4 ways URA's new move to curb shoebox units in central areas could affect the Singapore property market

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The last time the Urban Redevelopment Authority (URA) moved to curb shoebox units (one-bedder units, generally defined as 510 sq ft or smaller) was back in 2018. At the time, the impact was only for developments outside the central area. If you want a quick recap, the new guidelines meant that the number of permissible units will be derived by...

The last time the Urban Redevelopment Authority moved to curb shoebox units was back in 2018.

The upcoming policy change in 2023, however, impacts only the central region; and the intent is tied to URA's vision for these hot spots. Here's how it's likely to impact property buyers:Starting from Jan 18, 2023, residential developments must have a minimum of 20 per cent of units with a size of at least 70 sq m .As you can see from our earlier recap, this is quite different from the change in guidelines in 2018.

It's a move that makes sense from a liveability perspective, as developers will now have to cater to a more diverse mix of unit sizes.Current en-bloc hopefuls may need to revise their priceFewer options for singles and couples in the central regionThis is a tough time for developers to be told they get to build fewer shoebox units, especially in the central region where projects generally don't move as quickly.

The five-year deadline of the ABSD is a factor here, as shoebox units are typically the low-hanging fruit of any show flat. As shoebox units have a lower quantum, they're often the first units to be cleared out, whereas higher quantum units take longer to sell. We expect that current en-bloc hopefuls will revise their prices downward if they really want to push the sale through.One realtor we spoke to said the move could spike prices for new shoebox units, once implemented.

If we lower the number of shoebox units, however, these new investors are forced to compete for the smaller pool of units, and deal with rising prices.

 

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