(SINGAPORE) A study by property consultancy CB Richard Ellis (CBRE) has confirmed what everyone suspected - small apartments have become more common. And their sales hit a record-high this year. But whether owners or tenants can get used to tighter living space is another matter, says CBRE.
The firm looked at caveats lodged between January and September and found that 412 new non-landed residential units measuring 500 sq ft or less had been sold - 38 per cent more than the 299 sold in the whole of last year.
The number of small units taken up has risen steadily for several years. In 2006 and 2007, 171 and 275 such apartments were sold respectively.
'Developers are providing more of these small-format units and home-buyers are snapping them up, especially in 2009,' said CBRE Research executive director Li Hiaw Ho. 'The rise of small-format units has served to bolster overall transaction volume in the residential market.'
Activity in the residential market slowed sharply with the onset of the financial crisis last year. But sales picked up from February this year with the launch of Alexis - a project with many small units starting from a tiny 366 sq ft. It was fully sold.
Since then, developers have been re-doing designs to fit in more small apartments. And buyers have waded in, taking up more than 11,000 new private homes from January to August - far exceeding the number for 2008.
Just last week, Oxley Land previewed the 72-unit Suites@Guillemard, which has 45 one-bedders ranging from 258-527 sq ft in size. According to CBRE, 80 per cent of the project had been sold at around $1,300 psf as of Monday.
A brochure for another project, the 24-unit Cubik in Telok Kurau, shows there are eight one-bedroom units measuring 484 sq ft.
Penthouses have also shrunk, CBRE noted. While they were typically larger than 1,500 sq ft, some measuring just 800-1,200 sq ft have appeared.
The emergence of small units has raised concern among some market watchers. 'People who buy for owner-occupation will have to consider whether they can adjust to smaller living space,' said CBRE's Mr Li. 'And people buying for investment should think about who is going to rent such units.'
Ngee Ann Polytechnic real estate lecturer Nicholas Mak agrees, saying some foreigners are used to much more space and may prefer to rent bigger apartments.
Facing competition from larger units, owners of small apartments may have to lower the rent or wait longer to find tenants, he said.
But until the homes are completed and the anticipated leasing challenges materialise, Mr Mak expects small units to remain popular with buyers.
Source: Business Times, 7 Oct 2009
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