No more "free spaces" for developers ...?

By The Folks @PropTalk - January 7, 2013 4 Comments

National Development Minister Khaw Boon Wan has asked the Urban Redevelopment Authority (URA) to review and fix the policy allowing developers to sell off free spaces to make additional profit for themselves.

He said this in a blog post, "Who Gets Short-Changed?", on Monday, on the heels of recent launches of executive condominium (EC) projects.

Mr Khaw noted that in these projects, super-sized units were offered and snapped up by buyers who did not appear to be from the "sandwiched" households.

He said understandably, there was public indignation that there were "deviations" from the government's intention of meeting the needs of such households through ECs.

Mr Khaw said the developers explained that such super EC units were a minority, and that they were snapped up by buyers who could actually afford private properties as they had priced them low.

One such developer, he noted, priced its super penthouse at $470psf, while selling the other smaller typical EC units at $770 psf.

Mr Khaw was referring to CityLife@Tampines, which made the news for a penthouse unit with a record price tag of $2.05 million. The unit was over 4,000sqft - roughly four times as big as a five-room HDB flat. The unit was snapped up within two hours of its launch.

This sparked a public outcry on whether ECs have deviated from its original intent to provide subsidised housing for the sandwiched class - those who cannot afford private property but with an income exceeding the limit that qualifies them for a HDB flat.

Mr Khaw said communal sky terraces have been effective in promoting greenery and providing useful common amenities for residents.

But the creation and sale of super-sized private roof terraces is becoming more prevalent.

This is also happening on the ground floor, where it's referred to as "private enclosed space" for the buyer.

Mr Khaw said under URA rules, it's "not improper" for developers to sell off free spaces to make additional profit.

But he's concerned that as more developers do so with larger private roof terraces and private enclosed space, communal space in the development that benefits all residents will shrink.

Chesterton Suntec's research head Colin Tan said: "This is a closed market in the sense that there is a ceiling cap. And so the developers may think that the majority will not be prepared to pay for such space, and so they decided to concentrate most of this space in just a few units. They feel that at least there will be some buyers who will be prepared to pay for this."

In an emailed response to Channel NewsAsia, URA said: "We are reviewing the guidelines on private enclosed space and private roof terraces, and will announce the details once the review is completed."

Property analysts said the issue has much to do with equity.

CEO of International Property Advisor Ku Swee Yong said: "A sandwiched class family with a household income of $12,000 - are they able to afford a property that is more than $1.5 million? If the family, together with support from parents and relatives can afford (a unit costing) more than $1.5 million then perhaps they are not really in the sandwiched class anymore. They should be better off buying a private property rather than buying a subsidised property which is subsidised with taxpayers' money."
Source: Channel News Asia

Mr Ku seems to have hit the nail right on its head there...


4 comments to ''No more "free spaces" for developers ...?"

  1. Who got short changed?

    The losers who contribute to the treasury to subsidize the rich (namely developers and EC owners and the ones who are slumbering away).

  2. 'Open space' loophole just tip of the iceberg

  3. 'Open space' loophole just tip of the iceberg

    THE Urban Redevelopment Authority (URA) has been asked to review the policy loophole that allows developers to sell free spaces for profit ("'Open space' loophole to be plugged"; Tuesday).

    While plugging this loophole is timely, the URA is still behind the curve in many other matters.

    Nowadays, a growing number of apartments have disproportionately large balconies, double volume voids (lofts) and air-con ledges. Are these considered bonus gross floor area that developers can sell to make additional profits?

    Then we have "creative" developers. They market, say, a 1,000 sq ft unit with a very high ceiling at an exorbitant price. But they construct a raised second-storey platform over part of the unit, increasing the usable floor area to, say, 1,500 sq ft. This makes the "enlarged" unit appear cheap on a per square foot basis. But the platform-to-ceiling height is usually no more than 1.5m, such that it is impossible for one to stand upright.

    Another marketing tactic is to brand residential units as small office, home office (Soho). This misleads buyers into thinking that the units are akin to commercial offices and, hence, more valuable.

    The URA does not recognise Soho as a planning term, and developments being marketed as such are approved either as office or residential, but not for both uses. Nevertheless, developers are still allowed to use the term Soho.

    The inconsistent treatment of household shelters is also puzzling.

    Some are located internally and constitute part of a unit's saleable floor area, while others are located at the common staircases outside. Yet others are designed to double as walk-in wardrobes. Is this proper?

    I agree that communal spaces for residents should not be reduced. But the authorities should go one step further and ensure that common facilities such as swimming pools, gyms and barbecue pits are adequate and proportionate to the size of the development.

    The URA and the Building and Construction Authority should also step up enforcement of regulations.

    Areas requiring attention include the illegal subdivision of residential units for rental to multiple tenants, especially in older estates, and the unauthorised use of industrial property for commercial activities.

    The URA said in its reply ("URA probing misuse of industrial spaces"; yesterday) that it will "carry out investigations on unauthorised uses in specific industrial units that are brought to our attention". The authorities need to be more proactive in eradicating breaches, and not over-rely on citizen policing.

    Plugging the "free space" loophole is merely the tip of the iceberg.

    Victor Ng Beng Li

    Copyright © 2013 Singapore Press Holdings. All rights reserved.



    So many questions, so few answers

    AS AN enthusiastic first-time home buyer, I recently viewed several condominiums, executive condominiums, townhouses and cluster housing showflats as well as several completed projects.

    In the process, I encountered numerous doubts and anomalies, many of which could not be explained clearly even by experienced real estate agents ("'Open space' loophole just tip of the iceberg" by Mr Victor Ng Beng Li; last Saturday).

    My pet peeve is not being able to ascertain on a floor plan which parts of a unit are regarded as part of the total floor area and which are not.

    Open roof terraces and private enclosed spaces clearly are.

    But what about areas labelled "RC ledge", "A/C ledge", "void", "void over staircase", "flat roof (no access except for maintenance)" and "open roof terrace below"?

    What about unlabelled areas marked with a big cross and trellises protruding from the perimeter of a unit?

    Property agents say such unusable space often constitutes 20 to 35 per cent of a unit's total floor area (jumbo penthouses excluded). Is this true?

    A newly launched condo in Alexandra Road had units priced at $1,950 per sq ft (psf).

    But a valuation check on a three-year-old condo located just 300m away revealed that the highest possible valuation was only $1,450 psf - that's a 35 per cent difference.

    Checks on condos in Bishan, Marina Bay and Tanjong Pagar yielded similar results.

    Why are secondary market units valued at a hefty discount to primary market ones?

    Can small office, home office units with commercial titles like those at Southbank and The Central be purchased for residential use?

    Alternatively, is office-cum-residential use allowed?

    Some formerly freehold estates that went en bloc are now being sold as new 99-year leasehold condos. Are there any implications to buyers - legal or otherwise?

    And why are new developments prohibited from enclosing balconies and having covered structures built on top of open roof terraces whereas old estates aren't?

    Also, why is photography disallowed in showflats?

    Aren't photographs an excellent means through which buyers can hold developers accountable for representations made?

    Finally, what is the difference between unit size, gross floor area and strata floor area?

    Tan Chuan Poh

    Copyright © 2013 Singapore Press Holdings. All rights reserved.