2011 may be another shoebox units record sales year

A total of 1,867 shoebox units were transacted in the first 3 quarters of 2011 which is near the 1,999 record high the previous year.

The total shoebox apartment transactions based on data from URA REALIS cover developer sales, sub-sales and resale.

According to R’ST Research, Spottiswoode 18, Skysuites@Anson and The Interweave accounted for the largest primary sales of micro apartment projects in the first three quarters of 2011, whereas Alexis, The Clift and Prestige Heights chalked up the largest sub-sale of micro apartment transactions.

Transacted sales are as follows:

Projects with most micro units transacted in 2011 Y-T-D:
 

Source: URA REALIS, R'ST Research

What beholds for shoebox apartments amid the economic slowdown in 2012?

According to R’ST Research director Ong Kah Seng, shoebox apartments continued to be well sought after and receive good buying interest in 2011, even in 3Q 2011 in the face of economic slowdown. This illustrates the increased preference and probably acceptance of such super small units in view of high residential prices and shoebox units do indeed allow buyers to fork out smaller overall purchase prices although the unit prices (psf) can be fairly high.

“If property prices have some soft landing in view of the prolonged economic uncertainty in 1H 2012, there may be a number of homebuyers on the sidelines who will want to quickly grab hold of the opportunity and make a residential purchase. These include buying shoebox apartments which will have an overall smaller price quantum,” he said.

Mr. Kah Seng however notes that potential homebuyers are unlikely to buy from the sub-sale market, of shoebox apartments which were launched and bought from developers in 2011.

“This is because such property owners will have to pay sellers’ stamp duty up to 16% of the selling prices and interested buyers of shoebox apartments will find more sense and opportunity in the sub-sale market from projects that were launched and sold in 2009 and 2010. As prices of most shoebox units bought in this period have also increased, this allows he owners to dispose and profit,” Mr. Ong noted.

According to the expert, the major challenge for shoebox apartments is however the influx of new completions coming on stream. Although this will provide more choices for buyers and tenants, it will more likely intensify the competition among property owners.

“Currently, there is significant rental premium or envisaged rental premium of shoebox apartments for the privacy which one can enjoy in a shoebox apartment. However, this selling point will increasingly dilute and rents are expected to slightly decrease as more choices become available, resulting in lower rental yields for shoebox apartments,” he said.

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