Authorities unveil new bonus GFA incentive scheme

29-Nov-2021 Intellasia | PropertyGuru | 3:34 AM Print This Post
Authorities unveil new bonus GFA incentive scheme
Authorities unveil new bonus GFA incentive scheme

Developers can get up to 3% bonus GFA beyond the existing Master Plan Gross Plot Ratio by fulfilling certain productivity, digitalisation and sustainability standards.

Developers can enjoy up to 3% additional gross floor area (GFA) beyond the allowable Master Plan gross plot ratio (GPR) if they achieve enhanced standards in productivity, digitalisation and sustainability in their building development.

In a joint release issued on 24 November, the Building and Construction Authority (BCA) and Urban Redevelopment Authority (URA) revealed that the Built Environment Transformation GFA Incentive Scheme applies to development proposals from 24 November 2021 to 23 November 2026.

It will cover residential, commercial, industrial, institutional and mixed-use developments, with the private sites having a GFA of at least 5,000 sq m.

The scheme will also apply to Government Land Sales (GLS) sites launched until the second quarter of 2022, with the applicants enjoying only up to 2% bonus GFA.

After Q2 2022, the minimum requirements for GLS sites will be raised in terms of productivity, digitalisation and sustainability.

The authorities noted that proposals that have obtained planning permission but have not started superstructure works may also be eligible for the scheme on a case-by-case basis.

Successful applicants will have to “submit an amendment or fresh submission to URA for planning permission to include the additional bonus GFA in the development proposal”, they said.

However, they explained that the additional GFA granted “will not form part of the future development potential of the subject site and will be subjected to an overall cap of 10% for additional GFA allowed beyond the Master Plan GPR”.

Moreover, those who have taken up the new incentive scheme “will not be eligible for other funding schemes with comparable outcomes for the same development”.

Developers welcomed the scheme, albeit some were concerned about the all-or-nothing approach to qualify for it as well as the costs associated with fulfilling some of the criteria.

A GuocoLand spokesperson welcomed the incentives, noting that the industry “needs to adopt creative solutions amid headwinds such as supply chain disruptions and labour shortages”, reported The Business Times (BT).

CEL Development Executive Director Michael Ng underscored that GFA incentives are useful in offsetting additional costs related to adopting sustainability and productivity initiatives as well as digital solutions, provided the costs do not outweigh the gains.

For instance, adopting prefabricated prefinished volumetric construction (PPVC) could raise construction costs, he said.

To fulfil the productivity criteria under the scheme, a residential development needs a minimum of 65% PPVC, among other things.

This comes as the COVID-19 pandemic has resulted to supply chain disruptions and manpower crunch, which impacts construction costs. ERA Head of Research and Consultancy Nicholas Mak said increasing constructions makes it costlier for developers to apply for the bonus GFA.

“Developers have to pay development charges to obtain the right to build the bonus GFA and as development charges have increased, it also adds on to the cost,” he added as quoted by BT.

Ng noted that meeting all the scheme’s requirements may prove challenging as developers have to achieve the criteria for productivity, digitalisation and sustainability to qualify for the 3% bonus GFA.

Instead of the all-or-nothing approach, he suggested breaking it up into separate criteria – 1% each for productivity, digitalisation and sustainability.

“One or two small steps are easier than a giant leap,” he said.

One major developer, who declined to be identified, said the scheme is a good step forward.

However, he pointed that it is “important that the process to qualify for the bonus GFA is straightforward and streamlined, especially in the case of residential projects which face timeline constraints of the ABSD regime”.

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Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: [email protected]


Category: PRAsia, PropertyAsia

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