Putting an end to “shoe-box sized” apartments in Singapore might be reason for residents to cheer, but for developers, it could prove a double whammy.
Already hit in July by cooling measures that make it more expensive to buy and redevelop older apartment blocks, home builders have now been told there is a cap on the number of units allowed in any one project.
While the move is aimed at stopping ever-smaller dwellings, for developers it might necessitate a pricing rethink that could dent profitability.
Photo: Reuters
“The July curbs put the handbrake on en-bloc transactions,” said Nicholas Mak, head of research at real estate consultancy ZACD Group Ltd.
New rulings on unit sizes “could actually have a higher impact,” he said.
Developers in the city-state have to shell out almost 9 percent more for land acquisitions following the latest round of cooling measures.
That, coupled with the fact they now have to build larger apartments, might force companies to lower selling prices to shift stock, Mak said.
New guidelines on unit size, released last week, effectively trim the maximum number of apartments allowed in a project by 18 percent.
The changes would only affect developments outside of central areas and would come into effect early next year, the Singaporean Urban Redevelopment Authority said.
The measures are meant to address concerns that housing in Singapore is becoming ever more cramped.
Still, the problem is nowhere near as bad as in Hong Kong. Last year, a developer there was signing up tenants for a project with a “usable floor area” of about 5.7m2. That makes Singapore’s average of 85m2 seem positively spacious by comparison.
Projects being launched this year probably will not be affected by the new size guidelines, because they would have already received government approval.
However, home buyers eyeing condominiums coming online next year might want to watch out for good deals, Mak said.
Apartment prices could decline as much as 2 percent next year and post a similar drop in 2020, analysts at UBS Group AG said.
Developers in Singapore will ultimately end up building fewer, larger units, said Justin Tang, head of Asian research at United First Partners.
“This could make a calibration of price on a per-square-foot basis necessary, which will eat into margins,” Tang said.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by