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Majority Of Shoebox Apartment Investors Profited: Knight Frank

About 88.4 percent of resale transactions involving shoebox apartments, units smaller than 50 sq m (approx. 538.2 sq ft), made a profit, according to an analysis of caveats by Knight Frank.

“A majority of investors who have put their faith in shoebox units have not been disappointed,” said the property consultancy.

More: URA To Adjust Guidelines If Developers Build Too Many Shoebox Units

It found that those who have divested their shoebox apartments pocketed an average capital gain of 11.5 percent, or an annualised return of 2.4 percent.

This is slightly higher than the 10.6 percent average for resale deals involving units of all sizes, which works out to an annualised return of 2.0 percent for new developments launched since 2010.

However, the average transaction price of shoebox apartments in new projects only slightly increased from $727,846 in 2010 to $771,677 so far this year, while median psf pricing marginally increased from $1,473 psf to $1,495 psf over the same period.

Nonetheless, owners of shoebox apartments are currently enjoying gross rental yield of around 3.5 percent, with units in Singapore’s northern region posting the highest rate of 4.0 percent.

Knight Frank also noted that demand for shoebox apartments remains strong. In new non-landed developments outside the central area, sales of such units as a proportion of overall sales peaked from 16 percent in 2012 to 22 percent in 2016. As of end-October 2018, the rate remains high at 19 percent.

The study follows the Urban Redevelopment Authority’s (URA) announced on 17 October 2018 that the average unit size at new non-landed residential projects outside Singapore’s central region will be increased from 70 sq m to either 85 sq m (approx. 915 sq ft) or 100 sq m (approx. 1,076 sq ft). The higher average size will take effect for development applications submitted from 17 January 2019.

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