By Mr. Propwise
Whether you’re looking at investing in residential, commercial or industrial property, the Urban Redevelopment Authority’s (URA) area planning and guidelines will have a long term impact on your property’s values. In this post we will look at the different types of development that the URA plans for and in particular we will focus on industrial developments as interest from investors have been increasing in this segment.
The URA’s role is to plan the physical development of Singapore and to optimize the use of the country’s limited land resources. To this end it puts out the Concept Plan, which is a long term strategic land use plan that guides Singapore’s development over a forty to fifty year period, ensuring that Singapore has sufficient land to meet long term population, economic and quality of life goals. It is reviewed every ten years, and the last one was completed in 2011.
For medium term planning the URA also has a Master Plan, which details statutory land use and guides Singapore’s development over a ten to fifteen year period. The Master Plan renders the broad strategies outlined in the Concept Plan into detailed permissible land use and density plans for developments in Singapore. It is reviewed every five years and the last Master Plan was completed in 2008.
The Development Control Group of the URA puts out detailed Development Control Parameters that guide what can and cannot be developed in Singapore, depending on the type of development the area is zoned for. Broadly speaking, we can classify it into two major parts, Residential and Non-Residential developments.
Types of Residential Developments Planned by the URA
Residential developments in Singapore are generally classified according to i. Registration instrument (e.g. land title or strata title) ii. Density (low, medium or high) and iii. Housing type (e.g. detached, semi-detached, condominiums etc).
The key separation would be between landed housing and non-landed flats. Landed housing comprises detached (bungalows), semi-detached, terrace and strata landed housing. Flats can be condominium developments (on sites of 0.4 hectares or larger) or non-condominium flats (on sites smaller than 0.4 hectares). For more information on these different housing types, you can check out this post.
Residential development is mainly controlled by plot ratio (which determines the maximum gross floor area) and building height at the macro level, and by guidelines on housing type and form on the micro level.
Types of Non-Residential Developments Planned by the URA
Within the Non-Residential segment, there are five main groups that the URA has detailed guidelines on:
1. Commercial Developments
These cover commercial buildings (e.g. office blocks, shopping mall, food centre etc), mixed commercial and residential buildings (e.g. apartment blocks with a shopping podium), and residential with commercial use on the 1st storey (e.g. shophouses, and developments with shops on the first storey and apartments above).
2. Hotel and other accommodation facilities
The URA guidelines cover hotels, boarding/guest houses, serviced apartments, students’ hostels and workers’ dormitories.
I’m using Industrial here to cover not just Industrial properties but a broad range of related facilities such as warehouses, utilities, tele-communication and business park developments. The guidelines cover single-user industrial, multiple-user industrial and business park developments.
4. Places of Worship and other institutions
These cover places of worship (e.g. temples, churches and mosques etc), civic and community institutions (e.g. police stations, community clubs, old folks homes, libraries etc), and educational institutions.
These cover hospitals, petrol stations and golf courses.
A closer look at the URA’s industrial property guidelines
Given the run up in residential property prices over the last few years, investor interest has shifted to commercial and industrial properties, which ostensibly have higher yields and have the “virtue” of not having appreciated as much.
But what sort of industries are projects zoned as industrial supposed to be used for?
In the Masterplan 2008 the URA introduced a new environmental impact-based zoning approach by creating two new zones, Business 1 (B1) and Business 2 (B2). B1 zones are intended for use by industry, warehouse, utilities and telecommunication uses where the relevant authority (e.g. NEA) does not impose a nuisance buffer greater than 50m. B2 zones are intended for similar uses but for companies which have an imposed nuisance buffer of greater than 50m. In addition to B1 and B2, a Business Park zoning is meant for non-pollutive industries and businesses that engage in high-tech, high value-added, knowledge-intensive and Research and Development activities.
B1 and B2 zones are predominantly meant for industrial users such as manufacturing, processing, assembly and repair businesses, product design and development, industrial training, e-businesses, media, warehouse, utilities and telecommunication. A minimum of 60% of the floor area should be dedicated to such uses. Up to 40% of the space can be used for supporting uses such as childcare centers, display areas, toilets, meeting rooms, canteens etc. You can get the detailed guidelines here.
An investigative report by The Straits Times found a diverse array of non-industrial businesses and institutions taking up space in industrial estates, including offices, churches, tuition centers, travel agencies and fashion retailers. These non-industrial users are technically violating URA guidelines and if found out can be asked the business to stop, failing which they can be fined up to $200,000 or even jailed.
Given the development of Singapore’s economy, prime location of some of the older industrial estates and rising rental costs, do these guidelines still make sense? I’ve blogged about some of my thoughts on this issue. Share your thoughts in the comments below!