Shoebox units still appeal to some home buyers, investors

http://www.propertyguru.com.sg/en/property-management-news/2015/2/82198/Shoebox%20units%20still%20appeal%20to%20some%20home%20buyers,%20investors?utm_source=pgsg-newsalert&utm_medium=edm&utm_campaign=dailynews-02Feb2015&utm_content=links

Measures aimed at curbing the excessive development of shoebox units yielded mixed impact on the offering of said units outside the central area, revealed a Knight Frank study.

The study on selected private residential projects indicated the ratio of shoebox apartments located outside the central area has increased since the November 2012 guideline from the Urban Redevelopment Authority (URA) stating the maximum number of dwelling units for all new flats as well as condominium development outside the central area.
Notably, Knight Frank compared private residential projects whose building plan proposals obtained provisional permission within one-and-a-half-year prior to 4 November 2012 (which was the pre-guideline period) with those whose provisional permission dates fell within a one-and-a-half-year period after the release of the guideline on 4 November 2012 (post-guideline period).
The study, which looked into 105 projects, showed that the proportion of shoebox apartments in certain projects increased from 10.5 percent in the pre-guideline period to 12.1 percent during the post-guideline period.

Specifically, the share of shoebox units, which are less than or equal to 47 sq m, increased in the Northeast, East and Central (excludes central area and southern islands) regions in the post-guideline period, but fell in the West and North regions.
The mixed result may be at odds with what URA aimed to achieve when it introduced a formula for the maximum number of dwelling units for new flats as well as condominium developments outside the central area.

According to Knight Frank Singapore Head of Research Alice Tan, given the property cooling measures and the tightened financing requirements, property developers are still likely to include more small-sized homes within their projects in order to appeal to a wider group of investors, home seekers or singles and small families on the lookout for units with affordable lump-sum prices.
“This is critical for developers, in this competitive sales market, to reach out to a wider market base of investors with varying needs and wants so as to achieve better sales results,” she said.

Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg