Singapore revises rules to counter 'shoebox apartment' problem (updated)

UOL

18/10/2018 04:54

* UOL, City Developments, Oxley shares lower
    * New rules may curb developers' profit margins - analyst

 (Adds share price movement, analyst comment)
    SINGAPORE, Oct 18 (Reuters) - Singapore has announced
stricter guidelines on the maximum number of units in new blocks
of private flats and condominiums in a move to tackle what
authorities have called "excessive development of shoebox units"
in the island-state. 
    Shares of some real estate firms, including City
Developments  CTDM.SI , UOL Group  UTOS.SI  and Oxley Holdings
 OXHL.SI , fell in Thursday morning trade, underperforming the
broader market  .STI . 
    The new rules reduce "developers' leeway to prop up profit
margins by launching smaller units," said Christine Li, head of
Singapore research at consultancy Cushman and Wakefield.
    The guidelines apply to applications for developments
outside the city's central area received on or after Jan. 17
next year. They tighten rules first introduced in 2012. 
    Singapore this year unveiled its strongest property cooling
measures in five years, including extra taxes on developers that
had been paying record sums to buy land for residential use.
 urn:newsml:reuters.com:*:nL4N1U22EE 
    "With the revised guidelines, developers are encouraged to
provide a wide range of unit sizes that will cater to the
diverse needs of all segments of the market, including larger
families," the Urban Redevelopment Authority said in a circular
posted on its website on Wednesday.
    "The guidelines will also help moderate the reduction in
dwelling unit sizes, safeguard the liveability of our
residential estates and ensure that the local infrastructure
will not be overly strained," it added.  
    Under the revised rules, the maximum number of dwelling
units per development will be calculated by a proposed
building's gross floor area divided by 85 square metres, versus
70 square metres under the current rules.
    The new guidelines also added more areas of the island where
the maximum number of units are calculated by total area divided
by 100 square metres.
    Cushman's Li estimated that the 85 and 100 square metre
limit would reduce the number of units by 18 percent and 30
percent, respectively. Cushman also expected a hit to the
redevelopment market, as well as downward pressure on land
prices.

 (Reporting by John Geddie and Aradhana Aravindan
Editing by David Goodman and Darren Schuettler)
 ((John.Geddie@thomsonreuters.com; +65 6403 5578; Reuters
Messaging: john.geddie.thomsonreuters.com@reuters.net))