SINGAPORE - The Urban Redevelopment Authority (URA) could be looking to discourage an over-concentration of small strata shops in new developments, BT understands. It is also trying to steer them towards a certain size mix.
No official guidelines have been spelt out but market-watchers believe that URA is sharing informal advice on shop sizes. They feel this could be a first step towards putting a lid on the proliferation of small shops in new developments. Small shops have been attracting property investors from the residential sector, which has been hit by six rounds of cooling measures.
BT understands that URA is recommending that at least 50 per cent of the retail portion in a development should comprise units of at least 60 sq metres (645.83 sq ft) each. A maximum 40 per cent may be allocated to 25-59 sq m units, and no more than 10 per cent to 15-24 sq m units. It seems URA is discouraging units below 15 sq m (161.46 sq ft).
"Probably informal guidelines on size requirements for retail units are slowly creeping in," said a developer. On the other hand, a clear guideline would create greater certainty for property developers buying sites with a view to incorporating strata shops in their project, he added.
When contacted, URA declined to confirm the recommended unit size mix.
But its spokeswoman, while acknowledging the need for flexibility to cater to diversity of business needs of different market segments, added: "A development consisting predominantly of small units may pose problems, for example, carpark shortage and traffic congestion, to the local area."
URA's thinking seems to be that the bigger the number of retail units in a development, the more the retail operators and staff, thus increasing the car population in the building. However, industry players say even malls that are under single ownership have been experiencing carpark shortage.
Knight Frank's head of investment Ian Loh suggests that a key reason for URA's advice on strata unit-size mix could be to keep a lid on investment demand for strata shops, which have been fetching eye-popping prices.
Some developers have taken to minting smallish shops to keep lump-sum prices affordable to potential buyers, but in the process, setting high per square foot (psf) prices. For example, earlier this year, eight street-level cafe units ranging from 398 sq ft to 807 sq ft at Oxley Tower at Robinson Road were sold at $6,200-$7,200 per square foot. At the nearby EON Shenton, all 23 street-level shops fetched $4,000-$4,980 psf. The shops are 129 sq ft to 377 sq ft.
Some of the shops in Oxley Tower have been flipped, based on caveats data.
"The authorities may want to set some controls as to where prices are heading," suggests a market watcher.