National Development Minister Khaw Boon Wan has asked the Urban Redevelopment Authority (URA) to review and fix the policy allowing developers to sell off free spaces to make additional profit for themselves.
He said this in a blog post, "Who Gets Short-Changed?", on Monday, on the heels of recent launches of executive condominium (EC) projects.
Mr Khaw noted that in these projects, super-sized units were offered and snapped up by buyers who did not appear to be from the "sandwiched" households.
He said understandably, there was public indignation that there were "deviations" from the government's intention of meeting the needs of such households through ECs.
Mr Khaw said the developers explained that such super EC units were a minority, and that they were snapped up by buyers who could actually afford private properties as they had priced them low.
One such developer, he noted, priced its super penthouse at $470psf, while selling the other smaller typical EC units at $770 psf.
Mr Khaw was referring to CityLife@Tampines, which made the news for a penthouse unit with a record price tag of $2.05 million. The unit was over 4,000sqft - roughly four times as big as a five-room HDB flat. The unit was snapped up within two hours of its launch.
This sparked a public outcry on whether ECs have deviated from its original intent to provide subsidised housing for the sandwiched class - those who cannot afford private property but with an income exceeding the limit that qualifies them for a HDB flat.
Mr Khaw said communal sky terraces have been effective in promoting greenery and providing useful common amenities for residents.
This is also happening on the ground floor, where it's referred to as "private enclosed space" for the buyer.
Mr Khaw said under URA rules, it's "not improper" for developers to sell off free spaces to make additional profit.
But he's concerned that as more developers do so with larger private roof terraces and private enclosed space, communal space in the development that benefits all residents will shrink.
Chesterton Suntec's research head Colin Tan said: "This is a closed market in the sense that there is a ceiling cap. And so the developers may think that the majority will not be prepared to pay for such space, and so they decided to concentrate most of this space in just a few units. They feel that at least there will be some buyers who will be prepared to pay for this."
In an emailed response to Channel NewsAsia, URA said: "We are reviewing the guidelines on private enclosed space and private roof terraces, and will announce the details once the review is completed."
Property analysts said the issue has much to do with equity.
CEO of International Property Advisor Ku Swee Yong said: "A sandwiched class family with a household income of $12,000 - are they able to afford a property that is more than $1.5 million? If the family, together with support from parents and relatives can afford (a unit costing) more than $1.5 million then perhaps they are not really in the sandwiched class anymore. They should be better off buying a private property rather than buying a subsidised property which is subsidised with taxpayers' money."
Source: Channel News Asia
Mr Ku seems to have hit the nail right on its head there...