Singapore property stocks plunge after URA moves to cap condo unit sizes

Singapore property developers’ stocks faced a battered morning on Thursday as investors grow concerned with lower prices of properties after the Singapore government announced plans to limit the maximum number of units allowed in new private and condo developments beyond the central region.

At around 11.30am, Singapore time, UOL Group was trading at S$6.17, lower by 15 Singapore cents or 2.37%, City Developments Limited fell by 2.39% or 20 Singapore cents at S$8.17, and CapitaLand was down by 2 Singapore cents or 0.64% at S$3.09.

Oxley Holdings and GuocoLand were also trading lower, down by 1.59% and 0.54%.

The Urban Redevelopment Authority on Wednesday revised the maximum number of housing units allowed in a development outside the central area in terms of gross floor area proportions. For projects submitted on or after January 17 next year, the maximum number of units will be derived from dividing the gross floor area (GFA) by 85 square metres. The current calculation divides GFA by 70 square metres.

The changes look to manage potential strains on infrastructure at those areas.

Nine areas including Marine Parade, Pasir Panjang, and Balestier, will face stricter requirements, with the maximum number of units allowed to be built calculated through dividing GFA by 100 square metres.

The URA has previously deployed this strategy on certain locations such as Telok Kurau. In 2012, the guidelines were introduced to that area as the National Development Minister pointed out problems including severe traffic congestion and shortage of carpark spaces caused by the shoebox units developed there.

Property developers have been left to deal with policy changes made by the government in recent months. In July, the government raised the additional buyer’s stamp duty rates and tightened the loan-to-value limits on residential property purchases in a bid to “cool the property market and keep price increases in line with economic fundamentals”.