Record high sales for small homes: CBRE

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http://www.businesstimes.com.sg/sub/...45540,00.html?

Published October 7, 2009

Record high sales for small homes: CBRE

Developers provide for more units of 500 sq ft or less

By EMILYN YAP


(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.

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http://www.straitstimes.com/Money/St...ry_439054.html

October 7, 2009 Wednesday

Record sales of 'Mickey Mouse' units

412 small-format private homes sold this year; experts cite affordability

By Joyce Teo


According to CBRE Research, developers are building more small-format units - typically 500 sq ft or less in size - because these are easier to sell. -- PHOTO: WWW.DESIGNATMOSPHERE.COM.SG

DEVELOPERS have sold a record 412 small-format private homes so far this year, according to a new report released yesterday by CBRE Research.

In contrast, only one such 'Mickey Mouse' unit was sold 14 years ago.

The increase in sales volumes for units with an area of 500 sq ft or less has intensified in recent months, and helped swell overall residential sales this year, said the report, which looked at sales volumes of such units since 1995.

It found that 299 were sold last year, up from 275 in 2007 and 171 in 2006. Prior to this, sales remained at 45 units per annum and below.

CBRE Research executive director Li Hiaw Ho said some recent project launches boasted penthouses of 800 sq ft to 1,200 sq ft, which are atypical sizes for penthouses.

Developers are building smaller units because these are easier to sell, he added.

Recent launches have shown that these units are usually the first to be snapped up.

CBRE Research pointed out that a recent launch with tiny units - Suites@Guillemard in Lim Ah Woo Road - attracted strong demand.

The freehold project probably wins the contest for the smallest unit ever seen in Singapore. At 258 sq ft, the unit is smaller than the smallest HDB studio apartment - 377 sq ft - and is similar in size to some hotel rooms. The project also offers penthouses of less than 1,000 sq ft.

Buyers have already picked up 80 per cent of the project's 72 units, despite being priced at around $1,300 per sq ft (psf) on average each, CBRE said.

All four of the 258 sq ft units were reportedly sold at about $1,450 psf, or about $375,000, each.

'In today's market, a lot of developments will have small units because affordability is key,' said Knight Frank executive director (residential) Peter Ow.

It matters less if the psf price is high, so long as buyers accept the quantum and find it affordable, he added.

'Nonetheless, when these units eventually hit the market as completed homes... buyers who bought for owner occupation will have to consider whether they can adjust to the smaller living space,' said CBRE's Mr Li.

Investors will need to consider the size of their target rental market - single professional foreigners and Singaporean yuppies.

'The jury is still out as to whether this demographic group forms a significant enough proportion to fill these small-format units,' Mr Li said.

Mr Ow believes that this 'Mickey Mouse' home phenomenon could be a passing trend, lasting another two to three years.

A change may come when the economy grows strongly and buyers become more affluent. They will then go for the larger units, he said.

However, for the time being, more small units are expected to be built.

Developers sold 11,724 new private homes from January to August this year.

Mr Li anticipates that the 2007 sales record of 14,811 units looks set to be broken in what is a recession year.

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