Shoebox units an untested market in heartland: Khaw

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#1
The Straits Times
May 15, 2012
Shoebox units an untested market in heartland: Khaw

Minister says Govt monitoring rising popularity of such flats, will regulate if necessary

By Amanda Tan

NATIONAL Development Minister Khaw Boon Wan gave yet another warning on shoebox apartments yesterday, amid a craze for these small units.

Shoebox flats, which are 50 sq m (about 540 sq ft) or smaller, have been gaining ground among homebuyers in Singapore, and have proliferated, with many being built in suburban areas.

But the shoebox market in the heartland is 'untested', Mr Khaw said in Parliament, echoing earlier warnings from property consultants that it remains to be seen if tenants will bite.

The minister also said the Government is 'monitoring the trend of shoebox units in Singapore' and will consider 'additional regulations', if necessary.

He made a similar comment at a feedback forum earlier this month, saying the Government will 'step in' if the proportion of such homes becomes too high.

While the low absolute price of such flats has appealed to buyers, they have been criticised for driving property prices higher and being too small to live in, for example.

Mr Khaw, who was replying to Mr Ang Wei Neng (Jurong GRC), noted that there are about 2,500 completed shoebox apartments in Singapore.

These make up 1.2 per cent of the 210,000 non-landed private housing stock.

About 80 per cent of these completed flats, which are targeted mostly at singles and expatriates, are found in the Central Region, he said.

Mr Khaw added that the stock of shoebox units is expected to increase, hitting about 9,700 units by 2015. But unlike existing units, many new ones will be found in suburban areas.

While he has yet to have a clear picture of the buyer profile of these flats, Mr Khaw said that, at a glance, it is mostly Singaporeans 'with an HDB address'.

'Obviously, they don't plan to stay there because they won't be able to fit into this 50 sq m for a family of several (members)... Looks like they are investors parking their funds there and expecting to be able to rent out,' he said, suggesting that some buyers could have seen units in the Central Region being tenanted out relatively easily, and with a reasonable yield.

Still, Mr Khaw stopped short of introducing new measures now, as the heartland is still an 'untested market' for shoebox units.

He said: 'It is hard for me to intervene in the market thinking that I know better than the developers or the investors.

'So I think the minimum I can do is to alert everybody... and I think my job is to share information as much as I can with the investing public as well as the developers.

'But we are watching it closely and, if need be, if evidence is clear that we need to intervene, I will not hesitate.'

Mr Khaw also highlighted new rules which will be implemented later this week to provide more transparency for buyers in the property market.

These include requiring developers to provide more information, like the breakdown of a unit's total floor area.

In a separate reply to Mr Liang Eng Hwa (Holland-Bukit Timah GRC), Mr Khaw noted that several rounds of property market cooling measures have produced results.

For the first time in several quarters, private home prices saw a marginal decline in the first quarter of the year.

'These are encouraging signs that the market is moving towards a more sustainable path. But we must not let our guard down,' he said.

Still, he acknowledged concerns, like rising prices for mass market properties outside the Central Region, and said developments will be monitored closely.

tamanda@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
Haha think he's got one tough job to do.... Increase LTV, increase stamp duties might cause unit size to shrink further. Set a limit on number of below. 50 sqm being built and prices might rise further. Maybe this time round he should outright ban singaporeans from buying additional properties? If it doesn't work, ban singles and childless couples?,
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#3
I think KBW should seek opinion from his fellow parliment MP, Ms Lee Bee Wah, who has just bought a 570 sqft apartment for $826K. The price is after a 2.4 per cent discount she received as she is an ID of the developer, Tee International. Obviously she is not going to stay in that little house, with her 2 children and husband, right?
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#4
(15-05-2012, 09:42 AM)Ben Wrote: I think KBW should seek opinion from his fellow parliment MP, Ms Lee Bee Wah, who has just bought a 570 sqft apartment for $826K. The price is after a 2.4 per cent discount she received as she is an ID of the developer, Tee International. Obviously she is not going to stay in that little house, with her 2 children and husband, right?

Our dear MP is obviously endorsing the shoebox as a "viable" investment. I'll be surprised if she can squeeze in there with her husband and two kids. She and kids sleep in the bed while hubby sleeps in a foldable bed which sticks out from the toilet? Possibly.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#5
(15-05-2012, 09:53 AM)Musicwhiz Wrote: Our dear MP is obviously endorsing the shoebox as a "viable" investment. I'll be surprised if she can squeeze in there with her husband and two kids. She and kids sleep in the bed while hubby sleeps in a foldable bed which sticks out from the toilet? Possibly.

What I don't understand is why not use her husband's name to buy the condo and so to avoid unwanted attention? Is it because of the 2.4% discount? Which works out to about $20K, worth it?

Sorry, I am being a bit nosey here.
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#6
(15-05-2012, 10:54 AM)Ben Wrote:
(15-05-2012, 09:53 AM)Musicwhiz Wrote: Our dear MP is obviously endorsing the shoebox as a "viable" investment. I'll be surprised if she can squeeze in there with her husband and two kids. She and kids sleep in the bed while hubby sleeps in a foldable bed which sticks out from the toilet? Possibly.

What I don't understand is why not use her husband's name to buy the condo and so to avoid unwanted attention? Is it because of the 2.4% discount? Which works out to about $20K, worth it?

Sorry, I am being a bit nosey here.

There are always 2 sides to a coin. If she does what you suggested, some people will say what is there to hide, etc?
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#7
(15-05-2012, 10:59 AM)egghead Wrote: There are always 2 sides to a coin. If she does what you suggested, some people will say what is there to hide, etc?

I guess you are also right.
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#8
I think a lot of people who bought shoeboxes are going to get burnt from it down the road maybe we will see another gathering at hong lim speakers park and big outcry where people claim they were "misled" $800k+ leh crazy or what?

I will not pay anything more than $50k for what I see is something bigger than 1 kitchen and a toilet.
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#9
(15-05-2012, 08:08 AM)piggo Wrote: Haha think he's got one tough job to do.... Increase LTV, increase stamp duties might cause unit size to shrink further. Set a limit on number of below. 50 sqm being built and prices might rise further. Maybe this time round he should outright ban singaporeans from buying additional properties? If it doesn't work, ban singles and childless couples?,

Ya lol! In the first place how come assets price run up so fast? Blame who? Maybe force all PRS and NON-Citizens to go home. Then assets price back to "normal" or maybe "collapse". Ha! Ha!
Whatever is the outcome Singaporeans have to live with SHOE-BOX units lol!
By the way, isn't HDB FLATS also getting smaller and smaller. Everything is relative. Then one day SHOE-BOX units may consider better than the comparable units in HK or Tokyo. -especially immigrants keep on coming.......TongueBig Grin
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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#10
Think they led the way in reducing home sizes by reducing HDB sizes. Then to prevent backlash, demonize the "profit hungry" developers while charging them high land prices behind the scenes and hopping onto the $ making bandwagon with the stamp duties :p consumers are the biggest losers while government wins yet again
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