Judicious Market Intervention

As regulators, we try not to interfere in the normal functioning of the market, or to second-guess it.  But occasionally, some judicious intervention for public interest is necessary when the market outcome is less than satisfactory.

For example in recent years many residential projects in Telok Kurau area have led to a rampant development of tiny shoebox units in that area, resulting in disamenities such as severe traffic congestion, shortage of car parks and double-parking.  Residents in that area appealed for development guidelines to restrict the over-development of such tiny housing units.

After consulting with the stakeholders, URA decided to move in, but in a judicious way, without over-regulating or stifling the creativity of developers.

Hence, instead of specifying a minimum floor area for an apartment, URA chose to limit the maximum number of apartments that developers can propose in a particular development.  This way, developers are still free to build small apartments if there is demand, but there must be a good mixture of large and small units, in order to meet the URA guidelines.

The planning guidelines were implemented in Nov 2011.  It was very well received, by architects, developers and the local residents.

Meanwhile, elsewhere, outside of the Central Area, some new developments have included a large proportion of shoebox units.  I voiced concern about this trend in a couple of blog posts.  Many Singaporeans voiced similar concerns too.  Unlike the Central Area, the suburbs are largely for families.  While there is a need for smaller units, like studio apartments, 2-rm flats and shoebox units for the singles, retirees and small families, too many in the same locality cannot be optimal.

Many developers have frowned on this trend too.  To be sure, this is not a general industry practice, but largely confined to a few developments.

After watching this development for a while, URA decided that it should intervene as it had done before. This afternoon, it announced the new planning guidelines to address the issue of developments which consist predominantly of shoebox units outside the Central Area.

The new URA planning guidelines are measured and moderate.  There will still be shoebox units to meet the need of a segment of the population, but there will also be many more larger units,  to meet the demand of the other population segments.

I am confident  this judicious market intervention will again be welcomed by the stakeholders, developers and residents.


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