Shoebox units pulling down value of new homes

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#1
The Straits Times
May 4, 2012
Shoebox units pulling down value of new homes


By Amanda Tan

THE dramatic rise of 'shoebox' units here, with their low total price tags, are causing a major drop in the value of new private homes in the pipeline.

The total value of uncompleted condominiums slid 22 per cent last year as these miniature homes rose to prominence, a recent property study found.

Property firm CBRE said the 13,611 caveats lodged for new homes amounted to $16.6 billion last year, a drop from the $21.2 billion in 2010, even though the number of caveats that year was only a little higher at 13,933.

CBRE said shoebox units, typically 500 sq ft or smaller, have lower price tags - even though the per sq ft price may be higher - and this is pulling down the overall value of home sales. As recently as 2008, these units were 'mostly found in city-fringe locations', but they have since proliferated widely.

The median size of new units has dropped from 1,249 sq ft in the third quarter of 2009 to 721 sq ft in the first quarter of this year.

CBRE's findings come on the back of National Development Minister Khaw Boon Wan's comment that the Government is keeping an eye on the rise of shoebox units. Speaking at a feedback forum this week, Mr Khaw said the Government will 'step in' if the proportion of such units becomes too high.

Recent property statistics bear out their popularity: more than one in four new home sales in the first quarter of the year was a shoebox unit, as investors went looking for decent rental yields.

Urban Redevelopment Authority (URA) data also showed that the stock of small units will surge from about 2,400 at the end of last year to 8,200 units or more by the end of 2015 - a figure which could prove to be higher. Some upcoming projects featuring these flats include Punggol's Watertown and Parc Rosewood in Woodlands.

Despite the attractive price, critics say shoebox units are too small to live in. But if the shoebox market remains hot, property consultants foresee some measures or curbs being rolled out.

R'ST Research director Ong Kah Seng said one possible move would be to restrict such units in some condos - especially those which attract HDB upgraders - or those in popular neighbourhoods with good schools, for example. 'They could also restrict... how much a buyer can borrow,' he said.

HSR Property Group special adviser Donald Han expects an expansion of a scheme launched in ever more cramped areas like Telok Kurau and Joo Chiat.

The URA has set a minimum plot size of 1,000 sqm for all non-landed residential projects, to allow for more open space.

Still, the jury is out on the viability of shoebox units. Credo Real Estate executive director Ong Teck Hui said: 'It remains to be seen if there is really widespread demand from tenants or owner-occupation... if it doesn't pan out, it'll be an economic waste.'
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
http://www.channelnewsasia.com/stories/s...46/1/.html

This article tells you the picture of whats ahead with the property scene in Spore. Spore bank ability to finance is also dependent on their ability to underwrite their own borrowing? Others claim that our banks are flooded with oversea money parked here?

Once money parked here means liquid deposit and anytime can move in short notice. If it had not been the open policy of liberal banking, Spore could not attract so much money from offshore source?

When liquidity becomes tight, we will see the impact of lending to property and just look at how bias our press is towards Capitaland the leading culprit that cause all these exorbitant land tender price at record breaking level. It will continue to be flush with liquidity, property Co. may not die but the people better be able to secure their jobs to continue to pay the mortgage, otherwise everything can spin out of control.

How come gov is so concern about cooling the property? They obviously dont have the full picture and their over building program can easily be tampered again if the demand fall with a open door policy on foreigners!

Gov, property Co. (that have ability to inject liquidity) and bank they will all continue to be strong - but you and I will have no other means out except to fortify our earning ability to meet their ever increasing cost and profit demand. Essentially, the 3 hedge stone are the cornerstones of our economy that taxes and support the rich gov servant, property tycoon and old wealth bankers - the public benefit a little but pays a lot more until the day I hand over my IC, gov still hold my CPF money for the benefit of who?

Meanwhile, nothing can be done to our investment in the market nor savings in bank. They are not eroded by common daily essential but mostly COE, land price (bid 900/sqft, and sell breakeven at 1200? profit so little, who is the ultimate beneficiary? ) at the end of the day, the Papaya will pay the for by vote. The

The next generation will never ever have a dream unless their salary can be increase much faster then the sky high cost of property and it would mean older generation will have to foot for more expensive service cost!
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#3
Now we start connecting the dot on why some developers are "so concern" for our living standards with shoe box units.
Is all about vested interests.

Cory

Just my Diary
corylogics.blogspot.com/


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