The controversy surrounding shoebox units has spurred many diverse viewpoints in the past. And now a new report by Savills Research called “Shoebox units – Is small smart or is bigger better?” is championing the role such homes have in major cities around the world.
According to Savills, homes as small as 250 sq ft can successfully meet demand for city centre living amongst young professionals, for whom affordability is severely constrained.
Developers and investors in Singapore favour the higher psf values of shoebox units more than size. Currently a premium of around a third is payable compared to other non-landed property values, at over US$1,250 (S$1,522).
Despite this, the government has set limitations for developing such homes, which can only be built in core central locations to avoid speculation.
In Hong Kong, quality and location are bigger considerations than size, said Savills. As such, shoebox homes in the city have been repackaged as ‘boutique luxury residences’ usually located in prime hotspots, commanding high premium yields for investors.
“As a result, developers are now entering the market to deliver further stock, underpinned by HK SAR government policy which allows the redevelopment of buildings over 50 years old,” added the consultancy.
Simon Smith, Senior Director of Savills Research said that contemporary designers and architects have adapted to consumers’ changing lifestyles; hence shoebox units were introduced.
However, some old world cities have been reluctant in embracing this new trend.
For instance, lenders in Sydney are still hesitant to grant loans for units below 500 sq ft in size. Over in London, the Royal Institute of British Architecture recently came up with the term “shameful shoeboxes”.
“New world cities have experimented successfully with high specification shoebox units, finding strong demand amongst young workers wishing to live and work in central locations,” said Yolande Barnes, Director of Savills World Research.
“The old world now has to make up its mind about the pay off between size, affordability and centrality in its cities, given green belt issues and limits to city growth.”
Source : PropertyGuru – 18 Oct 2012