URA Bans Strata Subdivision Of Commercial Properties

URA Bans Strata Subdivision Of Commercial Properties In Singapore’s Central Area

SINGAPORE – Strata subdivision of commercial projects or mixed-use developments with a commercial component will no longer be permitted in Central areas, according to a circular published by the Urban Redevelopment Authority (URA) on Tuesday noon (15 March, SGT).

The restriction will apply to commercial properties situated in Orchard Road, Tanglin Road, Scotts Road, Shenton Way, Robinson Road, Anson Road, Raffles Quay, spaces facing Raffles Place Park, and those along the Singapore River.

It also applies to developments near key landmarks of national significance, namely the Parliament House, the Supreme Court Building, the Padang, and the War Memorial Park.

The goal of the restriction is to improve the upkeep and quality of commercial developments in Singapore’s Central Area.

“In general, strata subdivided developments, due to their fragmented ownership, tend to face challenges in maintenance and upkeep. For example, they may have difficulties in obtaining consensus to regularly maintain and/or upgrade the building, which can result in deteriorating physical condition, and in curating a good tenant mix,” stated the URA in its circular.

Colliers International Singapore’s Research Head Catherine He said the restriction is good as it will prevent unit owners in shopping centres from trying to maximise fixed rents from subdivided units with little sharing of business operational risks. This is because the ban will encourage owners to put more effort into marketing and positioning the malls in order to attract crowds and increase footfall.

“Under a single ownership, there will be stronger alignment of interests in terms of building management, incorporating ESG [environmental social governance] considerations, as well as choice of tenant mix. As a result, it will help to preserve the positioning and value of the asset in the long run,” she added.

However, owners of commercial properties who are planning to launch an en bloc sale could be negatively affected, as the submitted prices in collective sales could be lower. The new curb is also expected to significantly lessen interest in commercial properties in the affected areas.

“This is because the modus operandi of some developers is to redevelop a building or land into strata units for sale. This method can provide a relatively high rate of financial return within a given time, compared to holding the property for rental income.”

Free Finding Service