Singapore Sells Record Shoebox Apartments in First Quarter

Developers in Singapore sold a record number of so-called shoebox apartments in the first quarter, raising the prospect of additional government-led measures to cool the island-state’s housing market.

Developers sold 1,764 apartments that were less than 50 square meters (538 square feet) in the three months ended March 31, the most since the Urban Redevelopment Authority began collating the data in 2007. The smaller condos accounted for 27 percent of new sales in the first quarter, the data released today showed.

Singapore has been attempting to rein in prices since 2009, when it barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built. Analysts at Jones Lang LaSalle Inc., CLSA Asia Pacific Markets, Nomura Holdings Inc. and Bank of America Corp.’s Merrill Lynch unit all forecast earlier this month that the government will introduce further measures to curb price increases.

“The government could take some measures to curb this investment-led demand,” said Nicholas Mak, an executive director at SLP International Property Consultants in Singapore. “One way could be to stipulate that developers cannot build more than a certain percentage of shoebox units in a project.”

Prices Fall

Singapore’s private residential property price index declined 0.1 percent to 206 points in the three months ended March 31 from the previous quarter, according to final data released by the authority. Houses priced below S$750,000 ($603,621) contributed to 42 percent of new sales last quarter, today’s data showed. In the previous quarter, those houses accounted for 25 percent.

Home sales climbed to 6,458 units in the quarter, according to the data. Prices rose 1.1 percent for the mass market in the same period, the authority said.

Developers are increasing sales by offering smaller units, according to CBRE Group Inc., the Los Angeles-based property broker. The median size of units declined 24 percent to 667 square feet in the quarter ended March from the previous three months, while the median price slid 18 percent to S$786,340, according to CBRE.

Foreigners and corporate entities have to pay an additional 10 percent stamp duty following measures introduced in December. The extra levy is 3 percent for permanent residents purchasing a second home and for citizens buying their third residential property.

The next round of cooling measures will be targeted at curbing investment demand from Singaporeans, CLSA, a unit of Credit Agricole SA, said in a report dated April 17.

The evidence of strong investor demand can be seen in the overwhelming response to “shoebox developments,” according to the CLSA report.

To contact the reporter on this story: Pooja Thakur in Singapore at pthakur@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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