Condo units shrink with buyers' budgets

SINGAPORE - Homes across the board are feeling the squeeze as developers downsize apartments to find ways to keep overall prices within the reach of buyers.

"The smaller the better" notion gained prominence - or notoriety - with the rapid proliferation of shoebox apartments, some now as tiny as the 258 sq ft cubby holes at Suites @ Guillemard, the equivalent of 2½ carpark spaces.

But the shrinking of two- and three-bedroom apartments has started to draw attention too.

A three-bedder at 193-unit Natura at Hillview Terrace, a joint venture between Roxy-Pacific Holdings and Macly Group, for instance, measures just 635 sq ft.

The home - smaller than a squash court and slightly bigger than five HDB carpark spaces - caused an uproar when it was launched last year.

The 32-unit Treescape in Telok Kurau also has micro three-bedders starting from 603 sq ft.

Go back a few years and a three-bedroom unit would more likely be 1,500 sq ft in size, while most are now around 1,000 to 1,200 sq ft.

But sizes are changing fast as developers grapple with the opposing pulls of higher land costs and demand for affordable homes to fit buyers' tight budgets. The easiest solution is to build more compact homes, it seems.

A Knight Frank analysis of 40 private suburban condominium projects with at least 200 units launched since 2008 found average sizes shrinking by as much as 34 per cent for certain types of apartments.

For example, one-bedroom units in developments launched in 2008 averaged 678 to 947 sq ft, or 21 to 28 per cent bigger on average than the 538 to 678 sq ft units launched in 2010.

The squeeze intensified only in the past year with recently launched one-bedders averaging just 492 to 624 sq ft, about 27 to 34 per cent smaller than in 2008.

Two-bedroom units launched in 2008 averaged 851 to 1,208 sq ft but those hitting the market in the past year measure 734 to 1,069 sq ft.

Similarly, average sizes of three-bedroom units are down by about 20 per cent - from 1,208 to 1,620 sq ft in 2008 to 963 to 1,338 sq ft in the 2012-2013 period, Knight Frank noted.

Those flats look large compared with the offerings at Urban Vista, next to Tanah Merah MRT station. The launch last month featured two-bedroom units of 549 sq ft and three-bedders of 850 sq ft.

Developers are downsizing amid acute price pressure from buyers.

Experts say overall prices of up to $1.5 million are the most popular among first-time buyers and second-time investors in the light of the property cooling measures that have tightened loan limits.

Second-time buyers with an existing housing loan, for instance, will be subject to a 50 per cent loan-to-value ratio and must fork out a minimum cash down-payment of 25 per cent under the most recent January curbs.

Some experts add that while the Government has clamped down on developers building shoebox units, the more worrying trend could be the size crunch in the two- and three-bedroom apartment types instead.

"It's actually reasonable for one person to live in a shoebox unit of 500 sq ft. There should be more concern over three-bedroom units shrinking to as small as 600 to 700 sq ft instead," said an industry player who declined to be named.

Mr Teo Hong Lim, executive chairman of Roxy-Pacific, pointed out that homes in the past were probably larger as they included bay windows, planter boxes and household shelters in the total strata area, yet the actual livable area could have been less.

"Our homes are modular and flexible. The household shelter is now centralised at the fire escape staircase, so there is a more efficient use of space in the apartments," he added.

"Buyers are not shortchanged with compact units. They are given better value instead, with the option of having a three-bedroom unit or two-bedroom unit instead if they opt to remove the partition wall between the rooms."

With the high cost of land, it is "hard to fight the situation" of smaller homes as many Singaporean might not be able to afford the large sizes of previous three-bedroom units at current prices, noted Mr Teo.

The executive condominium (EC) segment, a public-private hybrid, is also facing the same trend.

Ms Alice Tan, senior manager of consultancy and research at Knight Frank Singapore, noted that sizes of two-bedroom EC units have fallen by as much as 19 per cent since 2010, while three-bedroom apartments are now about 8 per cent smaller.

Source: 15th April 2013

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Condo units shrink with buyers' budgets

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