The proposed changes in the rules that govern Singapore’s property developers could dampen sales of small apartment units, according to experts.
They said the disclosure of more information could lead to better-informed, and thus also more picky, buyers.
They added that the new rules could also spur competition in the industry, leading to superior innovation and more incentives from developers, offering better values.
Detailed information that developers will now have to share with prospective home buyers include a break-down of the unit’s floor area, listing different types of spaces such as balconies and bay windows.
Experts said this could be negative for projects with smaller apartments, especially single-room units, which are typically popular with investors.
Nicholas Mak, executive director, Research and Consultancy, SLP International, said: In future, developers are required to state the size of various parts of the apartment, for example the balcony, the airconditioner ledge and so on.
“Currently all this area is summed up as the total saleable space of an apartment. But once they are itemised, the buyer will have a better understanding of what is the actual internal space of their apartment, thereby they will be able to make a more informed choice..
“Buyers could become more picky as well – because for some of so-called mickey mouse apartments or shoebox apartments, a significant proportion of their space are actually aircon ledges or balcony space and such.”
Another new requirement is that developers must transparently list the prices of all the units.
Observers said this will give buyers the power to compare projects and bargain for a better deal. That will, in turn, put pressure on developers to offer more value-for-money products such as better flooring finishes.
The new requirement also means developers will have less flexibility to adjust prices according to demand through the day. It will still be possible, but more logistically challenging.
Some developers, however, believe that too much consumer focus on price could distract them from putting adequate value on quality.
Danny Low, COO, Heeton Holdings, said: “We don’t want to come to a stage where people try to sell an apple for 100 grammes at a certain price, and another shouting I’m selling at this price.
“And that would distract the attention of the buyer, who will then have to decide, ‘Should I go for the cheaper one or should I go for the developer’s name behind the project and location?'”
The new changes will generally mean more disclosure, which could be taxing for smaller developers here.
Daniel Teo, chairman & managing director, Daniel Teo Group, said: “It’s quite onerous – we have to measure and consult and discuss the trend, time consuming.
“For bigger projects, you may have to get more staff to back you up, engage outside consultants. Overall, it will definitely add to our running costs and reduce our profit margin, if any, with the market situation.”
“We should be able to absorb it, but again development is a fairly high risk, depending on the market situation, so it’s up and down and give and take. It will be more taxing on us, but as long as it’s more transparent and good for the consumer, we will support that.”
The Real Estate Developers Association of Singapore said it supports the government’s efforts to help buyers make more informed decisions.
Wong Heang Fine, President of REDAS, said: “REDAS supports the government’s efforts to take steps to help purchasers make more informed decisions.
“As a body representative of a large community of property developers, REDAS is committed to continually promote good practices and professionalism among developers to deliver better and higher quality homes for all.”
Market watchers have also applauded the move, which some say are long overdue.
Colin Tan, director, Research & Consultancy Department, Chesterton Suntec International, said: “The need to breakdown the actual areas for the various spaces in the apartment or house is significant. This will help buyers to compare them with other properties that they are also considering buying.
“I would further recommend these areas be included in the legal title documents so that the information is not lost when sold onwards to other buyers.”
“Developers will also be more cautious in ‘suddenly’ or drastically increasing their prices after an unexpectedly good preview or initial sales, as customers will be able to see the trend for the pricing for their projects,” said Adam Tan, manager, Corporate Communications & Marketing, Propnex.
Source : Channel NewsAsia – 17 Mar 2011