Counting the love of aircon ledges in dollars

Posted on Posted in Mr Ku Swee Yong's Articles


Just how much do buyers of private property pay for air-conditioner (AC) ledges every year? A whopping S$780 million.

I hope my estimates are wrong, but simply examining new residential sales in the six years from 2011 to 2016, it seems that buyers have spent a total of S$4.7 billion on AC ledges. If we include another 3 per cent of normal buyer stamp duties and disregard the buyers who have paid additional buyer stamp duties of as much as 15 per cent, the stamp duties collected on these AC ledges exceeded S$140 million.

I have not included the larger AC ledges sold with strata industrial, retail or office units, which were investors’ darlings following the series of residential cooling measures imposed from 2010 to 2013. The strata retail and strata office units have generally higher unit prices than residential properties, ranging from S$3,000 to S$10,000 per sqf, meaning that a 50 sqf AC ledge of a strata retail shop priced at S$8,000 per sqf is an investment of S$400,000 for the buyer, excluding stamp duty.


There is nothing wrong with investors buying oversized AC ledges. However, most investors probably do not realise that they have bought overly large, unusable areas that are collecting dirt. Worse, astute tenants will bargain for rents that are commensurate with usable space. Question: Which 700sqf apartment do you think a tenant would be more willing to pay a rental of S$2,500 a month: One that has a 54sqf AC ledge or one that has a 21sqf AC ledge? Ancillary areas such as ledges, planters, void areas, patios and balconies are usually discounted by tenants when it comes to price bargaining.

The typical footprint of an AC compressor that can cool three rooms is no more than 3sqf, and a high-capacity model for residential use that can cool up to five rooms simultaneously has a footprint of less than 4sqf.


(click to enlarge: This table shows the proportion of AC ledges for a single-floor, 2-bedroom apartment in Condominium A and Condominium B. Both city-fringe projects were sold at about S$2,000psf.)

Table 1 shows the breakdown of areas for a medium-sized and a small-sized two-bedroom unit in Condominium A and Condominium B, respectively. Assuming that the owners like really cold temperatures, they might install two small-sized AC compressors with footprints of about 2 to 3 sqf each, and install five indoor units to cool the two bedrooms, living room, dining room and kitchen. Without having to stack up the compressors and allowing for better access for maintenance and repairs, a 20sqf AC ledge should be more than sufficient.

However, as Table 1 shows, the investors each paid S$107,600 for 53.8sqf of AC ledges, more than half of which are unnecessary. Add to that the stamp duties and interest expenses and it is sufficient to keep a small business going for many months.


The issue boils down to the often-quoted Latin phrase “Caveat Emptor”, or buyer beware. Investors alone take responsibility for checking on the investment target before committing to the purchase. However, the S$4.7 billion bill for new AC ledges over the past six years indicates that investors do not know that they have overpaid for concrete slabs. They are aware of the poor investment value only when they are unable to achieve their expected rental returns.


(click to enlarge, Chart 1: the value of new AC ledges sold every month for the past six years.)

To derive the total value of AC ledges sold by developers every month, we compiled the new sales of private residences and Executive Condominiums from January 2011 to December 2016. Based on my observations in showflats in the past few years, I assume that the average size of the AC ledges in these residential units to be 40sqf. Then we multiply:

(a) the number of units sold in each project each month by

(b) the median per sqf price transacted for that project during that month, and

(c) 40sqf of AC ledge per residential unit.

And you can see from Chart 1 the value of new AC ledges sold every month for the past six years.


The Government does not mandate sizes for AC ledges to guide developers and architects. I believe that any professional architect can calculate how many AC compressors are required to cool the interior air volume of any homes that they design, and plan for suitably-sized ledges.

However, oversized AC ledges are prevalent today because while the area of AC ledges of up to one metre (or 3.3 feet) in width do not count towards the gross floor area (GFA) and plot ratio of a condominium development, they are considered strata area that developers can sell. Overvalued AC ledges are one of several examples where the distortion between the definitions of GFA and strata area is costing investors in the form of inferior financial returns.

Since May 2012, the Government has mandated that developers provide prospective buyers with clearly marked floor plans of the units with a detailed breakdown of floor areas such as bedrooms, kitchens, living rooms, AC ledges and balconies. Buyers should be able to make informed decisions before taking out their cheque books. However, these measures apparently did not make buyers open their eyes any wider, as investments into new AC ledges in residences totalled almost a billion dollars in 2013.

I believe that the real answer to a suitable size for an AC ledge will emerge once we re-classify the AC ledge as a non-strata area such that developers and architects will design cool homes with better investment values.

In the more-developed real estate markets, such as Japan and Australia, because AC ledges are not strata sellable areas, AC compressors are simply stacked and tucked into the side of a balcony. Easy to maintain. Less wasted space.

To tackle the problem at its root, it is imperative that we address the chasm in the definitions of GFA and strata area so as to prevent future investors from overpaying for unusable and non-productive areas such as AC ledges, advertising ledges, external void areas and internal void areas. This will be a mammoth task requiring the coordination between various government departments, as the responsibility for defining strata area comes under the Singapore Land Authority and the Ministry of Law, while GFA and other related planning and development control guidelines come under the purview of the Urban Redevelopment Authority and the Ministry of National Development.

I hope such co-ordination will take place soon.

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