One of the major concerns of policymakers and central bankers across the world today is the housing supply glut in Singapore. Currently, there are not enough units being built and sold in the market. With prices of houses continuing to rise, the demand for housing has only increased and there is a lack of supply. This might not seem like such a big problem until the housing shortage is discovered to exist and it cannot be resolved.
The MERS (Maritime Exclusive Trading Zone) system and its associated boom in residential construction in Singapore did not go unnoticed by the country’s government. The Government of Singapore was alarmed by the high level of new construction activity. While the policy makers were concerned with the slow recovery of the domestic real estate market and the strong growth of China, they wanted to avoid another housing bubble from taking place in their nation. The local Government of Singapore sought to prevent this from happening and the answer was announced when the Government introduced the AMMA (Allocation of Local Development Authority) at the end of 2020.
The AMMA was designed to increase the number of approvals for the development of condominiums and other types of housing in designated areas surrounding the AMMA. It was hoped that this would attract investors who wished to buy commercial properties and other types of properties that were located near the AMMA. In addition, the government also looked to increase the supply of local housing. The AMMA and the creation of the AMSA, the Application for Housing Supply Area, has not only helped increase the number of housing units built in Singapore, but also has put an end to the tremendous housing supply glut.
Multi Tenant Developments in The Pipeline
With the announcement of the AMMA, there was a large increase in the number of residential developments in Singapore. Many developers stepped up and made investments in the future of the housing sector in Singapore. In fact, some of the investors who have already purchased properties in Singapore with the intention of selling them in the future have already received offers from other buyers who wanted to purchase their properties.
Along with residential developments, there have also been a number of multi-tenant developments in the pipeline. These types of developments are usually mixed-use developments in which several different tenants share a specific building. This model has proven very popular in cities such as Singapore, where many residents are looking for more amenities in their cities.
There have also been a number of multi-storey office buildings constructed along the edges of AMSA zones. Most of these were residential complexes in which several small offices were put up along the main building. This was intended to encourage the private sector to construct bigger buildings in AMSA zones so that a larger influx of residential properties could be captured.
Long term effects to be noted
The long-term effects of the AMMA and the AMSA are yet to be determined, but it is important to note that the AMMA has indeed stopped the spread of the MERS. Even though the current situation does not appear to be ideal for residential developments, it can still be predicted that there will be many more residential developments in the coming years. The increase in supply of apartments and the increase in the supply of commercial properties will continue to keep Singapore building its housing supply.
As a result of the AMMA and the AMSA, it appears that the current housing supply glut in Singapore is not going to be totally averted by extending the AMBSD. The government of Singapore is also considering increasing the number of new approvals for the residential development sector. In spite of these current problems, the AMMA is still helping Singapore to develop its economy in the long run.