In the face of a continued troubled global economy and slower price increases in the private housing market, sale prices of landed residential properties have continued their surprising rise, as indicated by recent Urban Redevelopment Authority (“URA”) data1. This demand for detached, semi-detached and terrace houses, above that of non-landed properties, is driven by several factors and landed property sites continue to be popular for purposes of redevelopment.
Developers keen to develop such sites should however be aware of the recent changes in the law and directions from the planning authorities which impose restrictions on landed properties.
Restrictions on Foreign Purchasers
Acknowledging the demand for landed homes and the scarcity of land in Singapore, Law Minister K Shanmugam announced that he expects changes to the Residential Property Act (“RPA”) to reduce the number of foreign landed property purchases by half2 . Foreign ownership of landed property is presently kept at below 5% (with the current level maintained at 3.5%).
Developers of landed residential sites cannot sell to a foreign entity (such as non-Singapore citizens, permanent residents, foreign companies and societies) unless these foreign entities first obtain approval under the RPA. Such approvals are relevant for landed residential sites which include the usual landed developments as well as cluster landed developments.
“Cluster housing”, introduced in 1993, is more properly known as “strata-landed houses”. These are houses with strata titles located within a development which is strata subdivided. The subsidiary proprietors of such strata-landed houses share common facilities like swimming pools, car parks and security facilities, similar to a condominium. RPA approval is required for a non-Singapore citizen to acquire a strata-landed house. However, RPA approval is not needed if the strata-landed house is part of an approved condominium development.
Developers have to take special note of residential properties which are subject to conservation requirements. Such developments have to comply with the prevailing conservation guidelines by URA (“Conservation Guidelines”) and URA’s approval is required for any additions and alterations.
The type and level of Conservation Guidelines that are imposed vary depending on the type of conservation area where the property in question is situated. For instance, a developer would have greater flexibility in developing a house that is in a “Residential Historic District” (e.g. Emerald Hill) as opposed to a house that is in a “Historic District” (e.g. Chinatown), where the strictest form of conservation is practised and the entire building is to be retained.
Recently, developers have acquired conservation houses for integration in developments. Such houses would likewise be subject to the Conservation Guidelines. Under the present Conservation Guidelines, a conservation bungalow located within a site which is allowed for flat or condominium development may be strata-subdivided into apartment units or converted to a clubhouse. The Conservation Guidelines also provide that in these areas the developer may choose to conserve the entire building, including the outhouse, or just the main building.
Limitations on planning
As recent as November 2011, other changes by URA have also come into play to regulate redevelopment of landed sites into non-landed developments (i.e. apartments and flats).
From 24 November 2011, all applications for planning permission will fall under the new rules. Only those developers who have obtained provisional planning permission to redevelop such landed sites for new erections of non-landed developments or whose applications have been submitted before that date for which provisional planning permission will be obtained will fall under the old rules.
For such sites, (1) a minimum land plot size of 1,000 square metres is required for all new flat developments; and (2) a developer has to follow a guide on the maximum number of dwelling units for flat and condominium developments in residential estates with a gross plot ratio of 1.4.
The full effects of URA’s recent measures remain to be seen, but this will possibly result in some recalculation by developers as to the attractiveness of small landed sites for development of non-landed residential units.
Suffice to say, Singapore real estate is ever changing with new rules and evolving patterns of use of our land given its scarcity. Developers in Singapore continue to remain adaptive to the changes and will move with the market conditions and new requirements.