This is something which I personally would not buy. Well, at least when I still have a choice. We are talking about shoebox units. Yes, in other words, very small units. From online, I found out that shoebox units are defined as units which are up to 506 sq ft in size. This is smaller than most of the typical 550 sq ft SOHOs that we are used to see here in Malaysia. In Singapore, these units are already considered common and it seems that the number of units to be completed will peak in 2017. Thus, renting out these units may be harder compared to renting out one room instead. Alan Cheong the research head of Savills Singapore said that many of the overseas nationals (I think he meant many Malaysians too) could not afford to rent these units and would prefer to rent a room in an apartment instead.
The areas where these units would be coming up include District 19 – Sengkang, Hougang and Punggol where at least 700 units expected. Another 527 units would come from District 14 and 383 from District 12. In the suburbs, districts 17 would have 224 while district 22 would contribute another 151 units. Prices of newly-completed shoebox units is at around S$1,350 per sq ft in 2013 and is currently S$1,400 per sq ft. Rents however fell from S$2,600 in 2013 to between S$2,000 – S$2,200 this year. The gross yield thus fell to 4.1 percent from 5.2 percent previously. Cheong further stated that in the outlying HDB estates, the yields may be just 3 percent or eve lower.
R’ST Research director Ong Kah Seng reiterated that these shoebox units are relevant as they are normally occupied by younger tenants or owners. This is despite the falling prices due to growing supply. Based on NUS Singapore Residential Price Index, the prices of these shoebox units have fallen by about 10 percent from their last peak in August 2013.
If I am working in Singapore, I think I would still prefer to rent a room instead. This is because I would not want to pay S$2,000 for one shoebox unit rental per month. I think this is still more relevant to small countries with big populations. In fact Hong Kong’s shoebox units are nothing bigger than a hotel room nowadays. Read here: Roof over your head and ever smaller sizes? Hmm However I think there are some who said that these trends of smaller units are coming over to Malaysia, especially in the super hotspots. While I tend to disagree but as per the latest statistics, the fertility rate for Malaysia as at end 2014 has fallen to just 1.9. Read here: 2015: Birth-rate dropped to 1.9 for Malaysia Perhaps another 20 years lah, then these shoebox units may have to be the trend. Happy reading and buying if you truly think these small units are great for long term investment.
written on 15 Aug 2015
next suggested article: Family-style size vs small size due to price
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