Shoebox units and dual-key apartments have both been taking the real estate market by storm of late. Rental opportunities are often the reasons behind these property purchases. But which will earn you the most in rental income?
The answer is obvious. A dual-key apartment will easily earn you twice the rental income with only one property. But with a shoebox apartment, it’s only one set of rent. Unless of course you have 2 properties to rent. But that would cost you the additional buyers’ stamp duty (ABSD).
Developers are quick to catch on as well, and have been increasingly rolling out a higher number of dual-key apartments in their new projects. The Fragrance Group and World Class Land for example, have launched 700 sq ft dual-key units in their Urban Vista project in Tanah Merah. The new Liv on Sophia also has such units, albeit a limited number as there were not many to begin with. The development only has 64 units in total.
Dual-key apartments first hit the market in 2009, when Frasers Centrepoint brought it to the limelight. The main purpose was to cater for large family units who wish to live together under the same roof. Dual-key units are unique in that they have 2 separate entrances with their own keys and are big enough to accommodate large, extended families.Increasingly, these units now appeal to property investors who are looking to rent out both units in order to reap more profits and more quickly. And now for the ultimate plus point: If you purchase a single dual-key apartment, you can avoid the expensive ABSD since you are only essentially buying one unit.
In January, new rulings made the second and subsequent property taxable for Singaporeans and first purchases already taxable for Permanent Residents. Singaporeans have to fork out a 7 per cent ABSD for their second property and 10 per cent for their third and subsequent properties.
For smalls families or singles who are able to afford a dual-key unit, it might be the best way to reap profits through rental of the other unit. For now, the Central region is the only area without a restriction on the unit size, thus smaller dual-key apartments are available here and the costs might be considerably more affordable even for smaller families, couples or singles. Liv on Sophia’s dual-key apartments feature a small additional room or “suite” which features a small kitchenette and sufficient space for a washing machine. As a freehold property, units are going at $2, 450 to $2,500 psf.