Mickey mouse flats in Singapore see continued sales this year

Sales are still going strong for so-called Mickey Mouse apartments or those that measure 500 square feet or less.

According to Credo Real Estate, transactions of Mickey Mouse units made up 9.5 per cent of total transactions in the first half of this year.

This is a three percentage point increase from the same period last year. But analysts are divided on whether demand for these units can be sustained.

Shoebox living in apartments of 500 square feet or under has become somewhat of a talking point in property circles.

Experts said the popularity of these units is due to their lower price quantum, making them affordable to young professional and expats.

They also tend to be located in the prime districts, luring buyers with their attractive location.

According to Credo Real Estate, pricing of Mickey Mouse units in the CBD area could range between S$1,800 to S$2,000 per square foot while those outside the CBD area could range between $1,200 to $1,400 psf.

This is about a 20 per cent increase compared to last year.

Liang Thow Ming, executive director Residential Services, Credo Real Estate, said: “I would think that this trend will continue to increase. I would not be surprised if we see Mickey Mouse units making up 10% of total sales in the second half of this year, and probably going up to 11 or 12% next year.”

But other market watchers said these apartments cater mainly to investors who want to cash in on rising property prices.

Last year, sub sales in the broad residential market was 12 per cent and have come down to 10 per cent in the first half of this year.

Speculative sales of Mickey Mouse units have increased from 13 per cent last year to 17 per cent in the first six months of this year alone.

Nicholas Mak, lecturer, School of Engineering, Ngee Ann Polytechnic, said: “Starting from May, Singapore private home sales market is starting to slow down. So they are concerned that there could be a correction on the horizon. As a result, they are selling off their investments. Some of these investors of small apartments are actually speculators. They are not intending to hold their investment for long term rental gains but rather just for speculative short term capital gains.”

As for rental gains, the views are also divided.

Some said the rentals are hard to predict as most of these units are still under construction.

But others said that rents for Mickey Mouse units in the prime districts could fetch up to S$7 per square foot.

This represents a 4.2 per cent return on rents, when compared to a 3.5 per cent per cent return on rent for a 1,200 square foot three-bedroom apartment.

Source : Channel NewsAsia – 12 Jul 2010

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