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Is another round of cooling measure on the way?

Posted on 24 May 2012 | Comments Off

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

Comments Off on Is another round of cooling measure on the way?

Posted in Cooling Measures, Property Market / Real Estate

Tagged Koh Boon Wan, PPI, Private Property Index, shoebox apartment, Singapore Property

Shoebox investment apartments at risk of hard landing

Posted on 15 May 2012 | Comments Off

The number of small apartments, or shoebox units, in Singapore will nearly quadruple from 2,500 currently to 9,700 by 2015, the government said.

Currently, about 8 out of 10 shoebox apartments are located in the city, appealing to singles and expats with lower transportation costs and travelling time to their workplace.

But analysts question the appeal of shoebox units in the heartlands, where HDB flats are in abundance, providing more space for less rental.

Cheaper mortgage rates and plenty of liquidity were pushing investors to property, but speculation may be waning.

Since December’s cooling measures, transactions of uncompleted units in the resale market dropped to four per cent, while the number of private residential properties bought by foreigners and companies dropped to seven per cent.

Land supply for residential needs has also increased.

“The market is a lot cooler than it was, say, one year ago,” Minister for National Development Khaw Boon Wan said.

“(But) there are pockets of hot activities, particularly in the mass market, with the emergence of these shoebox units.”

Shoebox units made up 27 per cent of new home sales in the first quarter.

But unlike the soft landing of most property segments, analysts warn rentals and resale values of shoebox apartments could drop drastically.

“Shoebox (units) would be the first to suffer,” research head of Chesterton Suntec Colin Tan said.

“We may get (a situation) in the future where there will be falling prices for small apartments, and then rising prices for normal-sized apartments because they simply do not meet the requirements of the family.”

Source: CNA – 15 May 2012