Singapore's shoe-box unit limit threatens to curb developers' profits

PETALING JAYA (Oct 18): Singapore's new guidelines on the size of apartments that can be built per development threaten to erode profit margins further as it reduces the number of shoe-box units in a development, reported Reuters.

The new restrictions will affect applications for projects outside of Singapore's central area that are made from Jan 17 onwards, said the Urban Redevelopment Authority in a statement yesterday.

“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,” said the authority.

The authority said the guidelines aim to stop the growing trend of shrinking apartments and reduce the load on local infrastructure.

However, this move would give developers less room to shore up their profits by launching smaller homes, said Cushman & Wakefield Inc head of research at Singapore Christine Li.

According to the new rules, the maximum number of homes per development will be derived from the building's proposed gross floor area divided by 85 sq m, compared with 70 sq m.

The government will also introduce more areas in Singapore where the maxmimum number of dwellings per development will be calculated from the proposed gross floor area divided by 100 sq m.

Li expected the new calculations to reduce the maximum number of units per developments by 18% and 30% respectively.