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.
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