The Ministry of National Development (MND) is closely monitoring the development of “shoe-box,” or small-sized, apartments in Singapore.
In a blog entry entitled “Buying Shoe Boxes,” National Development Minister Khaw Boon Wan advised potential buyers to carefully weigh the risks and benefits of the shoe-box units.
He called on market analysts to “refine” their analysis by including independent analyses for each category of residential products.
“Comparing price per square foot for different products is like comparing apples with oranges,” Khaw wrote.
His blog post comes amid proposals that the government should intervene to impose a minimum size for private units.
The common size for a shoe-box unit is below 500 sq ft. The rise of such units in Singapore is quite a recent phenomenon, although they are widespread in Tokyo and Hong Kong.
The minister noted that there is apparent demand for shoe-box apartments. “The annual take-up of such units has increased from 300 units in 2008 to 1,900 in 2010, or from six percent to 12 percent of developers’ sales over the same period.”
Khaw wrote that industry analysts and developers have told him that many shoe-box units will be finished soon. “By 2014, the total number of completed units will increase from 1,100 to 3,800, based on known plans.”
In addition, some property developers, who have paid high prices for residential plots are planning to develop shoe-box units.
But Khaw noted that MND will require developers to provide an accurate representation of units, both within the show flats and in the sales materials.
Meanwhile, several analysts welcomed Khaw’s remarks.
“The good thing about his statement is that this is the first time a government official has highlighted the economics of buying a show-box unit,” said Ku Swee Yong, Chief Executive of International Property Advisor.
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