Who gets short-changed?

Super EC

In some recent EC launches, super-sized ECs units were offered and snapped up by buyers who did not appear to be from the “sandwiched” households. Understandably, there was public indignation at such deviations (both by some developers and some buyers) from what we had intended ECs to serve.

The developers explained that such super EC units were a minority and that they had priced them low (that was why they were snapped up by buyers who could actually afford private properties). The media reported that one such developer priced its super penthouse at $470psf, while selling the other smaller typical EC units at $770psf.

I was initially baffled by this. Why would the developer short-change itself? Why not sell more normal-sized EC units at a higher $psf, and make more profit? The space for one super penthouse, for example, can be used to build 2 or 3 normal-sized EC units.

As I probed, I discovered that the developer had not short-changed itself.

Let me illustrate: a super EC unit of 3,500 sqft may comprise 2,500 sqft of built-in space and 1,000 sqft of private roof terrace. Now, outdoor roof terraces are actually free space, space that developers do not have to pay development charges. URA allows this to encourage developers to build more outdoor space open to the sky, for the enjoyment of the residents. Developers can use this free space to develop private OR communal roof terraces, and they are NOT counted as GFA (gross floor area).

Communal sky terraces have been effective in promoting greenery and providing useful common amenities for residents in our residential developments. However, the creation and sale of super-sized private roof terraces (at the expense of communal sky terraces), is increasingly prevalent. What is happening at the roof top in the form of private roof terrace is also happening on the ground floor where it is referred to as “private enclosed space (PES)” for the buyer.

Developers’ selling off free spaces to make additional profit for themselves is not improper under current URA rules. But as more developers do so, with larger private roof terraces and PES, communal space in the development that benefits all residents will correspondingly shrink. There is a further downstream problem as some buyers may be disappointed later on, when they find out that these outdoor spaces that they have paid for are not allowed to be covered up or enclosed.

I have directed URA to review this policy and have it fixed.

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