SINGAPORE: For six months, Ms Hanna Sim was trying in vain to rent out her 1-bedroom apartment at private condominium Kingsford Hillview Peak. Her tenant search ended after her property agent lowered the monthly asking rent from an initial S$2,000 to S$1,750.
With a lower rental income, the 30-year-old is making a loss out of her 52 sq m shoebox apartment in Hillview. To break even, she would need a tenant who would be willing to pay a monthly rent of about S$2,200.
Ms Grace Seow, who had owned a shoebox unit at Parc Rosewood in Woodlands, sold her apartment at the same price she paid for it, albeit without factoring added costs such as renovation or maintenance.
"It took me quite a while to sell it, and I managed to break even at the price that I bought," the 29-year-old insurance agent said.
Ms Seow and Ms Sim are among a growing number of people here who are finding out the hard way that warnings by experts and the Government about buying shoebox units in the heartlands are true: There is low resale demand for such units given their location, and they are too small to raise a family in.
Even so, shoebox units in new projects in the heartlands continue to sell like hot cakes — often thanks to good marketing and persuasive property agents. These units at some of the recent launches were the most popular among buyers, developers said.
Shoebox apartments are generally defined by the industry as being 50 sq m or smaller, which is slightly four times the size of a car parking lot (11.52 sq m). The smallest shoebox unit ever sold in Singapore was 24 sq m — the size of two and a half carpark lots — at Suites @ Guillemard, according to Squarefoot Research.
While shoebox units used to be concentrated in the central region and city fringes of the island, such apartments have mushroomed in the heartlands, known as the Outside Central Region (OCR).
Responding to queries, the Urban Redevelopment Authority (URA) said that as of the first quarter of this year, there were about 28,000 completed shoebox units in Singapore in total, an 11-fold increase in just six years.
The figure makes up 8.7 per cent of the 323,000 non-landed private housing units completed on the island. Out of the total number of completed shoebox units, 85 per cent are located outside the central area — a complete reversal of the distribution of such units in 2012, when 80 per cent of shoebox units were located in the central area.
Concerns over an oversupply of shoebox units, particularly in the suburban areas, were first raised in Parliament in 2012. Then National Development Minister Khaw Boon Wan told the House that there were 2,500 such apartments, comprising about 1 per cent of the total private housing stock then.
Back then, the URA also observed shrinking dwelling unit sizes in new private housing projects, and the strain posed on the local infrastructure by the large concentration of such developments, which were much higher than what was originally planned for.
Mr Khaw also noted that property data at the time suggested most of the people who invested in shoebox units were mostly Singaporeans with Housing and Development Board (HDB) addresses.
He told Parliament: “Obviously, they do not plan to stay (in these shoebox units) because they would not be able to fit into these 50 sq m for a family of several members.”
"It looks like they are investors, parking their funds there and expecting to be able to rent out because they must have seen shoebox units in the Central Region being able to be tenanted out relatively easily with reasonable yield.”
Six years after Mr Khaw raised the red flag over shoebox units, they continue to proliferate.
On Oct 17, the URA announced new guidelines — taking effect three months later — to reduce the maximum number of units allowed in new private housing projects in the heartlands. This effectively deters developers from building an excessive number of shoebox units.
Several new areas — including Marine Parade, Balestier and Loyang — will also be subject to more stringent requirements due to the severe strain which the “cumulative effect of new developments” could pose on local infrastructure.
The new guidelines are a tightening of the ones first unveiled by the URA in 2012 to “moderate the excessive development of shoebox units”.
Data from two other property brokerage firms — Cushman and Wakefield and ZACD Group — showed that across the island, the average size of shoebox units had increased slightly from around 41.5 sq m in 2014 to 43.1 sq m in the first half of the year.
However, research from property consultancy CBRE showed that the median size of private homes in new projects in the heartlands especially has been shrinking since the second quarter of 2017.
In fact, as of the third quarter of this year, the median size of homes in OCR is the lowest among the three regions at just 57 sq m — compared to 82 sq m and 65 sq m in the city area and the city fringes, respectively.
Analysts attribute this to the fact that in the heartlands, developers need to keep the prices of condominium units relatively low in order to target the mass market. As a result, smaller units are built to maintain profit margins.
While shoebox units are usually targeted at investors and singles, other common profiles of their buyers include expatriates, the elderly and couples without children.
Mr Goh Boon Hong is one of them. The 48-year-old engineer currently lives in a 49 sq m shoebox apartment at Urban Vista condominium with his wife. He bought the unit in Tanah Merah in 2013, and moved in when the development was ready in 2016.
“This unit (size) is sufficient for couples, although it may be cramped for (owners) with kids,” he said.
Likewise, Mr Goh Zong Wei, 32, used to call a 49 sq m shoebox apartment in Mountbatten home for two years, until his wife got pregnant.
The apartment is definitely not suitable for a family since it has only one bedroom and one study, the banker said.
Another owner of a 44 sq m condo unit at Parc Centros — who only wanted to be known as Nicholas — also changed his mind about living in a shoebox unit after plans to settle down came to the fore.
The 28-year-old, who had been living with his parents in a HDB flat, bought his property in late 2017 with the intention of living there alone.
However, he now intends to sell his Punggol shoebox unit in two years.
More at https://www.channelnewsasia.com/news/singapore/shoebox-apartment-studios-singapore-high-demand-prices-value-10872250