If a site has a land area of 10,000 square feet and a permitted plot ratio of 2.5, the maximum gross floor area a developer can build is 25,000 square feet. Existing older developments were often built at a lower plot ratio than current Master Plan guidelines allow, which creates headroom for a developer to add meaningful density on redevelopment.
That headroom is what underpins en-bloc economics. If an existing development consumes a plot ratio of 1.4 and the current Master Plan allows 2.5 on that site, a developer acquiring the land can build significantly more saleable area than exists today, which supports paying a premium to the individual resale value of units, the en-bloc premium. If the existing development already consumes most of the allowable plot ratio, that redevelopment case is much weaker.
Realising the extra plot ratio also requires paying development charges to URA for the intensification, a cost that features directly in a developer's en-bloc bid economics.
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Book a free 30 minute callWinfred Quek is an Associate Marketing Consultant at Crestbrick Pte Ltd (CEA Licence No. L31010886H). CEA R073319H. This page is for general information only and does not constitute financial, investment, or legal advice. Verify current figures with IRAS, HDB, CPF Board, or MAS before making any decision.