Shoebox units seeing strong demand in property resale market

SINGAPORE — Shoebox units have become a resilient segment in Singapore’s property resale market, and rental demand for the tiny homes will likely remain strong even as an increasing supply is coming on stream in the next four years.

That is according to a report issued jointly by the Singapore Real Estate Exchange and Savills on Tuesday, which said that 137 of these units changed hands in the resale market in the first nine months this year, in line with the 136 units in the same period last year.

That compares favourably with the 39 per cent drop in transactions in the overall resale market, with various measures, introduced by the Government, cooling demand.

“In the first nine months into 2013, shoebox transactions represented 2.5 per cent of the non-landed private residential resale market, a significant improvement from the 0.5 per cent market share in 2009,” the report said.

It added that the resale activities should stay strong in the next four years, with 8,715 units potentially hitting the market after they clear the period during which transactions are subject to seller’s stamp duty.

But even with the supply of new and resale shoebox units on the rise, Mr Alan Cheong, research head of Savills Singapore, is still upbeat about rental demand for them.

He noted that the average number of new shoebox units that will be completed each year from 2014 to 2017 should be 2,668. With the number of non-residents — who constitute the main market for renting shoeboxes — increasing by 60,200 over the past year, that should translate to demand outstripping supply.

“Shoeboxes have displayed great rental resilience in times of an increasing supply of completed units,” Mr Cheong said.

“Unless the demography of immigrants seeking work here changes, this segment of the housing rental market should continue to prosper.”