Housing the growing masses

Anyone in the research business will appreciate the complexity of the data and the gargantuan efforts involved in producing the Population White Paper and the Urban Redevelopment Authority’s (URA) Land Use Plan.

After analysing historical data, projections were made based on a desire for economic growth to arrive at the scenario (or what is now considered the “worst case”) of a 6.9 million population by 2030.

From the population projection, budgets and resources can then be allocated. The primary resource is land and on this land that is slowly expanding in size, capacity is estimated and planned for a wide range of uses, such as housing, transport systems, water and other utilities, green spaces, as well as others including military and education.

Much of the attention is focused on the headline numbers in both reports, but those numbers represent just the tip of the iceberg. What is not visible to readers are the assumptions that went into the projections.

With so much energy focused on the projected populations in years 2020 and 2030, I am wondering, what is the projected population tree for those years? What would be the demographic profile of Singapore in 2030 in terms of racial mix, gender, age distribution, families, singles, etc?

While Chapter 2 of the White Paper highlights the growing proportion of singles and the increasing age of first marriages, I could not find in Chapter 4 (Population Trajectories) the projected absolute number and proportion of singles in years 2020 and 2030.

In my definition, singles include the never-married, divorced or widowed, and they can be with or without children. What do they need from society when they age? What are their contributions to society and to the workforce?

What are the assumptions on immigration? Are we welcoming more teenage foreign students and then grooming them for our workforce and for permanent residency? Are we giving out more employment passes to professionals who are about 35 years old to fill the jobs brought in by the Economic Development Board?

These different approaches matter much because the age gaps are wide. Adults on employment passes are often more than twice the age of teenage students.

The number of foreign students being groomed for the workforce versus foreign adults who can immediately contribute to the economy will affect in a big way the shape of the population tree and the “Old-Age Support Ratio”. Depending on whether we take in a larger proportion of younger foreigners or older ones, the capacity required of our schools, hospitals, housing, transport, etc would have to be planned differently.

Students are likely to stay in hostels for a few years before requiring private or public housing and they need less medical care. Adults on employment passes will immediately boost housing demand and they are likely to have more healthcare needs.

I urge the authorities to release all the relevant data, charts and assumptions used to produce the two reports so that we can have a clearer picture about the way forward.

As a property agent, my biggest concern is with the projected number of residential units. The attention-grabbing headline numbers are superficial and I would like to know the detailed assumptions used to stack up the numbers.

About 700,000 more housing units

To cater to a population of as many as 6.9 million by 2030, “sufficient land for homes has been set aside for an additional 700,000 homes from today, and more in the longer term if there is a need”, according to the Population White Paper.

And according to the URA Land Use Plan: “Today, there are about 1.2 million housing units, of which 0.9 million are HDB flats. To support the projected 2030 population range, we will set aside enough land to develop up to 1.9 million homes, an increase of 700,000 housing units from today. Of these units, 90,000 private housing units (including Executive Condominiums) and 110,000 public housing units will be completed by 2016.”

Therefore, excluding the 200,000 units that are expected to be completed by 2016, we need another 500,000 new residential units between 2017 and 2030, about 35,000 new units per year.

This is my biggest concern about the White Paper: I believe we need much more than 500,000 new units as the replacement of old HDB flats would have to be accounted for.

Over the past two decades, some HDB flats have been upgraded to extend their useful life. Others outlived their purpose as low-cost, no-frills public housing and were demolished, some under the Selective En bloc Redevelopment Scheme (SERS).

Since 1995, the HDB has demolished 112,132 dwelling units (Item F in table), including rental flats and those under SERS.

There is no precise expiry date for HDB flats. The decision to put a cluster of HDB blocks under SERS will depend on many factors, such as the deterioration of the existing flats, the cost of maintaining old flats and the need to intensify or optimise land use, etc.

While I would hate to see some of the charming old neighbourhoods disappear, certain clusters of flats will release more value if the land is redeveloped for private housing, for example, the odd single block at Moulmein Road, seven blocks along Farrer Road and the 13 blocks in Tanjong Rhu at Kampong Arang.

Certain clusters, for example, around Tanglin Halt Food Centre and Commonwealth Crescent, can be redeveloped as taller HDB blocks that can be more efficiently laid out, and with improved facilities for handicap access, car parking and community uses.

From the table, we see that if no more HDB flats are demolished from now, there will be 246,436 flats (Item H) that will be more than 50 years old in 2030. If we start to consider the flats from when they cross the 40-year mark, then by 2030, we would have to keep an eye on 555,443 flats (Item I).

I must qualify that this is a theoretical exercise. In actual fact, some SERS projects have been completed and the empty blocks of flats await demolition, for example, the four blocks in Zion Road and the eight blocks in Ghim Moh Road.

Assuming that the oldest 246,436 flats that were completed before 1980 — that is, they will be more than 40 years old in 2020 — will be demolished and replaced before 2030, the total number of new units required between 2017 and 2030 will increase from 500,000 to 746,436.

If only 500,000 more units are to be built between 2017 and 2030, the increase of 35,000 units per year is manageable in terms of the resources of the construction industry, developers and the HDB.

But if we have to cater for up to 246,436 additional replacement flats, then the average goes up to about 53,000 new units per year over the 14-year period. This will be higher than today’s breakneck pace of residential construction, strain resources and may even result in risks to construction quality as well as completion deadlines.

The simultaneous demolition of 246,436 flats and the building of 746,436 new dwelling units over the next 17 years will make the whole Singapore a bigger construction site than ever before.

With each residential project running over three to four years, at any one time, we can expect around 200,000 units in various stages of construction. The whole country could be resonating with the sound of construction piles. Ouch!

On top of the construction of roads, MRT lines, new commercial hubs and industrial estates, we will be adding road diversions, slowing down traffic and increasing noise and dust pollution.

Will we ever get a chance to enjoy living in the space we are building for ourselves?

By Ku Swee Yong – CEO of real estate agency International Property Advisor and the author of two best-sellers: Building Your Real Estate Riches and Real Estate Riches.

Source : Today – 22 Feb 2013

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