Small condominiums will bring large problems to big developers as a huge number of “shoebox” units are expected to enter the market next year, media reports said.
Notably, shoebox apartments, or units not bigger than 500 sq ft, became extremely popular investments after the Global Financial Crisis since they required low down payments.
But after their popularity peaked in Q1 2012, the government began to crack down on such units in September that year by setting limits on the gross floor area of projects.
CLSA stated that the first batch of owners who purchased shoebox units as investment assets in 2011 will be exempted from paying seller’s stamp duty (SSD) from 2015 onwards. Most of them are sitting on unrealised profits and are planning to sell their units next year, which could add to the current inventory and further pull down property prices.
“We estimate a total of 5,016 units are now profitable, prompting owners to take profit in 2015. If this materialises, we estimate it will add 24.3 percent to the current ready inventory in the system, putting downward pressure on prices,” said CLSA.
Romesh Navaratnarajah, Singapore Editor of PropertyGuru Group, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg
