Prices of landed homes in Kovan, Telok Kurau, and Joo Chiat are expected to fall by 10 to 20 percent after the Urban Redevelopment Authority (URA) announced new development guidelines, according to TODAYonline.
The rules, which took effect last Thursday, imposed a minimum 1,000 sq m plot size for all new flat developments in Singapore and a limit on the number of units which can be built in a project, in order to avoid overcrowding.
Analysts believe the new rules are more likely to affect smaller developers.
“Developers are known to pay higher prices for land because they know they can build small units and they can price them at higher per square foot,” said Eugene Lim, Key Executive Officer at property consultancy ERA.
“There are now restrictions. You will see developers being less aggressive in their bids and we could possibly see prices for land in these areas coming down by as much as between 10 and 20 percent.”
With the latest regulations, developers cannot build as many units as before on a single site. In the past, a 1,000 sq m site could yield some 20 units. Now, little more than 10 units can be developed on the same plot.
“If you are looking at a much larger unit, say about 1,200 sq ft and you are hoping to sell at the same unit price of S$1,000 psf, then you are talking about close to S$1.2 million, as opposed to less than a million kind of quantum,” said Chia Siew Chuin, Director of Research & Advisory at Colliers International.
“Therefore it may not be easy to sell,” she added.
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