2012 sep 5
http://online.wsj.com/article/SB10000872396390443847404577630974280936612.html
Singapore Cracks Down on Shoebox Homes
By CHUN HAN WONG
SINGAPORE—Singapore's government will curb the development of small "shoebox" apartments in the city-state's suburban areas, as part of an effort to temper the local property market and encourage developers to build larger, family-friendly homes.
The move, announced Tuesday by the Urban Redevelopment Authority, comes after officials in May expressed concern over "heated activity" in the so-called shoebox segment that has grown rapidly in the past year. Shoebox apartments have floor areas of 500 square feet or less and are popular with investors seeking rental incomes.
Under new guidelines that take effect Nov. 4, the URA will cap the number of apartments of any size that can be built in nonlanded private-residential projects outside the city-state's central area. Nonlanded housing are generally high-rise, high-density residential developments, and homes located out of the central region tend to be occupied by larger households, according to the authority
This is meant to encourage developers to provide a wider variety of home sizes that better cater to the different needs of Singaporean residents, including those with families, the authority said in a statement.
"Increasingly we are seeing some new housing developments consisting predominantly of shoebox units—as high as 50% to 80%," the authority said. It projects that Singapore will have about 11,000 completed shoebox apartments by the end of 2015, up from about 2,400 such units at the end of last year.
"The situation that we should avoid is for shoebox units to form a disproportionately large portion of the housing stock in Singapore," the authority said, noting that large concentrations of such housing can strain the local transport infrastructure.
Angry citizens have criticized the government for allowing sizes of new homes to shrink, while also blaming an influx of foreigners for high prices across all segments of the housing market and increasingly congested roads and subways, prompting a series of policy responses from the government over the past year.
Under the new rules, the government won't prescribe a minimum size for apartments in suburban private-residential projects, but will require them to have an average gross floor area of at least 70 square meters (nearly 755 square feet) per apartment.
National Development Minister Khaw Boon Wan, in comments published Tuesday on his official blog, said the new guidelines were "measured and moderate," adding that the government would still permit developers to build shoebox apartment to meet the needs of certain buyers.
Analysts say some investors are attracted to shoebox unit because of their relative affordability and potential for rental income, while certain developers prefer to build such apartments as they can fetch higher prices on a square-foot basis compared with larger units.
But Mr. Khaw warned in May that the appeal of such apartments remains untested, particularly in the suburbs.
"On density considerations alone, excessive 'small-format' flats can be detrimental to a neighborhood," said Steven Choo, a real-estate consultant at VestAsia Real Estate Advisory. "In terms of market impact, their high per-square-foot prices skew the picture, and their rental potentials are untested in non-central locations."
Analysts say the move dovetails with the government's commitment to boosting Singapore's low birthrates, by ensuring the sufficient supply of larger homes that are more conducive to family living.
The move is "aimed at providing variety in the housing market and, politically, the idea is to encourage people to have families," said Png Poh Soon, head of research at property consultancy Knight Frank's Singapore unit.
"But it's a good thing that the government doesn't kill off the [shoebox] idea. There's still a segment of the market that favors shoeboxes, like singles," Mr. Png said.
Write to Chun Han Wong at chunhan.wong@dowjones.com
http://online.wsj.com/article/SB10000872396390443847404577630974280936612.html
Singapore Cracks Down on Shoebox Homes
By CHUN HAN WONG
SINGAPORE—Singapore's government will curb the development of small "shoebox" apartments in the city-state's suburban areas, as part of an effort to temper the local property market and encourage developers to build larger, family-friendly homes.
The move, announced Tuesday by the Urban Redevelopment Authority, comes after officials in May expressed concern over "heated activity" in the so-called shoebox segment that has grown rapidly in the past year. Shoebox apartments have floor areas of 500 square feet or less and are popular with investors seeking rental incomes.
Under new guidelines that take effect Nov. 4, the URA will cap the number of apartments of any size that can be built in nonlanded private-residential projects outside the city-state's central area. Nonlanded housing are generally high-rise, high-density residential developments, and homes located out of the central region tend to be occupied by larger households, according to the authority
This is meant to encourage developers to provide a wider variety of home sizes that better cater to the different needs of Singaporean residents, including those with families, the authority said in a statement.
"Increasingly we are seeing some new housing developments consisting predominantly of shoebox units—as high as 50% to 80%," the authority said. It projects that Singapore will have about 11,000 completed shoebox apartments by the end of 2015, up from about 2,400 such units at the end of last year.
"The situation that we should avoid is for shoebox units to form a disproportionately large portion of the housing stock in Singapore," the authority said, noting that large concentrations of such housing can strain the local transport infrastructure.
Angry citizens have criticized the government for allowing sizes of new homes to shrink, while also blaming an influx of foreigners for high prices across all segments of the housing market and increasingly congested roads and subways, prompting a series of policy responses from the government over the past year.
Under the new rules, the government won't prescribe a minimum size for apartments in suburban private-residential projects, but will require them to have an average gross floor area of at least 70 square meters (nearly 755 square feet) per apartment.
National Development Minister Khaw Boon Wan, in comments published Tuesday on his official blog, said the new guidelines were "measured and moderate," adding that the government would still permit developers to build shoebox apartment to meet the needs of certain buyers.
Analysts say some investors are attracted to shoebox unit because of their relative affordability and potential for rental income, while certain developers prefer to build such apartments as they can fetch higher prices on a square-foot basis compared with larger units.
But Mr. Khaw warned in May that the appeal of such apartments remains untested, particularly in the suburbs.
"On density considerations alone, excessive 'small-format' flats can be detrimental to a neighborhood," said Steven Choo, a real-estate consultant at VestAsia Real Estate Advisory. "In terms of market impact, their high per-square-foot prices skew the picture, and their rental potentials are untested in non-central locations."
Analysts say the move dovetails with the government's commitment to boosting Singapore's low birthrates, by ensuring the sufficient supply of larger homes that are more conducive to family living.
The move is "aimed at providing variety in the housing market and, politically, the idea is to encourage people to have families," said Png Poh Soon, head of research at property consultancy Knight Frank's Singapore unit.
"But it's a good thing that the government doesn't kill off the [shoebox] idea. There's still a segment of the market that favors shoeboxes, like singles," Mr. Png said.
Write to Chun Han Wong at chunhan.wong@dowjones.com
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