Technically, after the introduction of TDSR cooling measures in 2013, we saw a shift in the sizes of units that was created by developers for new launches in the past. That brought about a new era whereby you get to see more and more 1 and 2 bedder being created, lesser 3,4,5 bedders being created, and sizes of the units starts to shift and change. Throughout this entire history, there were also seasons where there was a disappearance of units with bay window areas. Some units having bay windows wide enough for a day bed! I’m not sure whether you remember that season or not. There were several projects in the past that you go into that have bay windows predominant in the common bedrooms and master bedroom and even the bathrooms as well. And of course, we have a shift in some of the policies by URA and BCA that shaped the new landscape as well that now in terms of projects, you don’t see bay windows anymore. And most of the units that you see in the bedrooms are all usable space.
sample of bay window
So what is the harmonization rule? Whenever there is a new policy, for example, like 2013 TDSR, there will be a shift in terms of the unit sizes. I believe the harmonization rule will then create a new shift as well. Let’s have a look at the harmonization rules.
Basically, the new definitions of floor area could eat into developer’s sellable area in terms of GFA calculation. Let me just bring you through this. And this is going to be a norm starting from 2024. And there will be some projects that were built up previously that’s not under this rule. But moving forward, all the projects that will be built will be under the new harmonization rule.
Basically, it’s a harmonization of the government authorities, URA, SLA, BCA, and SCDF. They all will harmonize into the same kind of definitions of how GFA is being calculated and the size of units will be calculated in terms of the floor plan area and how floor areas per floor plan will be calculated as well. In terms of whether it is the midpoint of the wall, start point of the wall, outside the wall. In the past, all authorities have different definitions. Moving forward, this new harmonization is a good thing. All the authorities will standardize and then it’s easier for developers and consumers as well.
So the first key summary to take note in terms of harmonization rule, and this is important because if you’re going to buy new launches, this is the knowledge that I think everybody should have. You will want to know what the harmonization is and how does it shape unit sizes moving forward.
All agencies will take reference in the sense that floor areas will be measured to the middle of the wall and all strata areas will be included as GFA. Later, I will discuss about this because we’re going to talk about the AC ledges and how all this is going to be calculated. And this is going to create a new shift in our unit sizes as well, moving from 2024 onwards because we’re going to see a new era of units having a smaller unit area. And how does it impact us in terms of overall quantum and PSF? But the key point that we should be asking, is whether the units will be smaller?
Courtesy of URA
The very interesting thing is because all voids are going to be excluded from the strata area meaning that developers cannot and will be discouraged from selling the void area as well as AC ledges to buyers. BCA and SCDF they will adopt an aligned definition for some computation. So let us have a look at this. So this new regulation basically if you look at this the ledges are exclusive to a strata unit for example that the AC ledges and Basically, what is this all about? Let me just show you in simple format and we have already summarized the entire harmonization rule So the first thing is that aircon ledges if developers wants to build buyers aircon ledges because right now Order from 2013 until now or even way beforehand Basically when you look at the floor plan the AC ledges is Included in the strata area that you purchase So right now let’s say you go to buy any new launches that was launched in 2023 before the harmonization rule kick in This is part of the payable strata space that you are paying So if you buy a unit for example, you buy 1356 square feet you pay 2.83 million dollars at 2087 dollars per square foot, basically what it means is that you are paying this entire size of 126 square meters Inclusive of 8 square meters the AC ledge area which is about 86 square feet So technically you’re paying for the space to place your AC compressor. So what it means is that moving onwards? Developers will no longer be able to sell this to you as a buyer. This is going to “eat” into their overall GFA for the entire development and why is that important is because if it “eats” into their GFA of the entire development It means that overall they are going to be able to only create lesser amount of units to be sold to buyers and developers will be discouraged from doing that and then they will not include this basically in the floor plan anymore and it will still be there but it’s subjected to a new ruling.
What it means is that in future, projects that are under the new harmonization rule for example like Lentor Mansion, you’re going to see new versions of floor plans without the AC ledges being sold to you as a buyer. What it means is that if developers will price it logically and price it correctly, you’re going to see lesser unit area being reflected.
For example, this same floor plan that used to be 1356sqft maybe is a 3 bed 3 bath, it used to be 1356 with 86 square feet AC ledge. Now the AC ledge of 86 square feet is going to be removed and the new floorplan is going to reflect 1270 square feet which used to be the actual livable area in the first place. So basically, if I remove this from the old floor plan. which was not under the harmonization rule, you are already having a livable area of 1270 square feet. If you go to projects moving forward, whether it is Lentor Mansion or any other new project starting from 2024 under the harmonization rule, you’re going to see smaller floor plan square feet. And maybe at its first instance, you’re going to be a little bit alarmed –
“Why is it that suddenly from 2024, all the units are going to be smaller already?” Is it because we’re building smaller and smaller units?
The answer is no. It’s just that developers not selling you the AC ledge anymore. So, you’re going to see this same floor plan to be 1270sqft and AC ledge is there, but it’s not calculated into the area being sold to you. And I think developers, because of this, they don’t gain in the sense that it’s not as if they don’t have to build AC ledges anymore. They still have to build AC ledges; it Is that they cannot sell it to buyers like you and me. And because of this, they’re going to have to adjust the overall GFA as well as the price mechanism. So, moving forward, developers logically is going to price it at the same quantum compared to the past where they could sell the AC ledges to buyers beforehand at the lower PSF. But now, because they must build the AC ledge, but they cannot price it in, they will still sell the same quantum logically. The PSF reflector will then look higher. So maybe when you go and you will say,
“Hey, why is it that I’m paying the same quantum, smaller size, PSF higher?”
But technically what has happened is that the two floor plans are still the same. It’s just that the AC ledges cannot be priced in anymore. But the overall quantum logically will be around the same if the developer will price it logically or correctly. It also depends on the land bid prices moving forward because we all know the land bid prices tend to increase, construction costs are increasing and developers have to look into LBC(Land Betterment Charges) as well.
If let’s say we were to just do an apple-to-apple comparison, which is very difficult for a project with harmonization and a project without harmonization, it should behave in this manner that the quantum is the same. But the one with harmonization has a higher PSF level. So coming back to this, basically the conclusion is this, so let me just repeat, is that if the developers want to build huge AC ledges, they will have to include the AC ledge into the GFA, but it will not make sense for developers to do that because it will eat into the overall GFA, which means that they can build lesser units and due to this, this is like a safeguard measure to deter developers from building AC ledges and sell to buyers. All these AC ledges, not exceeding 2 meters in width are not computed as GFA. So, it means that developers still have to build, but as long as it’s not with exceeding 2 meters, it will not be computed as GFA, which is a good thing. But if it exceeds 2 meters in width, the area, will be included as part of the GFA. Developers will then try to maintain the AC ledges within 2 meters. At the same time, this will not make sense for developers to build longer AC ledges because this will not be computed as part of the strata area. And there’s also a safeguard measure to ensure that the design makes sense because developers must make sure that they cannot build AC ledges like example, too near to a lift lobby that people can just like climb onto the AC ledges and create a privacy issue. Developers also must make sure that it makes sense for maintenance as well. It should not be too narrow till maintenance is an issue. So, I think these are good measures to safeguard the buyers.
Developers will then have to adapt to see how they can do it in a practical yet logical sense. With all these considerations, it’s going to shape the design thought processes to ensure that it’s logical. It makes sense from a design standpoint and architect standpoint as well. From the pricing perspective, we’re going to see an increase in PSF for Lentor Mansion, but from the quantum perspective, it should not be too far away from the past. So perhaps in the past, we are used to like 900 plus square feet to 1000 odd square feet for 3 bedders. But we’re going to start seeing like 800 over square feet to maybe about 900 odd square feet for the premium ones, maybe it will be about 900 plus square feet compact models will be about 850 square feet plus minus. It all depends on what is the removal of size of the AC ledges and stuff like that.
In summary, even though the PSF might look higher, it does not affect the future buyers affordability because harmonization rule is going to be across all projects. It’s going to be the new norm. And in terms of quantum, it will likely remain similar even though PSF seems higher. So now that we are clear with the harmonization. Do you still think that PSF is a good gauge for property pricing or quantum is key?
