Shoebox flats continue to be popular

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On March 21, 2012
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Straits Times: Wed, Mar 21
   ABOUT one in seven homes sold by developers last year was a shoebox apartments, signalling that the trend of shrinking homes is here to stay.   These units – they are up to 500 sq ft in size – tend to cost under $1 million, a factor that has made …

ABOUT one in seven homes sold by developers last year was a shoebox apartments, signalling that the trend of shrinking homes is here to stay.

These units – they are up to 500 sq ft in size – tend to cost under $1 million, a factor that has made them a big component of the local market.

Buyers snapped up a record 2,037 new ones last year, according to analysis by consultancy R’ST Research.

The transactions include 138 shoebox units sold at Spottiswoode 18 near Outram MRT station, 99 at Skysuites@Anson, and 79 at The Interweave in Kim Keat Road.

Including resales and subsales, the figure grows to 2,400 – also a record – as high prices led to buyers picking up smaller apartments instead.

The level of sales is more than seven times the numbers recorded in 2008 and 20 per cent more than in 2010.

Experts note that shoebox buyers are often investors hoping to rent out the units or young single professionals.

Mr Ong Kah Seng, director at R’ST Research, said the large number of new shoebox units sold reflects the increased number of launches.

High land prices resulted in small units being pushed out by developers to ensure that projects bring in adequate profit margins, he added.

While shoebox quantums are often bite-sized, they can cost as much as 20 per cent more per sq ft than regular-sized homes in the same project.

‘Moreover, many prior projects in 2009 and 2010 which offered small units were well received, reflecting the popularity of such projects.

‘The success of shoebox apartments during the testbed years as well as limited restrictions on developing shoebox units, resulted in the continued provision of shoebox units in new projects,’ Mr Ong added.

But it is not only shoebox homes that are being snapped up. R’ST said small homes of 500 to 700 sq ft are equally popular with buyers on a limited budget.

Almost 3,200 such homes were sold last year, some in new projects like Euhabitat, The Tennery and Seastrand.

Experts expect small homes to continue to be popular this year as their lower overall quantum allows for a less risky investment in the uncertain economic situation.

Already, developers are pushing the limits with recent launches comprising two-bedroom units of less than 500 sq ft and three-bedroom units just over 600 sq ft – smaller than a squash court.

However, Mr Ong added that increased leasing and resale competition can be expected in the next two years as more such homes get completed.

esthert@sph.com.sg

Source: The Straits Times © Singapore Press Holdings Ltd.

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