In Singapore, the definition of a shoebox unit is confined to size. The Minister of National Development blogged that it is an apartment of less than 500 sq ft; however, there are others who believe that it should include units of up to 700 sq ft. The Urban Redevelopment Authority (URA), in its latest planning guidelines computing the maximum number of dwelling units on development land, uses 753 sq ft, but did not say explicitly that this refers to shoebox units. For the purposes of this report, the definition of a shoebox unit will be taken to mean units of less than 500 sq ft.

Shoebox units started to take root in the latter half of the last decade. The completed apartments currently hitting the leasing market were those marketed in 2007 and 2008. Even then, the numbers launched and sold over these two years totalled only about 500. By 2010, these units became popular, with new sales hitting a high of about 1,700 units before petering out at 665 units in 2011. With the URA stepping in to restrict the maximum number of dwelling units on development plans approved on or after 4 November 2012, the age of the shoebox unit is over for non-core central regions (CCR) of Singapore. Henceforth, only the CCR, which encompasses prime residential districts 1, 2, 4, 9, 10 and 11, will be permitted shoebox units so we can expect the supply and sales of such units to decline from now on.

Graph 7 shows that new shoebox unit sales were healthy over the first half of 2012, with take-up averaging 803 units per quarter.

Shoebox prices are presently commanding a 33.5% premium over all non-landed property values, and are currently transacting at about S$1,547 (US$1,259.9) per sq ft versus S$1,159 (US$943.9) per sq ft for all non-landed properties.

Rent wise, shoebox units also command a significantly higher rate on a dollar per sq ft basis. The average rent of a shoebox unit is currently above S$6.5 (US$5.3) per sq ft per month. This represents a significant premium to larger units. For example, for units that are between 501 sq ft and 1,500 sq ft, rents are fetching, on average, S$4.2 (US$3.4) per sq ft per month, 35% below shoebox unit rates.

Case study (Singapore)

Alexis@Alexandra

Facts

• Six-storey condominium development completed in April 2012.

• Two-hundred and ninety-three units, including shoebox units and a penthouse.

• Located within 6 km by road from the financial district.

• Convenient access to the MRT (Commonwealth Station) and shops/eateries.

• Longest skypool in town at 75-m long.

• Other amenities include Jacuzzi, steam bath, spa pool, gymnasium and playground.

Findings

• The shoebox studio is designed to target young, single urban professionals with modern designs and advanced appliances.

• On average, the shoebox units (Type A2 – see floor plan in gallery) are valued at a higher price per sq ft than larger unit types.

• Shoebox units have more potential buyers as the lump-sum price of the unit is lower.

Taken from
Spotlight: Shoebox units - Is smaller smart or is bigger better?