In 2013, small units of up to 800 sq ft accounted for 47.6 percent of non-landed private home sales by developers, up 43.4 percent from the year before.
Caveats analysis by CBRE revealed this trend has gained more than 40 percent share since 2011.
“This is a function of supply … as developers have been reducing unit sizes to keep the absolute price quantum affordable to buyers especially investors, who have been slapped with successively tighter loan limits in recent years,” explained CBRE Research Associate Director Desmond Sim, who was quoted in the media.
However, the growing share of small units applies to those around 500-800 sq ft instead of shoebox apartments – units below 500 sq ft.
CBRE’s analysis, which excluded executive condominiums (ECs), found that the number of 500-800 sq ft units steadily increased to 34.4 percent in 2013 from 2012’s 29.7 percent, 25.9 percent in 2011 and 18.9 percent in 2010.
This mirrors the trend among developers of creating more compact units (two- and three-bedders) to keep absolute price quantums affordable to buyers, despite higher psf prices.
The increase in share of small units during the past few years is also evidenced by the contraction in median unit sizes. Notably, the figure dropped 30.6 percent from 1,195 sq ft in 2009 to 829 sq ft in 2013. During the same period, the average psf price climbed 47.2 percent to $1,354, while the median lumpsum unit price increased 12 percent to $1.08 million.
The demand for small units ranges from young couples to retirees, said Frasers Centrepoint Homes CEO Cheang Kok Kheong.
“Most buyers still want the master bedroom and kitchen to be sufficiently sized. We’re also seeing creative storage solutions – for instance, above wardrobes, near the ceiling (by moving air-con pipes to the side) and insertion of linen storage areas along the corridor between the living room and bedrooms,” he noted.
Moving forward, CBRE’s Sim expects developers to continue building a high fraction of affordable homes in view of buyers’ reduced spending power post-TDSR.
Cheang added that compact apartment sizes could be pared down further by five to 10 percent, if the study space is integrated in a development’s common facilities.
“But we’ve not done that because our customers are not ready,” he said.
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
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