Prices, popularity of shoebox units set to increase

  September 27, 2011

Shoebox units outperformed other condos as an investment last month, according to website iProperty.com.

Prices for the minute flats, normally measuring less than 500 square feet, rose 14 per cent to an average S$1,549 per square foot (psf) in August 2011 from a year ago.

In contrast, psf prices increased 4.9 per cent for condominiums measuring between 501 to 1,500 square feet; and rose 9.9 per cent for condos of more than 1,500 square feet.

The hotspot for shoebox units was District 15 with 513 apartments transacted, while the lowest was in the non-prime area District 21 with only 11 of the total 197 deals crossed in August.

Shaun Di Gregorio, iProperty Group CEO, said the shoebox “present attractive investment opportunities,” despite the steep pricing and market uncertainties posed by European and US debt crises.

Some analysts such as Mr Ku Swee Yong, the CEO of International Property Advisor Pte Ltd, speculate the rise demand for shoebox apartments in August may be due to the spike in such properties being developed during that period.

“We cannot assume that the strong take up of shoebox units is due to the popularity of investors because it is a relatively new market,” said Mr Ku.

Source : Channel NewsAsia – 26 Sep 2011

Affordability concerns set to stabilise shoebox unit prices

  September 28, 2011  

The price of shoebox units are on the rise but concerns over affordability in this segment could see prices softening.

The Singapore Residential Price Index (SRPI) by the National University of Singapore (NUS), which tracks the price movement of new small apartments, rose 3.1 per cent in August (month-on-month), after falling 0.5 per cent in July.

The increase is more significant when compared to the overall SRPI which remained flat in August and July.

Small units are defined as being no bigger than 506 square feet. The SRPI Small for small units was created in July. At the time, NUS’ Institute of Real Estate Studies said that “this is important market information which will help us understand the price behaviour of different segments of the market.”

The popularity of shoebox units is a relatively new trend that appears to be correlated with housing affordability.

Jones Lang LaSalle’s head of research and consultancy Chua Yang Liang said that the increase in the SRPI Small was underpinned by the housing needs of young and small families. “Affordability is an issue,” said Dr Chua.

Investors are also price sensitive, it seems. “You also can’t discount the fact that some are buying for investment,” Dr Chua added.

Because this segment of the market is tied to the quantum price of the property, prices are not likely to keep rising, because the units cannot feasibly get any smaller.

“There will be a point when prices cannot get higher,” Dr Chua added.

Looking at the segmental index, the SRPI Central (central region), excluding small units, fell 0.7 per cent while the SRPI Non-Central, excluding small units, rose 0.5 per cent.

Giving insight on the overall property market, Nicholas Mak, head of SLP International Research, said: “The price range is reaching a plateau with no increase. The growth from sub-sectors like non-central and smaller units implied a stronger demand while the central district, suffering from three months of contraction, showed the opposite.”

Mr Mak also added that due to the current economic slump, the market becomes very “uncertain” and there is a need for investors to be “selective”.

Source : Channel NewsAsia – 28 Sep 2011