed government properties and public housing.

“These private apartments, especially those built in the 1990s, could end up being ripe for collective sale,” he pointed out.

Sing expects redevelopment in Changi, Pasir Ris, and Tampines.