Back in 2022, it was announced that floor area definitions by URA, SLA, BCA and SCDF will be standardized to (1) minimize confusion to property owners who wish to carry out addition and alteration works within their strata units, and to (2) reduce the significant amount of time and effort by Qualified Persons (QPs) to calculate various floor areas to fulfil the different agencies’ regulatory requirements.

This change is commonly known as Gross Floor Area (“GFA”) Harmonization.

As this was implemented only in June 2023, you will find that its only recently in Year 2024 that we start hearing a lot more about this term in the property market. So, what exactly is GFA Harmonization and how does it impact us as buyers?

Basically, GFA harmonization means that the definitions of floor areas will be standardized as follows.

• Measurement to the middle of the wall: Floor areas are now measured to the center of the wall, providing a more consistent approach.
• Inclusion of strata areas: All common areas within a development, such as corridors, lobbies, lifts, carparks, swimming pools, and gyms, are now included in the GFA calculation.
• Exclusion of voids: Void spaces, like air-conditioning ledges and roof overhangs, are no longer included in the GFA. 

Therefore, sometime in Year 2023, developers might have appeared to be bidding lower for land on a per-square-foot (psf) basis and you might have had the impression that market had hence peaked and that property prices should head South.

The lower psf land cost, as you are now aware, was largely due to the inclusion of strata areas in the GFA calculation. In many cases, the increase in GFA for a project is primarily due to the inclusion of common areas that were previously not included in the GFA calculation. Hence, while the developer might seem to be paying less per square foot, their overall cost for the land remains relatively unchanged.

Whilst the overall GFA of the project may be higher, the GFA of individual units may remain relatively unchanged or even decrease slightly. This is because under the new rules, void spaces such as air-conditioning ledges, roof overhangs, and areas created by high ceilings which were previously considered part of strata areas and could be included in the saleable GFA of units, are no longer included in strata areas and therefore cannot be counted towards the GFA of units. This has resulted in a reduction in the saleable area of units, typically between 5% and 8%, compared to units that were not subject to GFA harmonization.

Overall, GFA harmonization has introduced a new dynamic to the Singapore real estate market. While it has led to increased prices for many buyers, it has also prompted developers to adopt innovative strategies to enhance the value of their projects.