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.

Comments

  1. What an insight review, I like your site.

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  3. […] Aside from this, the team at Singapore also recently shared an interesting finding on “Shoebox Units – Dud or Stud? – Are shoebox units worthy investment products for those speculating in the property market?”. If you missed it, read all about the finding at http://blog.iproperty.com.sg/shoebox-units-dud-or-stud/. […]

  4. […] Aside from this, the team at Singapore also recently shared an interesting finding on “Shoebox Units – Dud or Stud? – Are shoebox units worthy investment products for those speculating in the property market?”.  If you missed it, read all about the findings at http://blog.iproperty.com.sg/shoebox-units-dud-or-stud/. […]

  5. […] And of course, location. According to a new report by local property consultancy Ascendant Assets, shoebox units are generally ‘quite profitable’, but it does not mean all sellers do well from the […]

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