Property developer shares were lower in early trade on Thursday after the Urban Redevelopment Authority issued new guidelines to limit the number of units in new residential developments.
“Investors are likely to interpret this announcement as a further tightening of policies by the government in its attempt to cool the housing market,” Nomura said in a note on Wednesday. “We think these new guidelines are likely to further dampen developers’ appetite for residential land bank in Singapore.”
Among developers, City Developments was down 1.79 percent at 9:49 A.M., CapitaLand fell 0.32 percent, Oxley shed 3.17 percent, GuocoLand declined 0.54 percent and UOL was off 2.06 percent. The Straits Times Index was down 0.41 percent at 9:32 A.M. SGT.
On Wednesday, the URA said it would revise the guidelines for the maximum allowable number of dwelling units for all new residential developments outside the central area to an average 85 square meters, up from 70 square meters previously. It also set nine areas where the average would be 100 square meters as the cumulative effect of new developments could “pose a severe strain on local infrastructure.”
“With the revised guidelines, developers are encouraged to provide a wide range of unit sizes which will cater to the diverse needs of all segments of the market, including larger families,” URA said in its circular. “The guidelines will also help moderate the reduction in dwelling unit sizes, safeguard the liveability of our residential estates, and ensure that the local infrastructure will not be overly strained.”
The guidelines will be applied to development applications submitted to URA from 17 January, URA said.
Nomura said there were some current projects that could be subjected to the new guidelines if applications aren’t submitted by the deadline.
The projects included CapitaLand’s and City Developments’ mixed-use develpment at Sengkang Central and GuocoLand’s redevelopment of Casa Meyfort at Meyer Road, Nomura said.
But it added, the actual impact of the changes on the housing market could be relatively muted, given the experience of 2012, when the URA took measures to limited the number of “shoebox” units
“In any case, developers have three months to submit any outstanding application for new projects, which seems like an adequate lead
time for developers to react,” Nomura said.