New URA policy will affect shophouse demand

http://www.businesstimes.com.sg/premium/singapore/ura-policy-may-reduce-demand-shophouses-20140714

A NEW Urban Redevelopment Authority (URA) policy to tighten approval of new development applications for hotel, boarding house and backpackers’ hostel uses will likely dampen demand for contiguous shophouses – unless they already have prior approval for such use.

In a circular last week, URA noted that hotels, boarding houses and backpackers’ hostels – which provide accommodation for visitors to Singapore – are generally found in commercial areas. “However, such uses should not dominate and displace other commercial activities in these areas. In addition, they are generally not permitted within or at the fringe of residential estates so as to protect the amenity of nearby residents,” URA said.

The planning authority added that in recent years, it has received more applications for new hotels, boarding houses and backpackers hostels, including change-of-use proposals to such uses on sites that are not zoned for hotel use.

“To address the potential proliferation of such developments”, URA minted the new policy, which took effect on July 7; it will be reviewed in two years.

Within the Central Area, proposals for new hotels, boarding houses and backpackers’ hostels, including any change-of-use proposals to such uses on sites that are not zoned or permitted for hotel use, will generally not be allowed within certain areas inside the Outram, Rochor, Downtown Core and Singapore River Planning areas.

The affected areas include a big chunk of Chinatown and Little India shophouses.

In Chinatown, the affected area is bounded by Upper Cross Street, New Bridge Road, Cantonment Road, Neil Road, Craig Road, Tanjong Pagar Road and South Bridge Road. The stretch includes Mosque, Pagoda and Temple streets, Keong Saik and Kreta Ayer roads, Duxton Hill and Duxton Road.

In Little India, the affected area is bounded by Sungei, Race Course and Kitchener roads extending to Rochor Canal. Other areas hit by the new policy include a stretch near Bugis MRT Station – covering Tan Quee Lan, Liang Seah, Purvis and Seah streets.

Also affected is an area surrounded by North Canal, South Bridge, Upper Circular and New Bridge roads.

For proposals in other parts of the Central Area, URA will evaluate them individually, considering its planning intention for the locality and the potential traffic impact generated by the proposal.

Although there was no mention of “shophouse” in URA’s circular, Mary Sai, executive director at Knight Frank, said: “We interpret these locations straightaway as shophouses because these streets are dominated by shophouses.”

According to Ms Sai, from a planning point of view, URA is not allowing change of use for shophouses in certain areas not only to hotels but also food and beverage outlets, as that would add to traffic congestion and parking woes.

“Morever, in some areas, we’re seeing commercial amenities like retail shops, bakeries, coffee shops, all being replaced by hostels and hotels,” she added.

URA’s new policy is expected to dampen demand for bigger chunks of shophouses. “The entry price for this segment is usually higher and with this ruling, it will reduce the attractiveness of rows of shophouses to be sold together – unless buyers see potential for other uses such as restaurants or corporate offices,” said Ms Sai.

Currently, most people buy a row of adjoining shophouses with the intention of converting them to a hotel or hostel.

On a brighter note, Ms Sai points out that one segment of shophouse owners will benefit from the new policy. “Over the years, shophouses in the affected areas that have been approved for change of use to hotels – whether they are zoned full commercial; or residential with commercial on first storey; or commercial and residential – these are the types of shophouses that will be well sought after by investors and hotel operators keen on boutique hotels.”

URA, in its circular, also stated that Outside the Central Area, it will generally not allow proposals for new hotels, boarding houses and backpackers’ hostels including any change-of-use proposals to such uses, on sites that are not zoned or permitted for hotel use.

As for existing approved hotels and boarding houses on sites that are zoned or permitted for hotel use, any proposed intensification of the gross floor area (GFA) will continue to be subject to evaluation.

Expansion of the existing approved boarding house and backpackers’ hostel uses that are on Temporary Permission (TP) will be considered individually, up to the total GFA of the existing building that it occupies. “URA will only allow further renewal of the TP for these uses if they have not caused any adverse traffic impact and disamenity to the surrounding users,” according to the circular.

Summing up the impact of the new policy, Ms Sai said: “While demand for shophouses may be dampened by the new rules, on the other hand, owners of shophouses already approved for hotel use will find their assets rise in value over time because of difficulty in getting hotels sites.”

Affected areas:

http://www.ura.gov.sg/uol/circulars/2014/jul/~/media/User%20Defined/URA%20Online/circulars/2014/jul/dc14-18app1-4.ashx

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