Much has been discussed in the Singapore media about National Development Minister Khaw Boon Wan’s remarks on shoe-box apartments and how he will not hesitate to intervene should there be clear evidence of unsustainable investor demand.
Singapore’s Private Property Index (PPI) finally eased 0.1 per cent in the first quarter, after five rounds of cooling measures to ensure property prices remain sustainable.
Shoe-box apartments, however, could possibly derail that plan.
Shoe-box apartments refer to residential units that are around 50 sq m in size that can hardly accommodate a family.
According to data from Savills, shoe-box apartments that are located in central areas are fetching the best rental yield in the first quarter – S$6.21 (US$5.00) per sq ft per month.
Therefore, buyers of such apartments are likely looking to rent them out due to the attractive rental returns.
A problem, however, could occur when such apartments are sprouting out in the suburbs.
As the suburbs is primarily home to Singaporeans, such apartments may lead to speculative buying without the intention of ever living in them.
This could push up property prices yet again.
So from the looks of it, another round of cooling measure could be on the way.
By: Khalil Adis, Singapore Editor, Property Report South East Asia
Source: PropertyReport – 2012 May 24