‘Subdued’ market impact seen in new URA guidelines
The guideline sets a minimum of 20% dwelling units for new developments.
The new guidelines of the Urban Redevelopment Authority (URA) on dwelling units in non-landed residential developments in the Central Area will likely have a “subdued” impact, analysts said.
The guidelines provided that new developments will be required to provide at least 20% of dwelling units with a nett internal area of at least 70 square metres. It will take effect in January 2023.
“The market impact is likely to be subdued. Given the premium of living space in the new endemic normal, units with a greater internal area are still likely to be well received,” Lam Chern Woon, Head of Research and Consulting, EDMUND TIE, said.
“In particular, foreigners who are increasingly looking to invest in residential properties in the prime or downtown localities have also exhibited a penchant for larger units.”
He said EDMUND TIE expects more families to consider living in the Central Area as transport connectivity improves and mixed-use development rises.
He added that the presence of more educational institutions in the area could make it more conducive for families.
Similarly, Lee Sze Teck, Senior Director (Research), Huttons Asia, said the overall impact of the new guidelines will “likely be minimal.”
He noted the market could see more bigger units, whilst investors may have fewer smaller units to buy in the future.
“Some of the enbloc sites in the Central Area and the Marina Gardens Lane may be affected by this rule change. Together with the increase in land betterment rates and changes to how gross floor area is computed, the costs to developers will rise considerably and eat into the margins of developers,” he said.
“Developers may re-assess potential bids for en-bloc sites. This may affect the success rate of some en-bloc sites in the Central Area.”
Colliers data showed that the median unit prices in the Central Area are 15.8% higher compared to the Rest of the Central Region and 34.6% higher than those Outside the Central Region as of the third quarter of the year.
“As such, to live in the Central Area for the same price quantum, buyers will have to contend with a smaller living area. This revised regulation ensures that there will be a minimum size to uphold the quality of living,” Catherine He, Director, and Head of Research, Singapore at Colliers, said.
She noted the new guideline is “timely” considering the median area for new residential units in the area declined to 73sqm in the third quarter of 2022. This is against 94sqm in the same quarter in 2017.