The land of shrinking apartments?

Developers offering small units gain from a higher per-sq-ft price, but what about buyers?

Property players seem to have gone flat-out in a race to offer smaller and smaller units these days .

The foundation of this trend is mainly in the mass-market and mid-tier projects. However, upmarket developments downtown such as The Sail@Marina Bay, One Shenton and Icon have also made room for units that are smaller than 700 sq ft each.

Colliers International executive director Ho Eng Joo said developers find it commercially viable to build smaller units because of the higher profit margins.

More units can be packed within the space, and can be sold at a higher per-sq-ft price.

But since absolute sums for the smaller apartments are still relatively affordable compared to bigger units, the prices may still seem like a good deal for buyers.

This explains why a lot of developers are looking at cutting unit sizes so that they will be able to sell out their projects faster, said industry sources.

This was especially true when the economy went through a slow phase in the earlier months of the year.

The bigger developers have larger sites so they would not usually consider very small units, or at least not many of them.

Typically, it is the smaller players with small sites which will try to carve out as many pigeon holes as possible, property experts said.

'If the sites are near MRT stations, developers will want to make the units as small as possible so that they are affordable,' said EL Development managing director Lim Yew Soon.

Some examples include Alexis in Alexandra, 8@Woodleigh, Kembangan Suites in the east and Mr Lim's own sold-out project Illuminaire in Devonshire Road.

Going by the good take-up rates, buyers seem happy to ink on the dotted line.

Whether they will eventually live in these small units themselves or look for tenants remains to be seen as many of these projects are still being built.

One consideration on their minds must surely be: Will the quality of life be compromised by such compressed spaces?

Not if the developer pays attention to the layout, view and planning of the project, said property experts.

'I don't think it is right if the planning layout is such that the cooker hob is next to the bed,' said EL's Mr Lim.

But to be sure, apartments that are a tight squeeze are not unique to Singapore.

In big cities like London and Tokyo, apartments can be as small as under 200 sq ft.

In Hong Kong, apartments of below 430 sq ft account for a whopping 32 per cent of the housing supply.

'As affordability gets stretched, people are prepared to compromise on the unit size,' said Mr Simon Smith, senior director of research at Savills Hong Kong.

But in Singapore, he notes that there are 'HDB flats which are quite generously sized', which means that many people are used to a certain standard of living.

The housing board's studio apartments are 377 sq ft.

Said property consultancy Cushman & Wakefield's managing director Donald Han: 'Unlike other places like the United Kingdom or Japan, we don't have the problem of commuting from an inner city to the countryside. Do we need small units in the city?'

'You don't want a nation of shoeboxes,' he added.

Source: Sunday Times, 18 Oct 2009