‘Shoebox’ units may wilt under URA’s gaze

Recent applications for apartments below 300 sq ft understood to have been rejected

The new breed of ’shoebox’ private apartments may have caught the imagination, but don’t expect them to invade the housing landscape. Some may not even get the planning authority’s approval, going forward, if recent decisions are any guide.

Earlier this month, Singapore saw its smallest ever apartment unit – at 258 square feet – being put on the market at the Suites@Guillemard project. While this made headlines, BT understands that the Urban Redevelopment Authority (URA) recently turned down some applications involving apartments below 28 square metres (or about 300 sq ft).

Apart from the size, the layout of the proposed micro units may also have been a factor. For instance, if an apartment does not adequately provide for a kitchen, it may resemble a hotel room rather than a residential development.

When contacted, URA said that it does not stipulate that private housing units should be of a minimum size or that a development should have a certain mix of unit sizes. However, it said: ‘We have observed that some developers have been building smaller apartment units.

‘URA will continue to monitor private housing development trends and ensure that our planning guidelines stay relevant in providing a quality living environment for our residents.’

The market has seen a surge in transactions of shoebox units, generally defined as below 500 sq ft, this year. BT understands that one issue that the authorities are grappling with is whether there is a real need for such apartments.

Since February, developers have found it easy to sell smallish apartments as their lumpsum unit price is affordable to a bigger pool of buyers.

This has also made it easier for speculators to jump on the bandwagon. Hence, the concern is that shoebox units fuel property speculation.

Another issue is whether buyers who buy such micro units off-plan realise what they are in for.

Ho Bee Investment chairman and CEO Chua Thian Poh said: ‘When you buy a 200-300 sq ft unit off-plan, you may not realise how small it is. But when you see the finished product, you’ll know how cramped it is. It’s not very liveable. I would rather stay in Housing Board flats. The size is much bigger, and the price quantum is not too far off.’

If ‘normal’ tenants like expatriates, foreign students and Singaporean yuppies do not wish to live in such small units, shoebox unit owners may push their properties to those who prefer shorter-term usage, including those in ‘hourly-rate businesses’, as one analyst put it.

DTZ executive director (consulting) Ong Choon Fah said that there could be a potential supply-demand mismatch if the trend of ‘mickey mouse’ apartments picks up.

‘We could have a situation where there are a lot of apartments but not the type that people would want to live in.’

Some argue that it is too early to rule out leasing interest for such units from single expats on small housing budgets.

However, Ho Bee executive director Ong Chong Hua said: ‘Those who do shoebox apartments will tell you there’s a rental market for such units. But if I’m a single expat, assuming I want to live in this kind of shoebox apartment development, then I must also consider the profile of the people who’ll be my neighbours. I think it is only natural to assume they’ll not be the normal neighbours you would expect in a typical housing development.’

Apart from ’shoebox’ units, other smallish units have surfaced since February. These include two-bedders starting from about 750 sq ft and three bedders from around 900 sq ft.

Developers can try to push for a higher per square foot selling price by having smaller units so long as the overall lumpsum quantum does not cross the typical HDB upgrader’s budget, which could be $1 million.

DTZ’s Mrs Ong also said that the trend of shoebox apartments could also have a social impact, as seen in Hong Kong. ‘People have breakfast, lunch and dinner outside, and spend most of their time out of their homes as they don’t wish to be cooped up within four walls. But this may not be conducive to developing family life, which Singapore is trying to promote.’

Real Estate Developers Association of Singapore CEO Steven Choo said that ‘it is not inconceivable that, in future, 200-300 sq ft apartments could become popular in Singapore as already seen in Central London where 40 per cent of all households are single-person households’.

‘There are districts populated with studio apartments catering to lawyers, financial industry professionals and students,’ he added.

However, CBRE executive director (residential) Joseph Tan said that since most of Singapore’s population live in HDB flats, the size of public housing units set the base.

‘Unlike London and Hong Kong where people may not have much choice but to squeeze into a shoebox unit, in Singapore people have the option of buying or renting a HDB flat.’

Agreeing, ERA associate director Eugene Lim noted that even an expat on a small housing budget can rent an HDB flat on the open market.

‘Of course, there won’t be any swimming pool or gym, whereas a resident of even a shoebox unit in a private apartment development or condo would be entitled to enjoy these facilities,’ he added.

Source : Business Times – 15 Oct 2009

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