Sales of shoebox units fall after new guidelines

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Yes! Finally we can afford a condo!

Sales of small private apartments, commonly known as shoebox units in Singapore, have taken a downward turn.

Data compiled by analysts show that new sales fell about 57 per cent in September from the previous month to 99 units.

The fall occurred after the government announced that it will moderate the number of shoebox apartments entering the market.

On September 4, the Urban Redevelopment Authority (URA) issued new guidelines that cap the total number of units that can be built on a site for non-landed private residential developments outside the central area. The new rules are to curb developers' enthusiasm to build shoebox units in 'suburban neighbourhoods' which are largely designated for families.

Analysts said buyers are now taking a "wait-and-see" approach in response to the measures. This caused new sales of shoebox units to drop across the board last month.

Vicinities under the "Outside Central Region" category were hit the hardest, with sales falling some 80 per cent to only 24 units sold in September.

Moving forward, analysts said the appeal of holding a shoebox unit as an investment is likely to wane.

Eugene Lim, key executive officer of the ERA Realty Network, said: "I think buyers are becoming more aware that there is actually a huge supply that is going to be completed in 2014, 2015. And that would mean this would put pressure on rental. It is this type of investments that is actually losing flavour."

About 11,000 shoebox units are expected to hit the market by 2015.