Sales of small units hit new high in 2009

Most likely occupiers of such apartments are expatriate tenants or S'porean single professionals: CBRE

A RECORD number of tiny new apartments were sold last year, according to property consultancy CB Richard Ellis (CBRE). A total of 696 new non-landed residential units of 500 square feet or less were transacted, it says in a new report.

CBRE Research also found that sales of units between 500 sq ft and 800 sq ft spiked to 1,285 last year.

And in the first four months of 2010, there were 211 transactions of new units of 500 sq ft or less and 322 transactions of new units of 500-800 sq ft.

In the primary residential market, non-landed units of 800 sq ft or less account for about 23 per cent of the 2,300 new sale caveats lodged so far this year.

'What started as a notable trend in 2009 appears to have caught on in the early part of 2010,' said CBRE's residential executive director Joseph Tan. 'Small-format units form a significant proportion of the overall burgeoning sales volume we have seen in the first four months of this year. Developers continue to provide these small-format units and home-buyers seem to be biting.'

DMG & Partners Research analyst Brandon Lee also said this week the market for small new units remains strong.

'We visited showflats for two small/medium size launches last weekend,' Mr Lee wrote in a May 4 note. 'Underpinned by low absolute price quantum, projects with compact-size units continue to draw strong buying interest, as evidenced by the swift take-up of Parc Somme and Suites @ Katong.'

Small units are commonly included as one-bedroom offerings in new projects. For example, Far East Organization's Altez has a substantial number of units ranging from 527 sq ft to 816 sq ft. And Hong Leong Holdings' 76 Shenton has unit sizes ranging from 596 sq ft to 624 sq ft.

Analysts say buyers are attracted to such units because their small size makes them more affordable than the usual family-size units. Developers can also maximise their returns by selling small units at a higher price per sq ft.

CBRE's Mr Tan said the most likely occupiers of such units are expatriate tenants or Singaporean single professionals. As lifestyle choices in Singapore continue to evolve in a cosmopolitan environment, and if demand for small units remains strong, developers will continue to provide them, he said.

Overall transaction volume in the private residential market has been strong this year. A total of 4,380 new homes were sold in the first three months.

And if this pace is maintained throughout the year, sales of new homes could be comparable to last year's 14,688 units, CBRE says.

But resistance to projects priced at hefty premiums of 20 per cent or more to nearby projects is beginning to set in. DMG's Mr Lee said this is especially the case in the mass and mid-market segments, where prices have already passed their last peaks.

Source: Business Times, 8 May 2010