Demand for shoebox units may be waning

Demand for small sized apartments also known as shoebox units may be waning.

These units spanning less than 500 square feet seem to be a hit with property buyers recently.

Analysts said the popularity of these units in the rental market will only be tested in 2013, when the bulk of these units will be ready and put up for rent.

Smaller apartments have been flooding the property market in recent years.

A shoebox unit is roughly the size of four HDB carpark spaces, and its price can go for below a million dollars for a private property.

Analysts noted that some a record high 2,000 units of this size were snapped up last year.

But experts said demand may be waning on concerns of potential oversupply.

Savills’ Head of Research, Alan Cheong, said: “At the moment, that seems to be the typical blueprint of developer to have shoebox units in any development. But I would think that the time will come, perhaps as soon as the second half of the year, when developers realise that they may have to tweak it to a family-oriented size units because you are also heading towards 2013, when the supply of the 2,000 units is coming out.”

Market watchers will be placing their attention on the upcoming Alexis, slated to complete by 2012.

Touted as one of the first few shoebox developments to be ready, Alexis will set a benchmark in how much rental shoebox apartments can fetch.

Lee Sze Teck, who is senior manager (Research & Consultancy) at DWG, said: “I think this would be popular with expatriates that don’t come with an expatriate housing package. For locals, maybe singles would prefer if it suits their current lifestyle, as in they work late, don’t stay there much often, and just going back there to rest.”

Analysts estimate shoebox units to command rentals between S$2,500 and S$3,000 in the suburbs.

IPA CEO Ku Swee Yong said: “For a S$3,000 budget per month, you scarcely can get a shoebox unit near to town or within CBD itself. But for $3,000 going out to the North-east of Singapore, Choa Chu Kang or Bukit Panjang, that rental can get you a 5-room HDB apartment that is three times the size of your shoebox unit. And you would probably still be able to share two of your bedrooms with some of your colleagues in order to share your rental expenses further. So in the outskirts of Singapore, small sized units rental values may not be as high as what we imagine or project them to be today.”

Another sign of waning popularity is that prices of shoebox units in the resale market also dipped by 0.9 per cent in February.

This is according to Singapore Residential Price Index compiled by NUS Institute of Real Estate Studies.

Source : Channel NewsAsia – 3 Apr 2012

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