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Thread: New limits on shoebox units in malls

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    Default New limits on shoebox units in malls

    [url]http://www.straitstimes.com/archive/wednesday/premium/top-the-news/story/new-limits-shoebox-units-malls-20130327[/url]

    [B][SIZE="5"]New limits on shoebox units in malls[/SIZE][/B]

    [B]Malls being proposed must have an average shop size of at least 50 sq m[/B]

    Published on Mar 27, 2013

    By Jessica Lim And Daryl Chin


    THE Urban Redevelopment Authority (URA) has put a limit to the number of shoebox shop units in future malls, in a move that analysts say could cut speculation in such properties.

    From today, proposed malls must have an average shop size of at least 50 sq m. So developers who want many shoebox units - from 9 sq m to 25 sq m - must balance them with bigger ones.

    Property analysts say the measure will reduce speculation in commercial properties, which were left largely untouched in the recent cooling measures.

    The URA said yesterday that over the last two years, it has received a growing number of proposals to build malls featuring mainly shoebox units, some just 9 sq m - smaller than a carpark lot.

    While it did not say how many of such proposals it got, the URA noted that in many cases, the proposed number of shops was more than 10 times what was in the original development.

    In a post on his blog yesterday, National Development Minister Khaw Boon Wan hinted that the new rule was to stop developers from targeting investors rather than those looking for a shop.

    "If these shops are not suitable for most retailers, then the developers' motive is probably to target individual property investors rather than genuine retailers."

    Property analysts like Mr Chris Koh noted that higher stamp duties on residential and industrial properties have turned mass-market investors to commercial properties. "These investors would not be able to afford large spaces, and developers are quick to offer them alternatives," he said.

    Typically, the price of retail space is about two to three times that of nearby residential areas.

    A recent report by HSR property consultants showed that $109.6 million worth of small strata shop units - 15 sq m or less - were transacted last year, up from $40.5 million in 2011 and $20 million in 2010.

    While the URA noted that smaller units cater to shops such as florists and money changers, it said there was a need to ensure a good range of sizes "to meet genuine retailers' space needs... and to serve the public better".

    More small retail spaces also means more employees, adding to traffic woes. The URA also wants wider corridors to reduce human congestion during peak periods.

    Developer Chip Eng Seng group's chief executive Raymond Chia said Alexandra Central, his firm's latest development, has an average shop size of less than 50 sq m. Of the 115 units, some 20 per cent are shops measuring 15 sq m or less. An estimated 20 buyers bid for each unit when it was launched in January. "Not everyone snapping up small shops is an investor," he said.

    But the company's upcoming Yishun project will adhere to the new guideline. "At the end of the day, we too don't want a mall comprising mostly smaller shops, as it isn't good for the image of the development," he said.

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    Default URA sets minimum average size for retail units

    [url]http://www.businesstimes.com.sg/archive/wednesday/premium/top-stories/ura-sets-minimum-average-size-retail-units-20130327[/url]

    Published March 27, 2013

    [B][SIZE="5"]URA sets minimum average size for retail units[/SIZE][/B]

    [B]Aim is to prevent a rise in small units at malls that may not serve their intended purpose[/B]

    By ong chor hao


    [SINGAPORE] The government is moving to prevent a proliferation of small units at malls that may not serve their intended purpose and can cause disamenities, but said that this should not be read as an attempt to cool the strata retail market.

    The Urban Redevelopment Authority (URA) yesterday introduced a minimum average size for retail units of 50 square metres (538 square feet) that takes effect today. This is comparable to a typical Housing and Development Board shop unit.

    Also introduced were guidelines that retail developments should have minimum corridor widths of two to 2.4 metres for single loaded corridors, and 2.4 to three metres for double-loaded corridors. Single-loaded corridors serve retail shops on one side while double-loaded ones serve retail units on both. "They are not intended to be a cooling measure for strata retail market," a URA spokesman said last night.

    The new guidelines, which apply to all new developments (commercial or mixed use) with retail floor area are meant to ensure a good shopping environment, the spokesman said.

    This follows National Development Minister Khaw Boon Wan's comments on his blog that flagged "a couple of developers" who have submitted applications for malls that feature mainly shops as small as nine sq m (97 sq ft).

    "At nine sq m, the shop will be even smaller than a car park lot," Mr Khaw said.

    URA said it had received more proposals that include a large number of small retail units from nine sq m to 25 sq m, with narrow corridors less than 1.5 metres wide. This means a mall can potentially have more than 10 times as many shops as it did before redevelopment.

    Mr Khaw said that small shops have a place in the retail landscape as they support entrepreneurs and are suitable for trades such as moneychangers and florists, but is concerned if they are the predominant shop type.

    "If these shops are not suitable for most retailers, then the developers' motive is probably to target individual property investors rather than genuine retailers.

    "Who will the individual property investors sell or tenant to after the developers have sold these units to them?" he questioned.

    URA said that developments with many small shops and narrow corridors can cause a lack of car park space and traffic congestion, and may not meet the varied needs of shoppers or be able to handle pedestrian traffic during busy hours.

    After consulting industry players, such as the Real Estate Developers' Association of Singapore and the Singapore Institute of Architects, who share the authorities' concern, URA introduced the latest measures.

    Mr Khaw said: "They give developers and architects the flexibility to propose a suitable mix of larger and smaller shops for their developments."

    Market watchers welcomed the latest measures.

    Letty Lee, director of retail services at CBRE, said the latest guidelines will restrict developers of future retail projects from creating too many "micro shop units", which will in turn limit the number of potential investors or buyers.

    Ong Kah Seng, director at R'ST Research, said the measures were "quite necessary and relevant" due to the strong demand seen for strata retail units over the past year.

    He said smaller units usually cater to small and new retailers with limited financial capacity, which may not be sustainable. A large new supply means buyers may not see their investments pan out.

    Ku Swee Yong, CEO of International Property Advisor, added that mall performance cannot be truly assessed before completion. He gave an example of how hard it would be to tell if the hot-selling Alexandra Central units will do well because they are surrounded not just by the popular Ikea store and Queensway Shopping Centre, but also the quieter Anchor Point.

    To further protect investors, he suggested that loan-to-value ratios be tightened, since it is possible to offset smaller unit space with one big outlet.

    Rentals are likely to come down with the new guidelines, especially for small malls or mixed use projects, where retail space is more limited, said Png Poh Soon, head of research and consultancy at Knight Frank Singapore.

    This is because smaller units fetch higher rents per square foot in general.

    "Naturally that translates to lesser returns," he said. A knock-on effect is that land bids for mixed-use developments could come down as well.

    Elaine Chow, associate director of research at HSR Property Consultants, said that developers have to put more thought into their costing, which in turn affects development values.

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