Minister for National Development Mr Khaw Boon Wan said on Monday that he would not hesitate to intervene in shoe-box unit market should there be clear evidence of unsustainable investor demand.
Mr Khaw added that the Ministry of National Development (MND) is watching the situation closely.
He however cautioned that it would be hard to intervene at present as the market for shoe-box units in the heartlands was “untested”, and he did not want to think he knew “better than developers or investors”.
Mr Khaw was replying to a question in Parliament by MP for Jurong GRC Ang Wei Neng, who asked if MND keeps track of the profiles of shoebox apartments buyers.
MND was also asked to share how many buyers were HDB occupants, and if these buyers were staying in HDB flats larger than 50 square metres.
In response, Mr Khaw said that MND did not yet have a good breakdown on the type of people that have invested in shoe-box units.
“But eyeballing some of the data we have, it suggests they are mostly Singaporeans with HDB addresses,” Mr Khaw added. “They obviously don’t plan to stay there (in shoe-box units), because they won’t be able to fit into 50 square metres with a family of several (people).”
These buyers were likely to be investors who were parking their funds in shoe-box units, with the expectation of renting them out.
“They must have seen shoe-box units in the central region being able to be tenanted out easily with reasonable yield,” said Mr Khaw. “The difference this time round is that most of the units are in the heartlands — where the market is untested.”
He likened the situation to a ferry, which may be overloaded under certain conditions.
“It’s like a ferry designed for a certain capacity,” Mr Khaw said. “If a ferry is overloaded with too many passengers, especially if they’re sailing in shallow waters, it may sink.
“But because it’s an untested water and untested market, it is hard for me to intervene in the market, thinking I may know better than developers or investors.”
“I think the minimum I can do is to alert everybody that I can see long queues going to board the ferry, and I think my job is to share that information as much as I can with the investing public, as well as the developers,” Mr Khaw added.
There are about 2,500 units of completed shoe-box units currently, making up 1.2 per cent of the 210,000 non-landed units in private housing stock. The supply is expected to increase to 9,700 units by 2015.