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04-05-2012, 06:51 AM
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.'
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.'
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