Record sales of ‘Mickey Mouse’ units

412 small-format private homes sold this year; experts cite affordability

By Joyce Teo
		According to CBRE Research, developers are building more small-format units – typically 500 sq ft or less in size – because these are easier to sell. — PHOTO: WWW.DESIGNATMOSPHERE.COM.SG

DEVELOPERS have sold a record 412 small-format private homes so far this year, according to a new report released yesterday by CBRE Research.

In contrast, only one such ‘Mickey Mouse’ unit was sold 14 years ago.

The increase in sales volumes for units with an area of 500 sq ft or less has intensified in recent months, and helped swell overall residential sales this year, said the report, which looked at sales volumes of such units since 1995.

It found that 299 were sold last year, up from 275 in 2007 and 171 in 2006. Prior to this, sales remained at 45 units per annum and below.

CBRE Research executive director Li Hiaw Ho said some recent project launches boasted penthouses of 800 sq ft to 1,200 sq ft, which are atypical sizes for penthouses.

Developers are building smaller units because these are easier to sell, he added.

Recent launches have shown that these units are usually the first to be snapped up.

CBRE Research pointed out that a recent launch with tiny units – Suites @ Guillemard in Lim Ah Woo Road – attracted strong demand.

The freehold project probably wins the contest for the smallest unit ever seen in Singapore. At 258 sq ft, the unit is smaller than the smallest HDB studio apartment – 377 sq ft – and is similar in size to some hotel rooms. The project also offers penthouses of less than 1,000 sq ft.

Buyers have already picked up 80 per cent of the project’s 72 units, despite being priced at around $1,300 per sq ft (psf) on average each, CBRE said.

All four of the 258 sq ft units were reportedly sold at about $1,450 psf, or about $375,000, each.

‘In today’s market, a lot of developments will have small units because affordability is key,’ said Knight Frank executive director (residential) Peter Ow.

It matters less if the psf price is high, so long as buyers accept the quantum and find it affordable, he added.

‘Nonetheless, when these units eventually hit the market as completed homes… buyers who bought for owner occupation will have to consider whether they can adjust to the smaller living space,’ said CBRE’s Mr Li.

Investors will need to consider the size of their target rental market – single professional foreigners and Singaporean yuppies.

‘The jury is still out as to whether this demographic group forms a significant enough proportion to fill these small-format units,’ Mr Li said.

Mr Ow believes that this ‘Mickey Mouse’ home phenomenon could be a passing trend, lasting another two to three years.

A change may come when the economy grows strongly and buyers become more affluent. They will then go for the larger units, he said.

However, for the time being, more small units are expected to be built.

Developers sold 11,724 new private homes from January to August this year.

Mr Li anticipates that the 2007 sales record of 14,811 units looks set to be broken in what is a recession year.

Source : Straits Times – 7 Oct 2009