When I first read of this term, I felt it rather derogatory. But apparently, it is a common term in the industry globally. It refers to an apartment which is very small, typically below 500 sq ft. This is about the size of a standard hotel room here. (A 3R standard HDB is about 700 sq ft.)
Many Hong Kong apartments are almost shoe-boxes; Tokyo too. Singaporeans are however house proud and we want our apartments to be cosy, comfortable and spacious. Most will not have land, but they must not be claustrophobic.
The emergence of shoe-box units here is a recent phenomenon. And it seems to have a demand. The annual take-up of such units has increased from 300 units in 2008 to 1,900 in 2010, or from 6% to 12% of developers’ sales over the same period.
80% of the buyers are Singaporeans, presumably for investment, with a view to rent to expats or singles.
Industry analysts and developers made these comments to me about shoe boxes.
First, many of these units will be completed soon. By 2014, the total number of completed units will increase from 1,100 to 3,800, based on known plans.
Second, some developers who bid high prices for sale sites, are planning to build shoe-box units, adding to the build up.
Third, the newer shoe-box developments are in the suburbs. Their appeal to tenants remains untested.
Some analysts wonder aloud if buyers know what they are in for. Some have suggested that the government should step in to impose a minimum size.
My instinct is not to second guess the market. Some shoe-box units do add to the diversity of housing options here. But we are closely watching its development.
For now, what is important is for potential buyers to weigh the benefits and risks carefully.
On our part, we are requiring developers to give buyers an accurate representation of the units they are buying, both within the show flats and in the sales materials. Analysts can also help refine their analysis by including separate analysis for each category of housing products. Comparing price per sq ft for different products is like comparing apples with oranges.
A shoebox unit is not the same as a 3 room flat. So please go in with eyes open.
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