Shoebox units: Dud or stud?

Are shoebox units worthy investment products for those speculating in the property market?

iProperty.com.sg, Singapore’s number one property website, today revealed staggering figures reaffirming the popularity of shoebox units among local property buyers. Shoebox units are generally defined as private apartments measuring less than 500 sq ft.

During the period of August 2010 to August 2011, transaction volume of shoebox units accounted for 7% of the total transaction volume for condominiums. On average, 197 transactions of such units were completed per month during the same period. Taking only a relatively small slice of the condominium pie, the appeal of such units remains strong even as average prices continue to climb.

 Cost versus value: Are shoebox units worthy investments?

From August 2010 to August 2011, the average price per square foot (PSF) for shoebox units stands at $1,546; 42% more than $1,090 for condominium apartments measuring between 501 to 1,500 sq ft; and 25% more than $1,232 for condominium apartments measuring more than 1,500 sq ft.

Average PSF price for shoebox units in August 2011 was $1,549, which is 14% more than it was in August 2010. Across the board, PSF prices increased from August 2010 and August 2011 – up 4.9% for condominium apartments measuring between 501 to 1,500 sq ft; and up 9.9% for condominium apartments measuring more than 1,500 sq ft. The biggest increase in PSF prices came from shoebox units and seemed to signify consumer confidence in this property category.

East Coast District: The lure for shoebox units peaks

Investors of shoebox units go for District 15 as their area of choice, with 513 units transacted from August 2010 to August 2011. This means an average of 39 shoebox units were transacted per month. District 15 covers mostly private residential developments in Katong, Marine Parade, Siglap and Tanjong Rhu. The average PSF price within this period stood at $1,390.

The appeal of shoebox units in this district can be attributed to the strong lifestyle offerings in this area, such as accessibility to East Coast Park and Changi Airport, favourite F&B haunts, and retail experiences.

On the other end of the spectrum, only 11 shoebox units were transacted in District 21, the lowest figure between August 2010 to August 2011 – average of only one shoebox unit transacted per month. District 21 covers the Clementi, Upper Bukit Timah and Hume Avenue area which comprises mostly private landed properties as well as HDB apartments. The average PSF price within this period stood at $1,598.

The case for small apartments – shoebox units and 3-room flats

Prices of a 3-room HDB flat remained steady at between $400 to $500 PSF, whereas prices of shoebox apartments seemed to loom above $1,000 psf – sometimes reaching close to $2,000 psf, and beyond.

“With the rising affluence of Singaporeans and new migrants, together with the increasing price of private properties, shoebox units present attractive investment opportunities for the local property investor – regardless of market uncertainties as a result of the European and US debt crises,” says Shaun Di Gregorio, iProperty Group CEO.

With new shoebox units to be released in the near future, property buyers with a penchant for the rudimentary nature of such units will see an extended selection of housing options that caters to their basic needs – accompanied with a host of amenities and proximity to lifestyle options that condominiums are offering.

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2011 iProperty Group Annual Conference

People, Opportunity and Innovation

A total of 280 individuals from four different countries, Indonesia, Hong Kong, Malaysia and Singapore, gathered under one roof for the Annual iProperty Group Conference which was held last week at the Pulai Springs Resort in Johor Bahru.

iProperty Group - How much we have grown!

Needless to say, the tranquillity and serenity of the resort was transformed with their arrival. Amidst the hype and buzz of old friends catching up and new friendships being formed, the one thing that was evident was the passion and dedication portrayed by each team member. This is the glue that binds us together and one that greatly attributes towards the success of the company.

The two-day conference, not only gave everyone the chance to mingle, but also the opportunity to bounce off ideas on how we can further enhance the experience of property hunters who use our website to search for their dream home and for agents who use it to list their listings.

It is via such brainstorming sessions that we are able to take a step back and put ourselves in the shoes of consumers and customers and ask ourselves the relevant questions such as what would they like? What sort of information would they require that will help them make an informed decision and etc.

The conference also gave me the opportunity to thank and recognise team members who have relentlessly and tirelessly worked towards enhancing and growing our position in the market. Congratulations to all employees, who either snapped up the Account Manager of the Year, Business Development Manager of the Year or the Monthly Awards Special Recognition Award. Do keep up the good work and continue to inspire those who work with you to strive towards the same success too.

Apart from this, there were team building activities that further encapsulated our core values of being a team-oriented company. The highlight of the conference was of course the annual dinner which got everyone decked in their finest outfits. I have to say that everyone looked dashingly smart. Most importantly, everyone had a good time! A lot of hidden talents were discovered too!

But don’t just take my word for it, I will let the below pictures paint you a story.

Full of passion — a trait that enables us to succeed in all we do while having fun

All Smiles — A team spirit that clearly defines our core value

Spearheading innovation - The Product Teams at the Group's gala dinner

Committed and Relentless — No Matter the Challenge, We will overcome it together

With a clear strategy and focus, no obstacle is too big or small for us

Predictions for the Singapore Property

There seems to be a lot of volatility in the global equity market as well as Singapore’s. Indeed, in the two weeks following National Day, billions were wiped out.

Singapore property prices will continue to rise

Singapore property prices will continue to rise (image courtesy of thinkstock)

A piece of interesting news is that the Swap Offer Rate (SOR) has gone into negative territory. US Federal Reserve Chairman Ben Bernanke has made an unprecedented move by guaranteeing that the SOR, which is highly correlated to the US interest rate and exchange rate, will not go up for the next two years. This is truly risk free investing if you know how to take advantage of it. Well, one way I can think of is to refinance your mortgage to a floating SOR rate with a two-year lock on it, reviewing the global situation to repackage it two years later if necessary.

Another piece of news that has grabbed the headlines is the downgrading of US debt by Standard & Poor’s. This has resulted in Singapore, which has one of the few remaining AAA-rated government debts, being thrown into the limelight as a safe haven during these turbulent times. However I think that there is a treat of the Singapore dollar appreciating too much, which will affect its exports. Currently it is trading close to a never seen before rate of 1.2 against the USD. The upside is that it is combating inflation since Singapore is a major importer, but the downside is deposit rates will remain low and investing overseas will be challenging, which will result in savvy investors turning to local property, perhaps even commercial properties, instead of the volatile equity market.

Taking these two factors into consideration, coupled with the stamp duty penalty of 16% for the first year, 12% for the second year and 8% for the third year, recent buyers have the advantage of a booming property market. In the interest of maximising their profits without any opportunity loss, they are unlikely to sell in the next two to three years to avoid being hit with stamp duty penalty and low interest rates. Also, the next two years will see less uncertainty in the market; with the Singapore dollar appreciating and overseas investment opportunities becoming scarce, property will remain attractive as it is less volatile than equities, especially since demand still exceeds supply, given that foreign investors are eying this market as well.

Therefore, my analysis is that Singapore property prices will continue to increase over the next two years at least. However there is the potential that this will come crashing down if interest rates start increasing, as today’s buyers will start off-loading as a result of lower stamp duty penalty and an oversupply of homes.

 

iProperty Group at AppsWorld Asia 2011 – Mobile Apps Strategy & Product Development

iProperty.com Singapore presented at the AppsWorld Asia 2011 on 2 September at Suntec City Convention Centre. Our Country Manager, Glenn Thompson and myself shared with marketers, apps developers, content managers and social media specialists on iProperty Group‘s strategic perspective on mobile apps and product development, and how this has helped you, our dear consumers, and our agent customers to achieve more, and make your life easier.

Here’s a look into our mobile’s present and near future. Mobile is not the future. It is NOW.

View more presentations from Michael Ong

Making a decision: EC or Private Condo?

The recent housing policy reviews have put the industry and home buyers on the spot. Many may still be dithering between both property types, and weighing the pros and cons. Let’s see if these figures will help you make your decision. Our focus this week is on one of the more idyllic areas of Singapore – District 18 in the East, consisting of Pasir Ris, Tampines and Simei.

What actual effect to property prices do new HDB BTO flat launches such as Tampines Leaf (image by HDB) have on private condominium sales in the same area (seen here is Pinevale condo on Tampines Street 73).

Executive Condos vs Private Condos in Pasir Ris and Tampines

Comparing the average price per sq ft of executive condominiums and private condominiums in Pasir Ris and Tampines, prices of the latter soar miles above, at more than double of the former.

Prices of Executive Condos in Pasir Ris and Tampines

Although prices of executive condominiums in Pasir Ris and Tampines seem on par, a close look will reveal that Tampines’ executive condominiums seem to be fetching slightly higher prices consistently for the past year. And as compared to July 2010, prices of executive condos have risen an average of $40 psf across the board, with those in Tampines seeing a rise of up to $50 psf.

Prices of District 18 Private Condos against National Average

Tampines, with its proximity to MRT stations, schools, offices, industrial parks, shopping malls, cinemas, parks and recreation amenities, is naturally a top choice for those in search of a choice home. Since May this year, the prices of ECs in this HDB town has risen month-on-month. HDB’s announcement of building more BTO flats in this mature estate does not seem to have affected buyers’ appetite for ECs here. New build-to-order flats were also launched in Tampines in May and July.

With luxury condos coming into the market and being quickly picked up by local and foreign buyers, the national average is raised. Though suburban condo prices in the these two areas have yet to hit the high note, they are certainly closing in.