URA told to fix loophole in EC developments

SINGAPORE - The Urban Redevelopment Authority (URA) has been directed to review its policy of allowing developers to sell off free spaces within executive condominiums (ECs) for a profit.

In a blog post yesterday, National Development Minister Khaw Boon Wan said that under current URA rules, it is "not improper" for developers of "supersized EC units" to use free spaces to develop communal or private amenities.

Mr Khaw said: "But as more developers do so, with larger private roof terraces and private enclosed spaces, communal space in developments that benefits all residents will shrink correspondingly."

"There is a further downstream problem as some buyers may be disappointed, later on, when they find out that these outdoor spaces they have paid for are not allowed to be covered up or enclosed."

In view of this, Mr Khaw said he has directed URA to review this policy and "have it fixed".

ECs are a public-private housing hybrid which come with government subsidies, and are intended to help "sandwiched" households with a monthly income of not more than $12,000.

In the post, Mr Khaw also revealed how it first came to his attention that developers were exploiting this loophole.

He said he was initially baffled by how one EC developer could price its "supersized" penthouse units at $470 per sq ft, while selling smaller, more normal-sized ones at a much higher $770 per sq ft.

Mr Khaw said: "Outdoor roof terraces are actually free space. Space that developers do not have to pay development charges (for)."

Developers of supersized ECs, which typically have units in excess of 2,000 sq ft, are able to use this free space to develop private or communal roof terraces.

This is because such spaces are not counted as part of the development's total gross floor area, and cost developers relatively little to build.

My Paper understands that two EC developments in the spotlight are CityLife@Tampines and Forestville, located in Woodlands.

CityLife has 16 penthouse units with roof terraces, ranging from 1,335 sq ft to 4,349 sq ft.

These are priced at about $470 per sq ft, while normal-sized ones are priced at about $770 per sq ft.

Forestville has 29 similar penthouse units, ranging from 1,559 to 2,534 sq ft, and priced at about $600 per sq ft.

Its normalsized units cost about $710 per sq ft.

MCC Land, which manages both Forestville and CityLife, declined to comment when contacted.

Property analysts told My Paper that even if the Government closes this loophole, the move is unlikely to have a negative impact on future EC sales.

This is due to the strong demand for ECs in general.

Mr Ong Kah Seng, director of R'ST Research, said: "Any prohibition in providing larger-sized units will free up space to provide more ordinary-sized units, which usually will come at higher per-sq-ft prices."

"The move will also perfect the dynamics of the EC market, ensuring that the EC housing subsidy goes to the sandwiched class."